REFINERY NEWS ROUNDUP: Refinery closures loom across the globe

London — News of refinery closures and conversions have accelerated around the world, following demand destruction caused by the COVID-19 pandemic.

According to the International Energy Agency, permanent shutdowns of refinery capacity planned for 2020-2021 amount to 1.7 million barrels/day.

Capacity shutdowns have been planned prior to COVID-19 but the "bulk of the new announcements reflect the pessimism about refining economics," the agency said.

"The protracted low margin environment leads to adverse economics for a number of refineries globally, as well as the Med region, with some of them ceasing operations temporarily or permanently, or converting to other activities," refiner Hellenic Petroleum said in its Q3 report.

Contrary to wide expectations that simpler refineries would be "the prime candidates for closure", some of them can be supported by "captive landlocked markets" whereas coastal sites are more exposed to international competition, such as the North American East Coast and Australia, the IEA said.

The "lion's share" of closures are planned at US refiners, where "just over" 1 million b/d is slated for permanent closure or conversion to bio-refining. The rest is "almost equally" split between Europe and Asia, according to IEA estimates.

Europe

** Finland's Neste explores the possibility of shutting down operations at its Naantali refinery as part of a mulled restructuring of its refinery operations in the country. "We are exploring the shutdown of the refinery operations in Naantali and focusing the Naantali site on the terminal and harbor operations, as well as transforming the Porvoo refinery operations to co-processing renewable and circular raw materials," Neste said on Oct. 22. It said the COVID-19 pandemic continued to impact physical products demand and both diesel and gasoline margins continued to be under pressure. In 2017, Neste completed the integration of the Porvoo and Naantali refineries that now operate as one refinery with a total capacity of 13 million mt/year.

** Total said it would convert its French Grandpuits refinery "into a zero-crude platform". By 2024, the plant will focus on new industrial activities, including production of renewable diesel mostly for the aviation industry, production of bioplastics, plastics recycling and operation of two photovoltaic solar power plants. Crude oil refining will be discontinued in the first quarter of 2021 and storage of oil products will end in late 2023.

** Gunvor Group would mothball its Antwerp refinery, but "will continue terminal activities, as well as further assess future development opportunities for the land and existing units." Gunvor Group said in June it was considering whether to mothball the Antwerp site as "a confluence of geopolitical and macroeconomic events exacerbated by the COVID-19 pandemic has put the refinery in a very difficult economic situation". The refinery stopped crude processing at the end of May.

** UK's Petroineos refinery will start consultation with employees on Nov. 16 regarding its proposal to reconfigure the Grangemouth refinery. The company plans to mothball CDU1 and the FCC. The two units "have been closed throughout the COVID pandemic due to significantly reduced local and international demand for fuels." By mothballing them the company "will reduce future incurred costs associated with operating these two older plants". The company proposes a smaller refining operation at Grangemouth where it will retain 450 jobs.

North America

** The future of Come by Chance remains uncertain as Origin International has offered a bid to Silverpeak for the site. The plant was idled in May by the sharp fall-off in refined product demand.

** PBF Energy said it would idle some units at its Paulsboro, New Jersey, refinery.

** Marathon indefinitely idled two of its refineries due to falling demand for transportation fuels from coronavirus pandemic lockdowns. The two plants are the Gallup, New Mexico plant and the Martinez, California, plant. Marathon recently announced it will turn Martinez, California, oil refinery into a renewable diesel plant.

** Shell Oil will shut its Convent, Louisiana, refinery as efforts to sell the plant have not yielded a buyer, a company spokesman said Nov. 5.

** Philadelphia Energy Solutions closed in 2019 after a fire damaged the plant.

** Phillips 66 will turn its Rodeo, California, plant into the world's largest renewable fuel facility. Permitting is underway for the facility and is expected to be completed in 2022. It will also permanently shut its Santa Maria, California, refinery, which traditionally supplied intermediates to Rodeo for final processing.

** HollyFrontier will repurpose its Cheyenne, Wyoming, refinery to produce renewable diesel.

Asia-Pacific

** Shell will halve the crude processing capacity at its Pulau Bukom refinery in Singapore as part of the energy major's initiative to reduce its CO2 emissions to net zero by 2050, it said Nov. 10. "Bukom will pivot from a crude oil, fuels-based product slate towards new, low-carbon value chains," the company said in its statement. "We will reduce our crude processing capacity by about half and aim to deliver a significant reduction in CO2 emissions."

** Pilipinas Shell Petroleum Corp. plans to shut down its Tabangao refinery and transform the facility into an import terminal, the company said in a statement. The refinery has been shut since May 24, having been idled due to weak demand for domestic products.

** Philippines' Petron has said that the Bataan plant may close should discussions regarding customs tax with the government fall through.

** New Zealand's Refining NZ has proposed lowering throughput at the country's sole refinery by 33% in 2021 amid ongoing discussions regarding its transition to an import terminal.

** Australia's second-largest refiner Viva Energy has again signaled the possible closure of its Geelong refinery, faced with thin margins and prolonged lackluster demand for refined oil products.

** Ampol, formally Caltex Australia, has announced the start of a "comprehensive review" of its Lytton refinery in Brisbane as a prolonged period of poor refining margins and an uncertain outlook threaten the closure of the facility.

** The Maritime Union of Australia has urged the federal government to nationalize BP's Kwinana oil refinery, rather than allow it to be closed, as such a move would not only save many jobs, but also drastically improve Australia's fuel security. BP Australia on Oct. 30 said it was planning to shut its Kwinana refinery and convert it into a fuel import terminal.

Africa

** South Africa's Engen said it is "considering several options with regards to the Engen refinery," although no decision has been made. The company also noted it "remains fully committed to operating the Engen refinery in a safe and reliable manner." Local media reported earlier that Engen is considering whether to close its refinery in Durban in 2023 and convert it into a fuel storage facility, and has started consultations with employees about increasing the import and supply capacity.