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Europe’s refineries battle global headwinds
26/4/2023
8 min read
Feature
Europe’s refining industry, battered by a growing number of global headwinds, is struggling to stay afloat and keep abreast of the decarbonisation measures that are required as part of the energy transition. Nnamdi Anyadike reports.
Since 2020, the war in Ukraine combined with the COVID-19 lockdown has dealt a severe blow to the European refining sector. Recent European Union (EU) proposals have also placed additional hurdles in the way of the refining industry, leading to many European plants being mothballed and sky-high fuel prices at the pumps.
A recent paper by the consulting firm McKinsey on the energy transition concludes that both the North American and European refining sectors are at greatest risk of closure relative to the rest of the world. However, while US refiners have some competitive advantage owing to relatively low energy and feedstock costs, European refiners have no such advantage, says the firm. It argues the risk of closures and conversions is greater due to the faster than expected decline in regional demand, higher energy costs and rising CO2 prices under the EU Emissions Trading System (ETS).
By comparison, the Asian market is expected to grow, largely on the back of strong Chinese oil demand.