Doris Leblond
OGJ correspondent
PARIS, Mar. 8 -- France needs increased diesel output from existing refineries more than it needs new refineries, according to Jean-Louis Schilansky, delegate general of the trade group Union Française des Industries Pétrolières (UFIP) at the group's annual press conference.
Current refinery production is equivalent to total products demand, and motor fuels demand has declined because of high oil prices and a crackdown on speeding, said Schilansky, whose group comprises Total, Esso SAF, Shell France, BP, Ineos (which acquired BP's Lavéra refinery), and Agip. The government's view is that more refineries are needed.
Refinery investment in France focuses on output of diesel oil, Schilansky said. Diesel demand has doubled since 1990, reaching 31 million tonnes in 2004, when imports totaled 11 million tonnes.
Over the same period, gasoline demand has fallen by about half to 16 million tonnes, of which 4 million tonnes was exported in 2004.
Assuming a 2%/year increase of merchandise road transport, an increase in the diesel-fueled share of the vehicle market to 70%, and improvements in vehicle fuel efficiency, UFIP projects that by 2010 refiners will need to produce 6 million tonnes/year more diesel than they do now. Some supply will come from biodiesel required by the government. Imports of diesel will remain at 11-12 million tonnes/year.
Refiners are increasing their capacity to run sour crude as production of sweet crude from the North Sea declines, although the crude slate is expected to remain about half sweet, half sour.
Beginning in 2009, European Union requirements for low-sulfur heating oil will force French refiners to increase imports of the product. Although growing volumes of low-sulfur diesel and heating oil will be available in trade, French refiners will face competition from buyers from the US and the rest of Europe.
Schilansky called for a more neutral tax system, which now favors diesel over gasoline.