Oil Refiners Shut Plants As Demand Losses May Never Return

Oil refiners are permanently closing processing plants in Asia and North America and facilities in Europe could be next because of the uncertain prospects for a recovery in fuel demand after the coronavirus pandemic cut consumption.

The pandemic initially cut global fuel demand 30% and refiners temporarily idled plants. But consumption has not returned to pre-pandemic levels and lower travel may be here to stay, leading to the possibility plants may shut permanently.

Here are some of the companies/refineries involved:

Australia has proposed offering incentives worth A$2.3 billion ($1.68 billion) over 10 years to keep the country's four remaining oil refineries open and said it would invest in building fuel storage as part of a long-term fuel security plan.

The four refiners - BP Plc, Exxon Mobil Corp, Viva Energy Group and Ampol Ltd - all welcomed the proposals but made no commitment to keep their plants open.

Viva Energy said earlier this month that a full shutdown of its refinery in Victoria was on the cards given the dire long-term outlook for the industry.

Eneos Holdings, Japan's biggest oil refiner and formerly known as JXTG, said it plans to close the 115,000 barrel per day (bpd) Osaka refinery that it owns with PetroChina in October, amid falling demand for crude products in Japan.

Royal Dutch Shell will permanently shut its 110,000-barrel-per-day Tabangao facility in Philippines' Batangas province, one of only two oil refineries in the country.

Marathon Petroleum, the largest U.S. refiner by volume, plans to permanently halt processing at refineries in Martinez, California, and Gallup, New Mexico.

JBC Energy said it expected a strong push for consolidation in China's refining sector potentially offsetting part of the strong capacity growth expected in the country.

Refining NZ said in late June it was considering shutting New Zealand's only oil refinery and turning it into a fuel import terminal, but first would reduce its operations to cut costs and break even into 2021.

Gunvor Group said in June it was considering mothballing its 110,000 bpd refinery in Antwerp as COVID-19 hurt the plant's economic viability.

Energy consultancy Wood Mackenzie put plants in Netherlands, France, and Scotland on a list of potential closures.

(Reuters)