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EurOil PROJECTS & COMPANIES EurOil

Gunvor weighs up closing

Antwerp refinery

BELGIUM OIL trading giant Gunvor is weighing up plans to consumption began to flatten in late 2019, sup-
mothball its 107,500 barrel per day (bpd) refin- ply continued to grow. The pandemic naturally
Gunvor does not see the ery in the Belgian port of Antwerp. made matters worse. With no major demand
situation getting better The Geneva-based company has looked at growth on the horizon in the short and medium
anytime soon. various ways of keeping the Gunvor Petroleum term, the problem of overcapacity will get more
Antwerpen (GPA) plant in operation, despite the serious.
structural difficulties that European refining has Furthermore, Gunvor’s costs at the facility are
faced with fuel oversupply. But the coronavirus on the rise. This is owing to increased expenses
(COVID-19) pandemic, and the resulting col- for maintenance activities and complying with
lapse in fuel demand earlier this year, may be the regulations and stricter environmental require-
final straw for Gunvor. ments, including CO2 taxes.
“Our team has made many efforts and Gunvor said GPA was currently in talks with
investments to keep GPA a going concern, but employee work councils on plans for a collec-
the novel [COVID-19] pandemic has turned tive dismissal should it decide to mothball the
an already challenging situation into one that’s refinery, without specifying a timeframe for the
unsupportable,” Gunvor CEO Torbjorn Torn- decision being taken. The move would not affect
qvist said in a statement last week. “GPA has had GPA’s terminal operations, however, including
and will now certainly continue to experience the 1.1mn cubic metres of storage capacity it
negative cash flow on a magnitude that is not operates, or its 88,000 bpd Rotterdam refinery in
affordable for the group. We are now consider- the Netherlands. The Rotterdam plant is under-
ing all options.” going a turnaround due to wrap up in October.
Gunvor sees several good reasons for shut- Likewise, there are no plans at this stage to
ting down the plant, despite what the company take offline Gunvor’s 110,000 bpd refinery in
describes on its website as its “ideal location” at Ingolstadt, Germany.
Europe’s largest integrated petrochemical cluster. For European refining, weak margins and
First, it cites the pandemic’s impact on demand oversupply of gasoline and diesel, as a result of
for fuel, particularly jet fuel and gas oil. This has increasing fuel efficiency during the last few dec-
put further pressure on European utilisation ades, are nothing new. In the past, excess Euro-
rates, and even when consumption recovers to pean supply has been soaked up by markets in
usual levels, it will take time for the glut in supply West Africa and Latin America. But a growth in
to be soaked up. Gas oil is a major product of the US capacity has meant that these markets are no
GPA plant. longer as dependable an outlet. Likewise, Middle
Gunvor also points to a lack of suitable Eastern refiners have pushed their higher-cost
feedstocks. As a simple hydro-skimming European competitors out of other regions, while
refinery, GPA is designed to process mainly excess Chinese fuel supply has made Southeast
medium-sulphur oil, which has gradually Asian markets crowded.
become more expensive because of scarcity. In the longer term, another risk comes from
As newer and more sophisticated refineries the electrification of European road transport.
are brought online, demand for this feedstock The pandemic has done little to weaken Euro-
will continue rising, making it harder for GPA pean commitments towards decarbonisation.
to compete. If anything, it has strengthened the continent’s
Thirdly, competition is getting ever stiffer. resolve, with many governments’ costly eco-
Refining capacity has risen substantially over the nomic recovery packages having a firm green
last few years, but so has fuel demand. But while agenda. ™

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