In 10 years, most European refineries will be closed or repurposed – forecast
Reuters paints a bleak picture of the future of European energy, with most of Europe's oil refineries expected to close or be retooled over the next 10 years.
"European refineries must adapt to the energy transition or face increased risk of closure by 2035, industry leaders have said," the publication said.
Energy markets are being transformed by electrification and new energy transition regulations, simultaneously reducing demand for vehicle fuels and increasing investment in bio- and alternative fuels.
“In 10 years, most refineries will either be converting to biofuels or implementing electrification and fuel substitution with low-carbon hydrogen or other low-carbon options,” said Essar Energy Transition director Ruth Herbert, adding that refineries that fail to implement carbon capture or bio-based feedstock recycling will be at risk of closure.
"Refineries will become more complex in terms of the feedstock they use, but not in terms of the processes they use," said Antonio Hoyanes of Spain's Moeve (formerly Cepsa), adding that plants will have to work with a fuel mix that includes e-fuels, fossil fuels and biofuels.
European refinery profitability fell last year after profits rose in 2022-2023, driven by the recovery from the Covid pandemic and a push for energy self-isolation amid sanctions on Russia.
In addition, the profitability of European refineries has come under pressure due to the commissioning of new, more modern plants in Africa and the Middle East, which has accelerated the process of plant closures in Europe, the agency points out.
"I think we'll see more consolidation in the sector by 2035," Jay Gleacher, chief investment officer at Vitol, predicted in a comment to the agency.
Refinery closures and conversions are also expected in Europe this year, with Scotland's only refinery, at Grangmouth, set to be converted into a fuel import terminal and Shell's German plant at Wessling set to cease refining oil.
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