Germany Wants to Stop More Oil Refinery Closures

SUBSCRIBE SEARCH ARTICLES NEWS Germany said it will seek to stem the loss of oil refining capacity. Image by bombermoon via iStock

Germany said it will seek to stem the loss of oil refining capacity, arguing that closures are hurting not only fuel suppliers and consumers but the country’s vast chemicals manufacturing sector too.

“Whoever loses the refinery loses not only the supply for the gas station, but above all for the chemical complex,” Economy Minister Katherina Reiche said Friday after meeting with oil industry officials in Berlin.

Europe has spent years scaling back an aging, high-cost refining sector as the shift to cleaner transport and industry erodes demand. But that’s left the region increasingly dependent on imports for products such as diesel and jet fuel — a vulnerability now exposed by geopolitical supply shocks and soaring prices.

When refineries shut, “more products are imported, higher prices are paid and there are risk premiums associated with supply security,” Reiche said. The government is seeking to develop a new refining strategy by early next year.

For petrochemical manufacturers, Germany’s refinery closures hollow out the domestic supply chain by removing sources of feedstock, necessitating more purchases from abroad and potentially making plants less competitive.

But holding onto some refineries no longer makes financial sense for many oil majors. Companies such as BP Plc, Shell Plc and ExxonMobil Holdings Corp. have all considered shedding assets or paring back operations at some of their European facilities. BP this year sold its Gelsenkirchen refinery in western Germany. 

European Union environmental rules also raise costs for refiners in the region, making it harder for them to compete with plants in Asia and elsewhere that may face lower costs for compliance. Reiche said she’s pushing for carve-outs from EU methane regulations to help relieve pressure on the industry.

WHAT DO YOU THINK?

POST A COMMENT

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.