BREAKING NEWS: Fuel Demand Slump Speeds Up Refinery Closures

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Fuel Demand Slump Speeds Up

Re�nery Closures
By Tsvetana Paraskova - Nov 12, 2020, 5:30 PM CST

Refiners around the world have been announcing permanent closures of

refinery capacity this year after the pandemic crushed fuel demand
worldwide, and significant overcapacity still remains, the International
Energy Agency (IEA) said on Thursday.

In its monthly Oil Market Report, the EIA said that permanent shutdowns
of refinery capacity had reached 1.7 million barrels per day (bpd). But
another more than 20 million bpd crude oil distillation capacity now sits
idle, the Paris-based agency said, noting that “there remains significant
structural overcapacity.”     
In the past few months alone, refiners have announced more than ten
permanent closures of refineries, with the highest capacity planned for
closure, 1 million bpd, in the United States, according to the IEA.

“There were capacity shutdowns planned for 2020-2021 prior to

COVID-19, but the bulk of the new announcements reflect pessimism
about refining economics in a world suffering from temporary demand
collapse and structural refining overcapacity,” the agency said in the
report, as carried by Reuters.

Refiners in the United States are idling refinery capacity and cutting jobs
to cope with the losses stemming from the demand crash in the
pandemic.

Refiners are also shutting down permanently or converging oil refineries

as the demand crash from the pandemic continues to crush refining
margins.

Several refiners and oil majors have recently announced permanent

closures in the United States and Asia, while analysts believe that some
high-cost refineries in Europe could also be shut down over the next few
years as margins for processing crude into fuels are expected to remain
depressed.

Shell said this week it would halve the crude oil processing capacity of
its largest wholly owned refinery in the world, Pulau Bukom in Singapore,
as part of its ambition to be a net-zero emissions business by 2050 or
sooner.

Also this week, Petroineos, a joint venture of Ineos and PetroChina, said
it plans to permanently close some units at the 210,000-bpd
Grangemouth refinery, the only refinery in Scotland, which will cut the
facility’s refining capacity to 150,000 bpd.

By Tsvetana Paraskova for Oilprice.com

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Tsvetana Paraskova
Tsvetana is a writer for Oilprice.com with over a decade
of experience writing for news outlets such as iNVEZZ
and SeeNews.  More

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