More than a fifth of the global oil-refining capacity is at risk of closure, energy consultancy Wood Mackenzie found in analysis, as gasoline margins weaken and the pressure to reduce carbon emissions mounts.
Of 465 refining assets analyzed, the consultancy ranked about 21% of 2023 global refining capacity at some risk of closure.
Europe and China house the greatest number of high-risk sites, putting about 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, the report found.
Shut since 2009
About 30 European refineries have already shut down since 2009, data from industry body Concawe shows, with nearly 90 still in operation.
This spate of closures has been brought on by competition from newer and more complex plants in West Asia 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 dips and sanctions on Russia ease while expected carbon tax should also start to bite, the Wood Mac analysis showed.
Operating costs could go up so much that “closure may be the only option,” said Wood Mac senior oils and chemicals analyst Emma Fox. The seven high-risk sites in China are small-scale independent refineries.
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