'Era of Recalibration' Underway in Europe's Downstream

'Era of Recalibration' Underway in Europe's Downstream
High-level summit to offer strategies for emerging from Europe's downstream slump.

Earlier this week, Essar Group announced a plan to reduce the headcount at its Stanlow refinery in northwestern England. In addition to the staff reduction, Essar is lowering the refinery's processing capacity by roughly one-third. The company's actions exemplify the types of measures that European refiners have been taking to survive in a tough competitive environment.

Years of falling demand, exceptionally strict European Union regulations and high operating costs have created a climate that has had a chilling effect on investment in refinery upgrades and expansions in the region. However, there are a number of industry experts who maintain that new investment will help Europe's ailing downstream facilities to properly retool their operations in order to survive and even prosper once again.

"The dilemma is the industry has to invest to survive and be more competitive, but investors are reluctant to do so with the expected forward gross refining margin," said Lars Thorstholm, Nordic business development manager with Statoil ASA and one of the 60-plus senior executives who will be at GDS International's upcoming Next Generation Downstream Summit Europe (NG Downstream).

"The European downstream industry, in this context refining, is facing considerable overcapacity and outdated refinery configurations," continued Thorstholm. Refined products from the U.S. and Asia, along with European Union (EU) regulations that do not apply to these imports, greatly diminish the profitability of refining in Europe as well as the appetite for investing in the sector, he explained.

At NG Downstream, which will take place Oct. 7-9, 2014, at the Dorint Park Hotel in Bremen, Germany, Thorstholm will offer an insider's perspective on an investment Statoil is planning to improve competitiveness at one of its key refineries. Specifically, he will lead a presentation on Statoil's installation of a new vacuum distillation unit at Mongstad refinery in Norway.

"The Mongstad refinery is designed to process feedstock from the Norwegian Continental Shelf (NCS)," said Thorstholm, noting that NCS crude oil production is steadily declining. "Mongstad needs to be able to process less expensive crude slates to be competitive in the future."

Not only will the upgrade enable Mongstad to process a wider range of crude oils and give it greater flexibility in the feedstock market, but also increase its ability to produce sulfur-free high-quality Arctic diesel, he added.

Thorstholm's presentation on Statoil's upgrade at Mongstad will contribute to a broader theme at NG Downstream: that of a renewed focus at Europe's refineries and petrochemical plants, noted Ben Arrowsmith, head of NG Downstream delegate attendees with GDS.

"This year we will be debating key refining trends and what they mean for the European business as we enter an era of recalibration," he said. "From Total's top-level management, Jean-Marc Sohier, vice president of manufacturing methods and performance, will join us in Bremen to present their decision to combine Refining and Petrochemical divisions and the various opportunities this has created."

Lars-Peter Lindfors, senior vice president for technology with Finland-based Neste Oil, is also on the summit's guest speaker line-up, said Arrowsmith.

"As innovation and development of new chemical processes becomes increasingly important in the European region in particular, Lars will give an insight into the exciting work being done on biofuels and the commercial implications that this has," he explained.

The summit, whose geographic focus also encompasses the Middle East, will serve as a venue for delegates to engage in frank discussions about myriad downstream challenges, said Arrowsmith. In addition to three roundtables focusing on relevant core themes, the event will feature high-level working lunches, intimate one-on-one meetings and ample time for networking, he added. Operating companies such as BP, Eni, Shell, Saras and Grupa Lotos and service companies such as NALCO Energy Services, Invensys, M-I SWACO will participate in the 2 ½-day event.

A couple of delegate and sponsorship opportunities are available for this year's NG Downstream Summit Europe, according to the event organizer. For more information, contact GDS through the summit's official website.

For the fourth straight year, DownstreamToday is the summit's official media partner.

Matthew V. Veazey has written about the upstream and downstream O&G sectors for more than a decade. Email Matthew at mveazey@downstreamtoday.com. Twitter: @Matthew_Veazey

 

 

 

 



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