Of 465 refining assets analysed, energy consultancy Wood Mackenzie ranked nearly 21% of 2023 global refining capacity at some risk of closure
More than a fifth of global oil refining capacity is at risk of closure, energy consultancy Wood Mackenzie found in analysis published on Thursday, as gasoline margins weaken and the pressure to lower carbon emissions mounts.
Of 465 refining assets analysed, the consultancy ranked nearly 21% of 2023 global refining capacity at some risk of closure.
Europe and China house the largest number of high-risk sites, putting nearly 3.9 million barrels per day (bpd) of refining capacity in jeopardy, Wood Mac found, based on its estimate of net cash margins, cost of carbon emissions, ownership, environmental investment and strategic value of refineries.
There are 11 European sites that account for 45% of all high-risk plants, according to the report.
About 30 European refineries have already shut down since 2009, shows data from industry body Concawe, with nearly 90 still in operation.
This spate of closures have been brought on by competition from newer and more complex plants in the Middle East and Asia as well as the impact of the COVID-19 pandemic.
Gasoline margins are expected to weaken by the end of this decade as demand drops and sanctions on Russia ease while expected carbon taxes should also start to bite, according to the Wood Mac analysis.
Operating costs could go up so much that “closure may be the only option”, according to Wood Mac senior oils and chemicals analyst Emma Fox.
In the meantime, Nigeria’s huge Dangote oil refinery could bring to an end decades-long gasoline trade from Europe to Africa worth $17 billion a year, heaping pressure on European refineries already at risk of closure from heightened competition.
The Dangote refinery, with capacity of up to 650,000 barrels per day, began production in January but was not included in Wood Mac’s analysis.
