EU refineries are not investing fast enough to shift the balance to diesel production as the US appetite to mop up surplus gasoline starts to wane, a draft Commission document seen by Reuters said. The European Union's refining sector has struggled against dwindling profit margins and a structural imbalance, which requires it to import products to meet growing diesel demand, while exporting unwanted gasoline.
According to figures in a Commission working document on energy markets seen by Reuters, since 2009, eight refineries have ceased operation, equating to around 6 percent of total EU refining capacity of 15.5 million barrels per day, second only to that of the United States' output of oil products. Investment plans for 2011 submitted by member states showed oil refining capacities would decrease by only 2 percent and flagging a need for increased spending on conversion capacity.
"The EU produces much more gasoline than it consumes and exports the rest. The US has been the main outlet for this excess gasoline over the last few years, but it is widely believed that it will significantly reduce its imports of gasoline going forward," the draft said. It was very likely, it added, "the EU's import dependence on certain products such as gasoil/diesel will increase, unless the industry is able to invest in further conversion capacity".
It did not specify now much investment was needed. The refinery figures represent an aggregate of plans to expand and cut refining across the bloc. France, Romania and Italy reported expected reductions in oil refining capacities by 15 percent, 12 percent and 4 percent respectively, while Portugal and Greece were investing in additional capacities of 14 percent and 12 percent.
As the EU shifts its focus towards renewable energy, oil infrastructure is expected to attract relatively little investment. "While this could be considered unsurprising given that it is projected oil demand will continue to decrease over the coming decade, there is however a widely recognised need for investments in conversion capacity in order to reduce the high gasoline yield of the European oil refining sector," the draft said.
The Commission said there could be extra projects, in addition to those reported by member states, and it has proposed law requiring EU members to disclose energy infrastructure plans to increase clarity. For all energy infrastructure, the Commission has estimated the EU system requires 1 trillion euros ($1.31 trillion) by 2020, including 540 billion for power generation and 200 billion for electricity and gas networks judged to have importance to more than one EU country.
Between 2005 and 2010, it said significant investment in renewable energy had taken place, increasing its share in electricity generation from 14.7 percent to 19.6 percent. But it said more spending was needed if member states were to meet the bloc's targets. Total installed capacity for generation from renewable sources would have to rise from around 174 gigawatts (GW) in 2005 to around 487 GW in 2020.
Comments
Comments are closed.