Refining: Europe’s Refineries: walking dead or happy valley?
Unloved and increasingly unneeded, Europe’s oil refining sector has been under duress for an astonishing four decades.
By Tommy Mars, Opportune LLP
Unloved and increasingly unneeded, Europe’s oil refining sector has been under duress for an astonishing four decades. As in many other sectors, Europe’s refineries expanded during the post-war decades to accommodate the internal needs of national markets. That world changed following the second oil shock of 1979–1980 and the globalization of the oil industry. Increased efficiency and weak economic growth reduced demand, and new, lower-cost producers, such as Russia, the US and the Middle East, forged a strong competitive advantage. Europe’s refineries became less relevant as the shortcomings of small-scale and high cost became increasingly apparent.
To be blunt, in today’s uncertain environment, many European refineries simply do not need to exist, at least not for economic reasons. Yet, there they remain.
This picture of decline and irrelevancy may not be promising, but first glances can be deceiving. First, it is necessary to examine how we got here. Click below to read the full article.