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.
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