• 4 minutes Europeans and Americans are beginning to see the results of depending on renewables.
  • 7 minutes Is China Rising or Falling? Has it Enraged the World and Lost its Way? How is their Economy Doing?
  • 13 minutes NordStream2
  • 2 hours Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 7 hours California to ban gasoline for lawn mowers, chain saws, leaf blowers, off road equipment, etc.
  • 11 hours "Here is The Hidden $150 Trillion Agenda Behind The "Crusade" Against Climate Change" - Zero Hedge re: Bank of America REPORT
  • 11 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 2 days An Indian Opinion on What is Going on in China
  • 2 days "A Very Predictable Global Energy Crisis" by Irina Slav --- MUST READ
  • 16 hours Nord Stream - US/German consultations
  • 2 days Can Technology Keep Coal Plants Alive and Well?
  • 3 days Two Good and Plausible Ideas about Saving Water and Redirecting it to Where it is Needed.
  • 3 days Succession Planning in Human Resources for Vaccinated Individuals in the Oil & Gas Industry
  • 5 days Perfect Energy Storm in Europe: turning our back on fossil fuels is easier said than done!
  • 2 days U.S. : Employers Can Buy Retirement Security for $2.64 an Hour
  • 2 days Storage of gas cylinders
Inflation Fears Hit Fever Pitch As Gas Rally Continues

Inflation Fears Hit Fever Pitch As Gas Rally Continues

With natural gas prices climbing,…

Libya's Election Is All About Oil Money

Libya's Election Is All About Oil Money

The looming election in Libya…

Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

More Info

Premium Content

The Oil Refinery Crisis Will Worsen This Winter

It was only to be expected that many of the world’s refiners would be pinched between low demand for finished products and rising inventories as the pandemic lockdowns continue to stifle activity. But the warm December that is expected this year is also threatening finished products demand. And it’s possible that many of the older, small refiners won’t survive at all.

According to HIS Markit, eleven U.S. refiners are scheduled to close.

The largest refinery in the United States, Royal Dutch Shell’s Convent, Louisiana refinery has shut down after it was unable to find an interested buyer. But the Dutch oil major is closing six more refineries according to Reuters, because it cannot sell those refineries either.

Then, the largest U.S. refiner, Marathon Petroleum, is set to close several refineries, including its Gallup, New Mexico, refinery and its refinery in Martinez, California.

Japan’s Eneos Corp has shut its Osaka refinery, too, but the real pain is in Australia.

BP announced back at the end of October that it was shutting down its aging 65-year-old Kwinana refinery in Perth, because it was simply “no longer economically viable.”  Instead, the refinery will be turned into an import terminal. After this closure, BP has only three refineries left in Australia.

PBF Energy shut 85,000 bpd of its Paulsboro, NJ, refinery down. Phillips 66 shut its Alliance refinery down in the runup to Hurricane Sally, but just left it shut while it waits for better days.

Other refineries that are not shutting down are simply extending maintenance or bringing maintenance forward.

Australia’s Caltex is a prime example of this, when in early April it brought forward—and extended—maintenance on its only refinery, Lytton. Caltex vaguely said that it would restart the refinery when conditions recover.

In all, Wood Mackenzie said that nearly 10 percent of Europe’s high-cost refineries, holding 1.4 million barrels per day of capacity, were in serious threat of closure over the next three years.

Related: Canada's Oil Heartland Goes Into Lockdown As Covid-19 Infections Surge

None of these developments bode well for oil refiners, which brought out the chicken littles of the oil industry warning of the permanent loss in demand.

While that might be going too far, more sober analysts are calling for China to surpass the United States as the world’s largest refiner. Why?

For starters, Asia’s demand for oil products hasn’t seen as much demand loss as its U.S. and European counterparts, which are still in the middle of substantial shutdowns that are stifling activity. This, combined with China’s cheap crude oil purchases, has some analysts anticipating a changing of the guard, so to speak, with China soon overtaking the United States as the world’s largest oil refiner.

And it doesn’t help that many of China’s refineries are large and new, compared to several older refineries, such as Shell’s Pulau Bukom oil refinery in Singapore, which the company said would see a capacity reduction by half, to just 250,000 bpd.

Shell’s total refinery capacity has been cut by well over a half a million barrels globally just in the last few months, ostensibly as it seeks to curb emissions. But the reality is, times are tough, and demand for gasoline and jet fuel are waning amid the pandemic.

According to the International Energy Agency, a total of more than 1.7 million barrels per day of refining capacity in the United States, Japan, Australia, and others has either retired or is set to be retired this year and next. Meanwhile, China, India, and the Middle East are planning refinery additions to the tune of 2.2 million barrels per day—shiny new refineries that are larger and far more efficient.

S&P Global Platts echoes the IEA’s estimates, stating that 1.69 million bpd of refining capacity is either offline now, or will be offline shortly due to depressed demand.

The shock to refinery capacities around the world has led some to be concerned with supply. According to S&P Platts, however, oil demand won’t return to 2019 levels until 2022. Whenever the recovery, it will unlikely be the shock that the demand loss was. This should give oil and gas companies time to match capacity with demand as the world calls for more refined products.

By Julianne Geiger for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News