Total SA said it will spend €600 million to revitalize its refining business in France with projects that include an overhaul of the 220,000-b/d Donges refinery near Saint Nazaire, as well as a permanent shuttering of crude processing activities at the 153,000-b/d La Mede refinery on the French Riviera.
The investment decision comes as part of the company’s comprehensive plan to ensure long-term futures for the two refineries, both of which continue to suffer profit losses amid a decline in Europe’s demand for petroleum products and increased competition from refiners in the US, Asia, and Middle East for customers in nearby export markets, Total said.
The central focus of Total’s strategy for its French refining business is to realign operations and production to changing markets, according to Patrick Pouyanne, Total’s chief executive.
“There are three possible responses to the crisis in the European refining industry. The first is to throw in the towel. The second is to do nothing and perish. The third is to innovate and adapt to meet shifting demand trends,” Pouyanne said, adding that the company’s latest investment plan will accomplish the latter for both Donges and La Mede.
Along with the capacity reduction program at its 200,000-b/d Lindsey refinery in the UK announced earlier this year (OGJ Online, Feb. 12, 2015), execution of Total’s program for the two French refineries will result in a 20% reduction in its European refining and petrochemical capacity by 2017, the company said.
At a cost of €200 million, the Donges modernization program includes construction of a desulfurization unit that will use intermediate feedstock to produce low-sulfur fuels that meet Europe’s more stringent fuel specifications.
The desulfurization unit will receive its hydrogen supply from a new steam methane reformer, which will be built by a contractor under a long-term hydrogen supply contract with the refinery, Total said.
In addition to the new units, the upgrading project will coincide with the rerouting of an existing rail line that runs through the production site and which currently poses an obstacle to future development of refining units at the plant.
Should Total reach an agreement with French government and local communities regarding the safe rerouting of the rail line this year, a process design package as well as front-end engineering and design for the Donges upgrade should be finalized in 2016, with contract awards for construction of the new units to follow in 2017, the company said.
Given this timeline, the new units would be commissioned sometime in 2019, Total said.
In February, the company announced the Donges refinery will enter a nearly 2-month shutdown beginning on May 4 for a complete modernization and maintenance overhaul designed to improve the plant’s profitability as well as its environmental footprint (OGJ Online, Mar. 20, 2015).
While the La Mede manufacturing site will remain in operation, Total will invest €200 million to convert the refinery into a 500,000-tonnes/year biofuels plant for the production of biodiesel from used oils and other renewable feedstocks.
The company said it plans to permanently suspend crude processing activities at the refinery by yearend 2016.
Contact Robert Brelsford at [email protected].