More refiners are permanently closing their crude processing facilities amid uncertain prospects for a full recovery in fuel demand which has been hit hard by the coronavirus pandemic. The pandemic initially cut worldwide fuel demand by 30% but consumption remained weak and had not regained its pre-pandemic levels. As a result, some refiners are shutting their plants to avoid further losses.
In the US, Marathon Petroleum plans to permanently end crude processing at its refineries in Martinez, California and convert it into an oil-storage facility and bio-based motor fuel production. Royal Dutch Shell announced it was permanently closing its refinery in Convent, south Louisiana. Shell initially planned to sell the facility but failed to find a buyer. Hence, it will shut the plant for good this month. Shell plans to simplify its refining network from fourteen to six facilities.
In Singapore, Shell will also reduce crude processing capacity at its Pulau Bukom refinery. The move is part of the company’s efforts to cut CO2 emissions. It will also result in job reductions at the site. Previously, Shell announced the permanent closure of its 110,000-bpd Tabangao facility in Batangas province in the Philippines. The company plans to reconfigure it into a fuel import facility.
In Australia, BP plans to stop fuel production at its money-losing Kwinana oil refinery and turn it into a fuel import terminal. Viva Energy has also said that it considered a full closure of its refinery in Victoria. Following the announcements, ExxonMobil urged the Australian government to speed up the release of A$2.3 billion ($1.68 billion) aid to the country’s refining industry. In neighboring New Zealand, Refining NZ in late June said it would reduce operations at the country’s sole oil refinery before eventually closing the complex and reconfiguring it into a fuel import terminal.
In Europe, Gunvor Group said it could mothball its 110,000 bpd plant in Antwerp, Belgium. Petroineos said earlier this month it would mothball nearly 50% of its 200,000 bpd Grangemouth refinery in Scotland. Previously, Total announced a more than €500 million ($583 million) investment to convert its Grandpuits refinery into a facility focusing on biofuels and bioplastics production.
