BAKU, Azerbaijan, Oct.9
By Leman Zeynalova – Trend:
For the period 2020–2025, total refinery closures are estimated at 2.5 million barrels per day (mb/d), Trend reports with reference to OPEC’s World Oil Outlook (WOO) 2020.
It is clear the COVID-19 pandemic will have an adverse effect on refinery viability, especially if the recovery is slow, according to the cartel.
“The pandemic has already begun to precipitate a rash of closures. What is not yet known is whether this signals a new period of sustained, major reductions or whether the initial surge in closures will be enough to induce still-operating refiners to struggle on,” reads the report.
OPEC estimates that at 2.5 mb/d, the projected level of medium-term closures (2020–2025) equates to an average annual rate of 0.5 mb/d.
“This is below the 750 tb/d p.a. rate of closures that occurred from 2012 to 2019, which included very extensive rationalizations in Europe and other industrialized regions. Actual closures across the medium-term could be higher or lower, but the former is now more likely because of the COVID-19 pandemic and oil demand implications. The pandemic is most likely to adversely impact refineries that are old and small; lack specialty products, petrochemicals and/or local crude supply; and which are fully exposed to international markets, as in coastal locations. It is notable that these factors are starting to play out in the announcements of actual and potential closures. Many of the refineries being closed or reported as at risk of closure are around 0.1 mb/d of capacity or less.
“From 2012 through 2018, some 5.7 mb/d of refinery closures occurred worldwide, mainly in Europe, the Asia-Pacific and the Middle East. In 2019, the primary closures were those of the 355,000 b/d Philadelphia Energy Solutions facility in the US after a severe fire, and the 44,000 b/d INA refinery in Sisak, Croatia, as part of a consolidation of processing into INA’s Rijeka plant. These closures were partially offset by the reopening of the Al-Sumoud (formerly Baiji) refinery in Iraq, leading to a net total for 2012-2019 of 6 mb/d. This equated to an average annual rate of closure of 740 tb/d in this period,” reads the report.
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