The recent crisis in European refinery industry has attracted eyeballs of economists and industry experts. Amidst the fading operating margins and tough global competition many refineries are facing inevitable shutdowns. Few of the major issues have been highlighted in the article.

There are many challenges to overcome in order to sustain the European refining industry few of them are listed here:

• Oil producing countries and new refineries in emerging countries are major threats: New players from US as well as from India have started their new refinery plants recently.
• Shale gas boom in US has reduced the demand drastically : Previously European refineries benefited from high  export of gasoline to US market and respective emerging market but this prospect is ruining because of growing domestic shale oil supply in US
• Production is not concentrated on market demands (i.e. gasoline surpluses and lack of capacity for middle distillates)
• The substitute energy alternatives such as bio-fuels
•  And the present economic crisis dampens the opportunities of possible resurrection.

One of the major European economies like France is struggling to find buyers for their refineries which are at brink of closures. French government is already in talk with Middle East based prospective buyers to save their deteriorating refineries and working out a win-win solution for domestic market.

Petroplus Holdings AG, Europe’s largest independent oil refiner by capacity has been significantly cutting down production activities across Europe. Like Petroplus there are other refineries who are suffering from overcapacity chiefly in Atlantic basin.  Atlantic Basin refineries will have a high impact on their operating costs of refineries due to weak economic growth; high oil prices and legislation for biofuels. According to Jean-Louis Schilansky, head of France's UFIP oil business,” there will be an 8 to 10 percent overcapacity is expected in the European refining system till 2015”.

Crisis situation often produces long lasting ideas which shape the future of economy.

 Currently the immediate solutions that can be suggested are as follows:

• New market opportunities need to be discovered
• Refineries should take product diversification on their priority list to match the demand supply gap and
• The role of government being a major deciding factor, which will provide non functioning refineries an opportunity to sink or swim.

 

Related Report : 

• Refining Industry Outlook in Europe, 2013 - Capacity Analysis, Forecasts and Details of All Operating and Planned Refineries to 2017
• Refining Industry to 2017 - Asia-Pacific, Middle East and Africa to Emerge as Key Regions for Infrastructure Investments for Capacity Additions
• Refining Industry Outlook in South and Central America, 2013 - Capacity Analysis, Forecasts and Details of All Operating and Planned Refineries to 2017
• Refining Industry Outlook in Middle East and Africa, 2013 - Capacity Analysis, Forecasts and Details of All Operating and Planned Refineries to 2017

 

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