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Refiners around the world have announced permanent shutdowns to refining capacity this year after the pandemic of global demand for crushed fuel, and significant overcapacity remains, the International Energy Agency (IEA) said on Thursday.
In its monthly oil market report, the EIA said permanent shutdowns of refinery capacity reached 1.7 million barrels per day (b / d). But another crude oil distillation capacity of more than 20 million bpd is now inactive, the Paris-based agency said, noting that “there is still significant structural overcapacity.”
In the past few months alone, refiners have announced more than ten permanent refinery closures, with the largest capacity slated for closure, 1 million bpd, in the United States, according to the IEA.
“There were capacity closures planned for 2020-2021 before COVID-19, but most of the new announcements reflect pessimism about the economics of refining in a world suffering from a temporary collapse in demand and structural overcapacity of refining, ”the agency said in the report. carried by Reuters.
Refiners in the United States are idling refining capacity and cutting jobs to deal with losses resulting from collapsing demand during the pandemic.
Refiners are also closing petroleum refineries permanently or converging as the collapse in demand from the pandemic continues to squeeze refining margins.
Several refiners and oil majors recently announced permanent shutdowns in the United States and Asia, while analysts believe some high-cost refineries in Europe may also be shut down in the next few years as crude processing margins into fuels should remain low.
Shell said this week it would halve the crude oil processing capacity of its world’s largest wholly-owned refinery, Pulau Bukom in Singapore, as part of its ambition to be a net zero emissions company. ‘by 2050 or earlier.
Also this week, Petroineos, a joint venture of Ineos and PetroChina, announced plans to permanently shut down units at the 210,000 bpd refinery at Grangemouth, Scotland’s only refinery, which would reduce refining capacity. from the factory at 150,000 bpd.
By Tsvetana Paraskova for OilUSD
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