REFINERY NEWS ROUNDUP: Demand in Europe remains weak amid new lockdowns

London — Oil product demand in Europe extended losses in January as lockdowns were reimposed across many countries.

Retail fuel products withdrawn from Spain's Compania Logistica de Hidrocarburos storage tanks in January fell 27% on the year, after a 25% decline for all of 2020, according to data published by the the national fuel distributor. Spain is in a state of alert until May 1, having initially imposed pandemic restrictions in March 2020, but tightened movement and travel restrictions for the holiday period, which affected the first week of January.

Portuguese road fuel sales in 2020 dropped 14% year on year, amid COVID-19 restrictions that weighed on volumes starting in March, data published by the country's Energy Department, Direccao Geral de Energia e Geologia (DGEG), showed. The heaviest hit was aviation fuel, which saw sales volume drop 62% year on year to 616,000 mt amid stringent travel restrictions that have continued into 2021. While a second state of alert was declared in November, it was extended in January until March 9. The only segment to show a volume increase during 2020 was the bunker fuel segment.

Italian oil product consumption will only start picking up again in the second half of the year, though it is unlikely demand will recover by more than half of the volumes lost in 2020 and it will take at least two years to return to pre-pandemic levels, according to the head of the Italian downstream oil and energy industry association. Italy, Europe's fourth-biggest economy, saw demand for oil products slump by 17% in 2020. "I see some possibility of recovery in the second half of the year...though it is premature to make definitive forecasts for the entire year as a lot will depend on the pandemic and on how the vaccination campaign is rolled out," Unem head Claudio Spinaci told S&P Global Platts in an interview. Fuels for automotive use will likely recover the fastest, Spinaci said.

Spinaci said that the slump in global oil demand, and in particular the collapse of jet fuel consumption, has forced Italian refineries to reduce their throughputs and in some cases even move forward their maintenance plans by going offline ahead of schedule. Even so, Spinaci said he didn't expect any Italian refineries to close from the fallout of the COVID-19 pandemic but rather to move forward with efficiency and conversion plans that are already in place.

In more positive news, car sales in the EU are set to rise 10% in 2021, the European Automobile Manufacturers' Association (ACEA) forecast Feb. 3, even though the COVID-19-related impact on sales was expected to continue through the first quarter.

Meanwhile, last week staff at French oil major's Total refineries and petrochemical sites joined an industrial action in support of the company's Grandpuits refinery which is set for conversion. The strike action, which has been called for Feb. 3 and 4, has been joined by around half of the staff at the Gonfreville refinery and petrochemical complex in Normandy, 40% at the bio refinery at La Mede, and 100% at the Feyzin refinery. Staff at Donges refinery and the Flandres facility at the port of Dunkirk has also joined the strike. All product deliveries have been halted for 48 hours.

** All units at Total's Grandpuits refinery in central France are now fully offline as a result of a strike called by staff to protest against job losses resulting from the conversion of the refinery into a biorefinery, a union source said. Total halted the crude distillation unit at Grandpuits Nov. 16 but the other units at the site had remained in operation. All units are now halted and product deliveries have also stopped, while work to prepare the conversion of the refinery has also been halted. Strikes started in October at the site. The CGT union has called on nine of Total's sites in France, including refineries and petrochemical plants, to join the strike action Feb. 3-4. Separately, there is also a general call for a nationwide strike in France for Feb. 4.

** Eni is evaluating conversion of its Livorno refinery in northwest Italy into a biorefinery, as part of the Italian company's wider strategy to make its activities more environmentally sustainable, a company spokesperson said. Eni has already converted two of its Italian refineries and said last October that it may speed up the conversion plan for its traditional refineries, with the aim to be producing 5 million mt/year of biofuels by 2050.

** Portugal's Galp said in a regulatory filing Dec. 21 it will discontinue refining operations at the Porto refinery from 2021 and concentrate its core refining activities and future developments at its larger Sines refinery. Galp said it will focus on enhancing the resilience and competitiveness of the Sines site, with a view to improving efficiency and to integrate the production of advanced biofuels and other cleaner as well as more valuable products. The Porto refinery, which came on stream in 1969, halted fuel production for a second time last year on Oct. 10 due to the impact of COVID-19 on fuel demand and high inventories.

** France's Donges refinery is not expected to restart before mid-March although with potential new lockdown in France the restart could be postponed further, a source from the CGT union said. Total said Nov. 24 it was to halt operations at Donges from Nov. 30 for the coming months for economic reasons, due to weak margins, in the wake of the demand slump caused by the coronavirus pandemic. The refinery has been operating at a loss, it said. At the time trading sources suggested that the refinery was likely to restart in January.

** Petroineos said that it was continuing consultations with employees, which started on Nov. 16, regarding its proposal to reconfigure the Grangemouth refinery in Scotland "to meet current and future anticipated demand" for fuels. The company proposes a smaller refining operation at Grangemouth and plans to mothball CDU1 and the FCC, two units that "have been closed throughout the COVID-19 pandemic due to significantly reduced local and international demand for fuels".

** One of the two distillation units at Cepsa's La Rabida is currently idled but set to quickly resume operations if demand improves, the company said Jan. 14. Fuel unit 1 and and Vacuum Unit 2 have been offline since they concluded maintenance in Q4 2020.

** Croatia's Rijeka refinery will optimize its operations from November "for a few months" and during that period will "perform regular technological activities at process units such as catalyst regeneration and preparation of these plants for the new processing cycle in 2021 through regular maintenance work." Local media reported that the refinery will temporarily halt production between November and January due to reduced demand.

** Finland's Neste said it will shut down its Naantali refinery by the end of March as part of its restructuring. Operations at its Porvoo refinery will be revamped to focus on co-processing renewable and circular raw materials. It will focus the Naantali site on terminal and harbor operations and in the second phase of restructuring will develop the Porvoo refinery "towards co-processing renewable and circular raw materials."

** Gunvor Group said it would mothball its Antwerp refinery, but "will continue terminal activities, as well as further assess future development opportunities for the land and existing units." The refinery stopped crude processing at the end of May.

** Shell has relaunched the sale of its Fredericia refinery in Denmark after suspending the sale in 2018.

** Total has agreed to sell its Lindsey refinery in the UK to fuel trading and marketing Prax Group, as the French oil major focuses on its integrated downstream assets and the coronavirus adds to the uncertainty over long-term demand for fuel.

** At Spain's Bilbao the FCC was taken offline in April, and the company has not commented on its restart. At Spain's Tarragona, the refinery is online with units adapted to market conditions. The smaller crude unit (Crude 2) has been used as a swing unit to allow more flexibility.

** Germany's Heide refinery will reduce its staff by 106 positions following "intensive and constructive negotiations" since the end of October, the refinery said Jan. 28. "The ongoing global expansion of renewable energy and the effects of the current coronavirus pandemic have led to a sharp drop in demand for mineral oil products," the refinery said, adding that it had faced decline of product sales "for almost a year", while "the ongoing energy transition is leading to major challenges for the company in future." It said however that it will be "well positioned for the future" with the agreed downsizing and "by changing its business model towards the future production of green hydrogen."

In other news, Austria-based OMV's refinery utilization over January-December reached "a resilient level" of 86% at its European refineries "despite the imposed lockdown measures related to COVID-19" but remained below the 97% in 2019. Its 2021 utilization rate at European refineries is forecast to remain at the level of 2020, with no major turnaround planned.

OMV Petrom said that it expects utilization rate above 95% in 2021 for its Petrobrazi refinery. Its utilization was 92% in 2020.

Finland's Neste said Feb. 5 that 2020 was a "success" despite the "challenges and disruptions caused by the COVID-19 pandemic." Its renewable segment "proved to be very resilient" with increased sales volumes and strong sales margins. However its oil products segment "suffered from a historically weak refining market" which "accelerated the need to improve the long-term competitiveness of our refining business", Neste said noting the decision to close its smaller Naantali refinery by the end of March this year.

Poland's largest refiner PKN Orlen said Feb. 4 that the worsening macroeconomic environment and lower fuel demand caused by the COVID-19 pandemic saw it reduce throughput in the fourth quarter of 2020 by 12% year on year to 7.391 million mt. Utilization of the company's refineries fell 10 percentage points to 84%, the company said in a Q4 report. Throughput at PKN's largest refinery Plock fell 8% year on year to 3.671 million mt and utilization was down seven percentage points at 90% due to maintenance shutdowns of the crude distillation unit VI, hydrocracking, hydrogen and H-Oil units, and reduced utilization of the FCC II, H-Oil and HDS units. Fuel yield at the plant dropped seven percentage points to 77% due to the maintenance.

Throughput at the Orlen Lietuva refinery in Lithuania dropped 16% to 1.915 million mt with utilization down 14 percentage points at 75% to minimize the "negative effect of unfavorable market conditions."

Throughput at PKN's Czech Unipetrol refineries dropped 13% to 1.739 million mt and utilization was down 11 percentage points at 80% on lower demand for middle distillates and maintenance shutdowns of the CDU, visbreaking, FCC and PE3 units. Fuel yield decreased two percentage points to 79% due to maintenance and a higher share of high-sulfur crude in throughput.

Separately, Varo Energy said Feb. 3 that the global investment firm The Carlyle Group will increase its stake in the company by acquiring the stake currently owned by Raggeborgh, a Dutch private investment company. Vitol Group's share in Varo remains unchanged.

NEW AND ONGOING MAINTENANCE

FUTURE MAINTENANCE

Near-term maintenance

New and revised entries

** In 2021, Neste plans to carry out around major maintenance in the second quarter at the Porvoo refinery lasting around 12 weeks. The maintenance work was originally scheduled for 2020 but was deferred due to COVID-19.

** API's refinery in the Italian coastal town of Falconara Marittima is currently offline for routine maintenance works, according to information provided by two sources Feb. 3. The exact date of the start of maintenance work was not given, though it began in the first half of January. There was no information given on the duration of the maintenance works either, or details on which units were affected.

** UK's Pembroke refinery is starting planned maintenance, according to market sources. The works are set to last until April.

** BP's Rotterdam refinery, which went offline in mid January following an incident at the facility, is back to normal operations, according to trading sources in eraly February. The refinery was not expected to start loading products until February, trading sources said previously. The refinery started bringing its units back online shortly after the incident. The refinery halted its two CDUs on Jan. 14 as part of a full shutdown following a power outage and fire.

** Spain's Petronor said Feb. 5 it is restarting its N2 naphtha desulfurization unit in plant 2, which it took offline for maintenance Feb. 2. The unit was previously taken offline Dec. 11. The refinery also said it will halt its G4 diesel desulfurization unit from Feb. 13, alongside its Hydrogen unit (H4) and sulfur recovery plant (SR5) for maintenance. The restart of the units will be from March 15, it said. The company restarted its other diesel desulfurization (G2) in Plant 2, on Feb. 2, rather than Jan. 29 as originally planned. It was halted Jan. 23. Petronor refinery said Jan. 25 it is restarting its boiler in Plant 3 -- the plant which houses its conversion units. The boiler was taken offline Jan. 24 for maintenance. The refinery had halted its No. 2 crude distillation unit on Nov. 20, 2020, in reaction to weaker market conditions. The halt has affected 40% of the refinery's crude distillation and also includes the visbreaking unit. The FCC was taken offline in April, and the company has not yet confirmed its restart.

** Units at France's Fos refinery have been restarting since Feb. 2 which could lead to incidents of flaring over several days, according to local media report citing the refinery. Fos refinery started the shutdown of some units on Jan. 4 for planned maintenance, the company said Jan. 5.

** France's Lavera refinery was operating normally after completing works, market sources said Jan. 25. The refinery halted a unit in December, which led to flaring. Traders also reported partial maintenance at the site. The refinery is planning works at its FCC unit in September.

** Czech Kralupy refinery was undergoing maintenance shutdown in December. PKN reported last week that throughput at its Czech Unipetrol refineries dropped 13% to 1.739 million mt and utilization was down 11 percentage points at 80% on lower demand for middle distillates and maintenance shutdowns of the CDU, visbreaking, FCC and PE3 units.

** France's Donges refinery is not expected to restart before mid-March although with potential new lockdown in France the restart could be postponed further, a source from the CGT union said. Total said Nov. 24 it was to halt operations at Donges from Nov. 30 for the coming months for economic reasons, due to weak margins, in the wake of the demand slump caused by the coronavirus pandemic. The refinery has been operating at a loss, it said. At the time trading sources suggested that the refinery was likely to restart in January.

Existing entries

** All units at France's Grandpuits refinery are now fully offline as a result of a strike called by staff against the loss of jobs following the conversion of the refinery, a union source from the CGT union said. Total halted the crude distillation unit at Grandpuits Nov. 16 but the other units at the refinery had remained in operation. All units are now halted and product deliveries have also stopped. Work to prepare the dismantling of the refinery has been halted.

** The Milazzo refinery located on the Southern Italian island of Sicily is currently running maintenance on some units ahead of placing its LC Finer unit offline in scheduled wide-scale upgrade works at the plant in the first quarter of 2021, a source close to the refinery said. No information was available on which units were involved in the works, or if the production output was affected. There was also no information available on the duration of the maintenance. The upcoming wide-scale maintenance that included the LC Finer unit being placed offline was originally scheduled for 2019 and postponed various times.

** The ISAB refinery in Sicily, which postponed its Dec. 15, 2020 scheduled restart after the completion of a two-month maintenance cycle that began Oct. 15, may return most units to operation in February barring the integrated gasification combined cycle unit, which will likely be back online only in April, a person close to the company said. The situation may change depending on evolving market conditions, and the restart schedule will be reviewed on a monthly basis. ISAB is made up of two refineries connected by a pipeline. The north and south plants operate as a single refinery after the two separate units were integrated in 2007. The separate IGCC plant is connected to the north and south complexes as well.

** One of the two distillation units at Cepsa's La Rabida is currently idled but set to quickly resume operations in case of demand improvement, with Cepsa continuing to adapt the refinery utilization ratio to current demand, the company said Jan. 14. Fuel unit 1 and and Vacuum Unit 2 have been offline since they concluded their last maintenance in Q4 2020.

** Tupras will halt production at its Izmir refinery between Jan. 1 and Feb. 28 for maintenance, the company said in a disclosure to the Istanbul stock exchange. The company did not specify in the disclosure exactly what maintenance would be carried out. But in a teleconference presentation published following its third-quarter results, the company listed a number of planned maintenance projects that had been scheduled for Q4 2020 and all but one of which had been postponed to unspecified periods in 2021.

These included work on the U400 FCC unit, planned to take six weeks staring in Q4, as well as work on the U9200 CCR unit planned to take seven weeks, the U9600 Isomerisation unit planned to take eight weeks, and the U9900 MQD unit planned to take seven weeks. Tupras said that it did not anticipate any effect on its sales during the shutdown as it planned to compensate for lost production by utilizing its existing stocks and continuing production at its other three refineries.

** Turkey's Tupras confirmed in November that it was planning to go ahead with some refinery maintenance work in 2020 having previously announced that all planned maintenance would be postponed to 2021. Work was planned on the Plt 100/1000 crude and vacuum unit at Batman slated to start in Q4 and continue for eight weeks, into Q1 2021.

** General maintenance at Germany's Leuna will be carried out in Q2 2021, although the exact timing is yet to be confirmed, the company said Oct. 19. The maintenance and an upgrade which had been scheduled for this autumn had been postponed "due to the ongoing pandemic and the resulting restrictions on travel and transport of goods, as well as the impact on international supply chains," the company said earlier this year. The maintenance had been planned to take placed over six weeks, S&P Global Platts reported previously. Total said in 2019 it would invest Eur150 million in the Leuna refinery over 2020-21 to reduce production of heavy products as demand decreased and increase production of methanol, a key feedstock for the chemical industry. The project will deepen the integration of refining and petrochemical operations and increase the competitiveness of the plant, Total said at the time. Methanol production will increase by 20% as a result of higher output from the visbreaker unit and an upgrade of the POX/methanol plant. Work was due to continue until 2021, with the bulk carried out during a major shutdown of the refinery in 2020, which will also cost around Eur150 million.

** Croatia's Rijeka refinery will be optimizing its operations from November "for a few months" and during that period will "perform regular technological activities at process units such as catalyst regeneration and preparation of these plants for the new processing cycle in 2021 through regular maintenance work," the company said late Oct. 7. Earlier local media reported that the refinery will temporarily halt production between November and January due to reduced demand caused by the spring lockdown and a weak tourist season.

** Two planned maintenances at the Castellon refinery is eastern Spain have been pushed back, with no fixed date for when they will now go ahead. The first was previously scheduled for May and to last two to three weeks, affecting two distillation units, the powerformer 1 and the HVN. A second maintenance, initially due for November for two to three weeks, affecting one conversion unit (treatment plant) and the 1.4 million mt/year coker, has been pushed back into 2021.

** France's Gonfreville is working at around 50% capacity after its CDU was damaged in december 2019.

** Eni's Sannazzaro de Burgondi refinery in northern Italy started another cycle of maintenance and upgrade works, even as a decision on when to reactivate its Eni slurry technology (EST) unit, which has been offline since a 2016 fire, is still outstanding. The works being carried out are not the series of works planned for the EST unit that had previously been suspended.

** The Canary Islands' only refinery on Tenerife will be permanently closed in the long term. There has been no production since 2014. Cepsa will install some logistics and storage facilities at the site, amid a wider regeneration project.

Future

New and revised entries

** France's Lavera refinery is planning works at its FCC unit in September.

Existing entries

** Austria's OMV said it will expand and modernize the cracker units and petrochemical cold section at its Bughausen refinery in Germany with the upgraded units planned to go live in Q3 2022, following a planned turnaround of the refinery.

** Czech Unipetrol said that following the turnaround at its Litvinov plant in Q2'20 the refinery has prepared production for a new four-year cycle. Thus the next turnaround is due in 2024.

** Lukoil's Neftochim refinery in Burgas, Bulgaria, will be carrying out major works in 2021, including atmospheric vacuum unit 1, atmospheric vacuum units 2, atmospheric vacuum distillation 2, FCC, hydrotreatment, hydrocracker, according to company tender documents. The refinery typically carries out works around February-March.

** With its 2020 maintenance, Romania's Petromidia and the petrochemical division "will align with the new operating strategy, with a general turnaround scheduled for 4 years and technological shutdowns scheduled for 2 years," the company said.

** Germany's Mineraloelraffinerie Oberrhein (Miro) will carry out a major turnaround in 2021. It will invest Eur300 million, with two-thirds going on new projects and a third for upgrading the existing plants during the turnaround.

** Two months of maintenance at the Sarpom refinery in Trecate, Italy, originally scheduled for October 2019 have been pushed back to 2021. Details on which units at the refinery will be upgraded as part of the maintenance -- of the kind needed every 3-4 years -- had yet to emerge.

** The Holborn refinery near Hamburg, northern Germany, plans its next turnaround in 2023. Its previous maintenance was in the autumn of 2018. The refinery carries out major works every five years.

** The next major maintenance at Poland's Gdansk is planned for spring 2021.

** The next major turnaround at Preem's Gothenburg refinery in Sweden will be in 2021.

** Romania's Petrobrazi will undergo its next big turnaround in 2022.

** Total's Feyzin is considering mothballing a visbreaker unit around 2021 as demand for heavy fuel is gradually declining and the unit works on average no more than three days a month. As a result of the mothballing seven people would lose their jobs, but would be offered other jobs within the organization, the company said.