MOSCOW (MRC) -- European oil refineries are reducing operations as they face an unprecedented fall in fuel demand brought about by the coronavirus pandemic, reported Reuters.
In the United Kingdom, INEOS shut down a 35,000 barrels per day crude unit at its 200,000 bpd Grangemouth refinery on March 17, according to industry monitor Genscape.
A source familiar with the plant’s operations said the shutdown was related to deteriorating profit margins for fuels produced at a refinery including aviation and motor fuels.
“Horrendous margins and even worse physical markets,” the source said when asked about the cause of the shutdown.
A spokesman for the company declined to comment.
With planes around the world being grounded, demand for jet fuel, once one of the biggest factors in oil demand growth, has fallen off a cliff, with prices for the fuel in Europe now at record lows.
Refiners in Europe are producing gasoline at a loss.
“Refiners must cut runs now to manage the situation,” consultants FGE said in a note.
Oil major BP also shut down a 70,000 bpd crude unit at its Gelsenkirchen (Scholven) oil refinery in Germany on March 18, Genscape said.
BP declined to comment. But two trading sources said the shutdown was an economic run cut.
In France, whose population is currently under government enforced lockdown, oil major Total delayed the restart of its 102,000 bpd Grandpuits refinery near Paris by eight days to April 1, CGT union delegate Thierry Defresne said.
Other sources said the maintenance work at the company’s 110,000 bpd Feyzin refinery was suspended.
It is difficult to gauge how extensive the fall in fuel demand the outbreak of the coronavirus has caused as the situation is changing day by day and more and more cities are shutting down.
Head of research at the world’s biggest oil trader Vitol said on Friday demand could fall by more than 10%, or 10 million bpd. )
As MRC wrote before, Total said Tuesday it had a suspected case of coronavirus on a rig at its Culzean gas field in the UK North Sea, but production was unaffected.
We also remind that Total has recently disclosed that it is evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
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