Introduction:
BENCHMARKS Refining, concern of oil companies
While oil companies continue to post profits, more and more of them want to sell part of their European activities. Upstream refineries and downstream service stations are threatened, resulting in thousands of jobs. Why ? The point in four key questions.
Refining: where are the oil companies?
An imbalance between supply and demand. While in 2008 production capacities and demand for refined petroleum products were roughly in balance, in 2009 a sharp drop in demand linked to the crisis, combined with the opening of new refining sites in Middle East, has considerably worsened the overcapacity that is already plaguing the sector.
From a surplus of 2 million barrels days in 2008, we fell suddenly to 7 million barrels days in 2009, estimates the French Union of Petroleum Industries (Ufip). However, according to the latter, this surplus should not be absorbed before at least 2014-2015. A delay that is difficult to accept for oil companies who, compared to other industrialists heavily affected by the crisis, are nevertheless doing well.
Lower margins. Consequence of this imbalance: the margins of European refiners have deteriorated, weighing on the results of oil groups. In the fourth quarter of 2009 alone, the refining division of Shell, the second-largest European oil group in terms of market capitalization, lost $ 1,76 billion and recorded its lowest margin in nearly 15 years, thus contributing to the drop the group's profit over the period of 75% over one year, to 1,18 billion dollars (850 million euros). At the end of the year, Total was losing around 100 million euros per month in refining in Europe. This deterioration in margins threatens to continue. Especially in France. If the slightly harsher winter in France may augur for a very small improvement in January, refining margins should remain at a "depressed" level for the remainder of 2010, warned Ufip.
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