What is the future of the refining industry?

At this time, 95% of the transportation sector depends on petroleum products. Technological progress will no doubt lead to an increase in energy efficiency, but transport’s heavy reliance on oil will remain. It is in the European Union’s best interest to maintain an effective refining industry.

 The downstream refining sector is much less profitable for oil companies than the upstream sector and of the hundred or so refineries in the European Union, eight shut down in the past five years.

The European deficit in middle distillates (diesel fuel, diesel and kerosene) – between production and consumption – was 14% in 2010. There was excessive benzene production and a shortage of diesel fuel.

Importing both crude oil and refined products weakens the security of our transportation sector’s supply chain and, as a result, gradually increases costs.

Europe needs strong, innovative, efficient and healthy industrial companies able to compete with their counterparts worldwide. This is also true for refining.

It is first a matter of acknowledging that it’s up to the industry itself to take action and to deal with its problems without requesting help from the public authorities. The latter must resist giving subsidies that will only delay inevitable plant closings.

The Commission also provides a European dimension to challenge this global problem which is of concern to us today.

After organising two round tables with the refining industry and publishing a communication entitled “A Stronger European Industry for Growth and Economic Recovery”, the Commission created a “European refining forum” which will meet for the first time on April 12.

All parties interested, including workers’ unions, will be able to express their opinion to prepare proposals that will assist the refining industry’s recovery and ensure that the measures planned at the European level are consistent, complete and in line with the other policies being developed for Europe.

The situation described above is of concern to the European Commission which initiated an in-depth dialogue with the competent industrialists.

Jean-Claude Charrault
Special Adviser