PROBLEMS PERSIST FOR FRENCH REFINING SECTOR

France's refiners face a continuing shortfall of middle distillate capacity and a persistent surplus of heavy fuel oil. That's the main conclusion of the official Hydrocarbon Directorate's report on how France's refining sector performed in 1991. The directorate noted that although net production of refined products in French refineries rose to 1.534 million b/d in 1991 from 1.48 million b/d in 1990, products imports jumped 9.7% to 602,000 b/d in the period.

July 27, 1992

2 min read

France's refiners face a continuing shortfall of middle distillate capacity and a persistent surplus of heavy fuel oil.

That's the main conclusion of the official Hydrocarbon Directorate's report on how France's refining sector performed in 1991.

IMPORTS UP

The directorate noted that although net production of refined products in French refineries rose to 1.534 million b/d in 1991 from 1.48 million b/d in 1990, products imports jumped 9.7% to 602,000 b/d in the period.

The glut of heavy fuel oil eased to some extent last year because French nuclear power capacity, heavily dependent on ample water supplies, was crimped by drought. That spawned fuel switching.

The most note-worthy increase in imports was for motor diesel, climbing to 176,000 b/d from 148,000 b/d in 1990. Tax credits are spurring French consumption of that fuel. For the first time, consumption of motor diesel in 1991 out-stripped that of gasoline at 374,000 b/d and 356,000 b/d, respectively.

The directorate's concerns focus on French refiners' inability to meet the demand for new specification products.

France's refineries are extremely limited in deep or semideep conversion capacity and lack the dedicated units to produce sufficient volumes of quality conversion diesel. Unlike their counterparts in Germany, Italy, Netherlands, and the U.K., French refineries rely heavily on catalytic cracking.

In addition, says Olivier Appert, head of the directorate, gasoline margins are so low in France for refiner/marketers because of vigorous competition from supermarket chains, "refiners currently are better off importing products than refining them in France."

CHANGES AHEAD

The directorate's report also emphasized critical changes ahead for French refiners in meeting new specifications under Europe's tightening environmental rules.

European refiners soon must complete the first stage of phasing down leaded gasoline and reducing the sulfur content of diesel and heating oil.

Current estimates of what's needed to install high pressure desulfurization units or adapt existing ones involve capacities of 600,000-1 million b/d at a cost of 15-22 billion francs ($2.7-3.96 billion), including sulfur recovery and hydrogen units.

Among European projects on tap are Petrofina SA's $900 million resid desulfurization project in Belgium, Repsol SA's $2.34 billion program focusing on producing unleaded gasoline and installing coking facilities at four of its refineries in Spain, and Agip Petroli's 20,000 b/d LC-Finer resid hydrotreater at its Milazzo refinery in Italy.