(Corrects number of facilities halted in first paragraph.)
The closing of Petroplus Holdings AG’s Coryton refinery, the second facility to shut in the U.K. since 2009, has boosted fuel imports to the most this year.
Traders bought 150,000 metric tons of jet fuel, 100,000 tons of diesel and 80,000 tons of gasoline last month for delivery to the U.K. in the Platts pricing window. In total, 18 cargoes were purchased compared with 10 in April, five in March, three in February and one in January, data from the news and pricing unit of McGraw-Hill Cos. show. The shutdown of Coryton was confirmed on June 6.
“You can certainly attach the rise in imports to Coryton coming slowly out,” Olivier Jakob, managing director of Switzerland-based consultant Petromatrix GmbH, said by phone yesterday. “Europe has a continual problem of surplus refining capacity so in the short-term, the closure will translate itself as more imports into the U.K. as there is a re-balancing of regional flows. Overall though, it is not going to have a significant impact as the U.S. needs to export product.”
Britain is the third-largest consumer of oil in the European Union at 1.59 million barrels a day in 2010, according to BP Plc’s Statistical Review. The country has lost 292,000 barrels a day of refining capacity since 2009, according to data compiled by Bloomberg, with the Coryton plant catering for 20 percent of fuel demand in the south-east.
European processors have struggled to make money in the past few years as competitors in Asia, such as Reliance Industries Ltd. in India, owner of the world’s largest refining complex, and the U.S. are able to produce oil products profitably because of cheaper feedstock and as the economic crisis on the continent crimps demand.
“The reason Coryton has closed is basically due to the pressure from product volumes from foreign markets,” David Wech, managing director at Vienna-based JBC Energy GmbH, said by phone yesterday. “You have Russia exporting at record levels, Reliance sending large volumes into Europe and on the gasoline side, you have European refiners who are struggling to get rid of volumes.”
Deliveries into the U.K. of gasoline rose 2.6 percent in March and diesel imports increased 4.5 percent, according to data from the Department of Energy and Climate Change.
European refiners may still have to reduce capacity by 2.3 million barrels a day to boost processing rates to 83 percent, the International Energy Agency said in its May 11 monthly report. Plants in the region operated at 75.2 percent of capacity in March, compared with 83.7 percent in North America, according to the IEA.
“I think there will be more European refineries closing,” Jakob said. “What we have seen with the other Petroplus refineries in Petit Couronne, Cressier and Ingolstadt, is that they were closed down and bought by other entities. So in the end, not that much capacity has been taken away.”
The Coryton unit became the sixth refinery to close in Europe since last year, following Shell’s Hamburg plant in Germany; ConocoPhillips’s Wilhelmshaven facility, also in Germany; Tamoil SA’s Cremona plant in Italy; Petroplus’s Reichstett plant in France; and OMV AG’s Arpechim in Romania.
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