The European Commission has identified the ongoing shale gas boom in the US as one of the primary reasons for profit margin losses in the EU refining industry in recent years, it said in preliminary conclusions presented at a refining forum in Brussels on Thursday.
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"The biggest effect [on refining profitability] comes from the relative deterioration of energy costs in Europe with respect to other regions," said Robert Marschinski of the EC's Joint Research Center and one of the authors of the ongoing study.
From 2008-2012, the EU has seen its average net cash margins drop from within the top third globally to the bottom third compared with 2000-2008.
"This backslide is attributable to the deterioration vis a vis US energy costs" based on data assembled by Solomon, a group of energy analysts and consultants, Marschinski said.
The EU Refining Forum, which brings together representatives of the EU refining industry including companies, trade associations and EU member state officials, was set up in November 2012 to examine claims of excessive EU legislation stifling an already beleaguered industry.
"This shows that there are other factors besides EU legislation which influence the refining sector in the EU," said Fabrizio Barbaso, deputy director general for the EC's energy division and chair of the forum.
"We want to draw on that in order to draw lines of action that aim at mitigating gaps of competitiveness in the European sector," he said.
But overall conclusions are far from firm, Barbaso said. Following talks from previous forums, the EC is now looking at collecting further data over the 2000-2012 period from Solomon in conjunction with oil refining industry association Europia, which is expected to take about two months to complete.
Once the data is complete, the Joint Research Center will run different scenarios to examine the different legislative cost impacts, such as investments in desulfurization units, refinery sulfur dioxide abatement and energy efficiency requirements, the EC said.
The refineries that are struggling to find buyers have not changed the speed with which the checks are being developed, as they are already considered urgent, Marschinski said.
"We are sensitive to the preoccupations of European industry," he said. "We are [being] as urgent as we can be. We need to be on time but we have competing calls for comprehensiveness -- we need to find a middle ground."
The EC wants to use the information to enable the industry to compete more effectively in a global market, Barbaso said.
The EC hopes to complete the investigation by the end of September, Marschinski said.
Since summer 2008, the US has benefited from a boom in shale gas production, which has led to cheaper feedstock for its refining industry and left the EU struggling to remain profitable globally.
The EC is looking at quantitative and qualitative impacts of relevant EU legislation on costs and productivity over the 2000-2012 period, including the industrial emissions directive, which requires refineries to meet best available technology benchmarks, and the fuel quality directive, which sets targets for cutting greenhouse gas emissions from fuels.