Europia blasts EC for ignoring refining sector

Doris Leblond
OGJ Correspondent

PARIS, Sept. 29 -- The European Union’s European Commission “seems to ignore” the necessity of future petroleum products and provides “little basis” for downstream investment, said Europia, the European petroleum industry association, in a 70-page review of the EU’s refining sector.

“In other words, the crucial need for oil product availability during the transition [to a low carbon economy] receives hardly any attention,” Europia claimed.

The white paper outlining challenges facing the refining sector is the industry's contribution to the EC’s announced publication early next year of a European energy strategy through 2020 and its initiatives for 2050. It also will serve as a backup of Europia's lobbying efforts for refining to be included as an essential part of the EU's energy strategy.

Europia's 18 member companies operate 98 refineries in the EU, Norway, and Switzerland as well as a number of smaller specialty facilities. Together they produce 90% of the energy needed for transport and 77% of the feedstock for the petrochemical industry.

An average $6 billion over the past 20 years have been invested in refining, and significant fiscal revenue contributed to the EU member states, proponents said.

Current and future challenges to the industry include falling product demand, pressure on margins, declining capacity utilization, and the mismatch of supply and demand patterns (the gasoline-diesel oil imbalance) due to tax incentives and structural trends, as well as endangered ability to compete globally because of exceptionally demanding current and future EU regulations.

Europia claims a long-term view for investments and a level playing field are needed to help overcome these challenges; otherwise, products will have to be imported from the Middle East and Asia as well as Russia to the detriment of supply security.

Commenting at a press conference, Jean-Louis Schilansky, president of France's oil trade group Union Francaise des Industries Petrolieres, pointed out there are 9 refineries idled or shut down in Europe and 12 up for sale. He said 15 more should be shut down to retrieve a balanced market.

And in 2013 when industries will have to buy emissions credits instead of current free carbon dioxide quota allowances within Europe's emissions trading system, Schilansky warned, “This will mean taking from refiners the money they will need to adapt their industry.”