Major European oil refineries face the risk of permanent closures as fuel demand slumps on the continent due to fresh lockdowns imposed to contain the spread of the virus. It is reported that the demand for gasoline is expected to fall between 15 percent and 20 percent between November and December compared to the same period in the previous year.
Fresh lockdowns and curfews in countries such as the UK, Germany, France, Italy and Spain are hampering the oil demand again. Major refiners have struggled to rebound from the slump in fuel demand since the spring and many of the refiners are restructuring operations including permanent closures of crude oil processing units.
It is reported that the joint venture of Ineos and PetroChina, Petroineos is planning to permanently close down a few of its units at the 210,000-bpd Grangemouth refinery in Scotland. Finland’s Neste is also planning to permanently close its refinery operations in Naantali.
Neste’s President and CEO Peter Vanacker, told the media in September, “The forthcoming operating and maintenance investments in the Naantali refinery are not viable nor sustainable in a situation where there is large over-capacity for oil refining globally.”
Many oil refineries in the US are also planning to reduce refinery capacity and are slashing jobs to cope up with the losses from the demand slump.
According to the International Energy Agency (IEA), global refiners have been planning to permanently close their refinery capacity this year. However, significant overcapacity still remains.