London — Austrian energy group OMV has seen signs of an uptick in road fuel demand over the last week, but expects a slow recovery to normal consumption this year even as the country lifts its coronavirus lockdown, CEO Rainer Seele said Wednesday.
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Last week, OMV's sales of jet fuel were down by 95% year on year, while gasoline sales were down 60% and diesel sales were reduced by 30%, Seele told analysts on a quarterly earnings call.
Austria was the first European country to start relaxing its measures to slow down the spread of coronavirus allowing small shops, public parks, and DIY and gardening centers to reopen after April 14.
The since the limited re-openings, road fuel sales have recovered somewhat with gasoline currently 40% lower and diesel down 20% on the year, Seele said, adding that jet fuel sales remain 95% lower.
"Gasoline was/is still a problem...but gasoline and diesel are coming back," Seele said. "Next week, on May 4, there is another lifting of the restrictions here in Austria and then I hope that people have enough of staying in their flats and that they are going to drive as much as possible. That's the best storage I can get."
Reporting its first-quarter earnings earlier Wednesday, OMV said its refined product sales fell 4% year on year to 4.6 million mt in the quarter due to the travel restrictions. It expects the utilization rate of its European refineries to be around 80% this year, down from 95% previously.
Due to limited jet storage capacity, the main bottleneck for refining utilization is jet production, Seele said, adding that OMV has changed processing in its refineries so are jet production is now nearly fully cracked into the monomer and diesel product lines.
Looking ahead, Seele said he saw a slow recovery in overall fuel sales as public caution over coronavirus contagion lingered, affecting travel behavior for the months and years ahead.
"My picture tells me Europe would come back the day we do have a vaccination, then we are back to normal," he said adding that jet fuel demand could take "two, three years" to recover fully.
European refineries have been dialing back crude runs and idling units over the last month as fuel demand collapses due to lockdowns, travel curbs hit jet fuel demand and storage options are exhausted.
Long term, Seele speculated that some of the shutdowns could become permanent, supporting future margins at rival regional refiners.
"That would be good for the market because we have seen for decades oversupply in refining in Europe, but I'm afraid that low costs and flexibility will be even more important in the refining business in Europe," he said.
OMV owns the 192,000 b/d Schwechat refinery in Austria, the 76,000 b/d Burghausen plant in Germany and holds stakes in Romania's Petrobrazi refinery and the UAE's Rewais plant.