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Graphic shows refineries shutting down or at risk of closure.


Oil refineries face shutdowns as demand plummets

August 17, 2020 - Oil refiners are permanently closing processing plants in Asia and North America and facilities in Europe could be next as global fuel demand remains below levels seen before the coronavirus pandemic.

The pandemic initially cut global fuel demand by 30 percent and refiners temporarily idled plants. But consumption has not returned to pre-pandemic levels and lower travel may be here to stay, leading to tough decisions for permanent shutdowns, Reuters said.

Among the plant closures is Royal Dutch Shell’s 110,000-barrel-per-day Tabangao facility in Philippines’ Batangas province, one of only two oil refineries in the country. Shell blamed a pandemic-led slump in margins for turning the plant into an import terminal.

Marathon Petroleum, the largest U.S. refiner by volume, plans to permanently halt processing at refineries in Martinez, California, and Gallup, New Mexico. The larger plant in California will become an oil-storage facility and may be converted to produce renewable diesel, a fuel made from industry waste and used cooking oil.

“Around four million barrels per day (bpd) of shutdowns will be necessary over the next few years to underpin a meaningful refinery margin recovery,” said Kostantsa Rangelova, head of downstream at JBC Energy.

“Of that, we see about 1.5 million bpd coming from Asia, with OECD and Southeast Asian refiners showing the greatest vulnerability.”

Plants in Japan, Australia and New Zealand could be likely candidates for closure ahead, said Mia Geng, at consultancy FGE.

Energy consultancy Wood Mackenzie estimated 1.4 million barrels per day, about 9 percent, of refining capacity in Europe is at risk of shut-downs by 2022-2023, with plants in the Netherlands, France, and Scotland on a list of potential closures.

PUBLISHED: 17/08/2020; STORY: Graphic News