The collapse in oil demand from the COVID-19 pandemic is hastening the reckoning for those refiners already struggling as new capacity overtakes demand, posing an existential threat to many, particularly Europe’s ageing plants. Even before the pandemic struck, which at its height destroyed over 20% of global oil demand, analysts expected global refining capacity would have to rationalize, particularly in Europe. According to consultants WoodMac, 1.4 million barrels per day, or around 9%, of refining Capacity is under threat of rationalization in Europe in 2022-2023. WoodMac declined to name specific refineries, but in a list sent to its clients and seen by Reuters, BP’s 377,000 bpd Rotterdam refinery, Total’s 102,000 bpd Grandpuits refinery in France and Petroineos’ 200,000 bpd Grangemouth refinery in Scotland were among 11 plants mentioned. European refining has seen several waves of rationalizations, most recently in the wake of the 2008-2009 financial crisis. Strong labor unions are making refinery closures in many European countries difficult. Two of Europe’s biggest refiners, Total and Eni, have managed to shutdown some capacity in the past decade, and to turn some sites into biofuel operations.
