Refiners In Europe Achieve Strong Q2 Results

A recent news article published in the Platts states that European refiners report strong Q2 results; some incidents.

Strong refining results for the second quarter

European oil companies have been reporting strong refining results for the second quarter amid strong margins and healthy demand.

** Essar, the owner of the UK’s Stanlow refinery, said its domestic sales over April-June — the company’s first quarter — amounted to 1.72 million mt, up 10% year on year, and were up 8% at 3.2 million mt in the first half of 2022.

Essar Oil UK also said it maximized diesel production and sourced non-Russian diesel in support of the UK’s ban on Russian imports. The increased demand “for locally produced fuel amidst the tight global supply situation” has driven its stronger financial performance over April-June.

** Spanish integrated energy group Repsol saw its second-quarter domestic refining margin jump more than threefold against the previous three months to a record $23.30/b. The Q2 figure was a 243% increase from Q1’s $6.80/b margin and 16 times greater than its Q2 2021 figure of $1.50/b, according to a provisional report filed at the Madrid stock exchange. “A reduction in European refining capacity since 2010, growing competition in other regions and the perspectives from the energy transition have also created challenges for the sector, which has increased its activity to meet the demand amid difficult circumstances,” it said. Repsol’s refining rate in Q2 increased to 91% from 83% in Q1 and from 71% in Q2 2021, it said. Its conversion rate also increased to 97% in Q2 from 80% in Q1 and 73% in Q2 2021. In its petrochemicals business, the company reported a margin of Eur1,285/mt in the quarter, from Eur1,390/mt in Q4 2021, but wider than the Eur1.059/mt recorded in Q1 2021.

** Cepsa’s second-quarter refinery output rose 5% year on year to 5.4 million mt, or 414,000 b/d, with record high margins. The utilization of Cepsa’s refining capacity was 90% in the quarter, up from 81% in the year-ago quarter and 83% in Q1.

Q2 refining margin jumped fourfold year on year

The company said its Q2 refining margin jumped fourfold year on year to a record high of $19.10/b, from $4.50/b in Q2 2021. The margin surged eightfold from $2.50/b in Q1.

** Portuguese integrated energy group Gap reported record high refining margin in Q2 of $22.30/b — a nine-fold increase year on year and threefold increase quarter on quarter. Galp boosted throughput at the 220,000 b/d Sines refinery by 9% year on year and 5% quarter on quarter to 22.9 million barrels (about 251,000 b/d).

** Independent commodity trader Gunvor’s earnings surged in the first half of 2022 despite trading volumes slipping 16% on the year, as the company benefitted from major trade disruptions in the wake of the invasion of Ukraine, it said in a statement July 21. “Particularly encouraging is the return of substantial profitability in our refining operations and our shipping. This has resulted mainly from tight refining capacity worldwide and strong demand, specifically in Europe, for middle distillates, including diesel, heating oil, and jet fuel. As a leading global ship charterer, Gunvor benefitted from strong demand for spot charter capacity,” CEO Torbjorn Tornqvist said in the statement.

** Austrian OMV said its new refining indicator margin for Europe based on Brent jumped to $20.46/b in Q2, up from $6.78/b in Q1 and from $2.23/b a year earlier. Its previous indicator margin was based on Russia’s Urals crude values, which are no longer a relevant reference after falling sharply due to Western sanctions. OMV also reiterated that its Schwechat refinery in Austria is expected to be fully operational in the second half of Q3 2202. it said it expects the total financial impact from the June 3 damage to the plant which occurred while restarting after maintenance to be around Eur200 million ($202 million).

** TotalEnergies’ average refining margin more than tripled to a record high in the second quarter of 2022 as Europe’s biggest refiner benefitted from a strong post-COVID recovery in fuel demand outstripping available refining capacity. TotalEnergies’ “variable cost margin” for its European refineries averaged $145.7/mt, or about $19.9/b, in the second quarter, compared with $46.3./mt in the previous quarter and $10.20/mt in the year-earlier period, it said in a July 15 trading statement.

Strong demand continued to define the European market

** Italian demand for refined oil products in June rose by 151,000 mt, or 3.1%, to 5.1 million mt from the same month last year, data from industry group Unione Energie per la Mobilita (UNEM) showed. Monthly demand was slightly above June 2019, which was prior to the outbreak of the COVID-19 pandemic, when oil product demand was 4.9 million mt, the association said.

Overall, gasoline gained 3.3%, or by 22,000 mt compared to June 2021. Diesel, meanwhile dropped 0.5%, or by 10,000 mt compared to the same month last year.

Jet fuel demand jumped 126% last month compared to June 2021 to 379,000 mt, though was still down 19% compared to the same month in 2019. Bunker fuel demand jumped 12% in the month of June compared to 305,000 mt in the same month last year.

** Spanish national distributor Exolum said the volume of vehicle fuel it supplied to the domestic market in the second quarter was up 21% year on year to 9.9 million cu m (7.9 million mt), on the back of surging kerosene volumes.

Kerosene volume, buoyed by rising air traffic as European travel restrictions were increasingly lifted, was 1.6 million cu m in Q2, a 170% increase year on year and included 578,000 cu m in June, the highest monthly volume since October 2019 but still 16% lower than June 2019.

New incidents at European refineries

** The units in Spain’s Bilbao refinery 1 were halted mid-afternoon July 7 following an electric fault at the main substation to the refinery. Refinery 1 has the smaller of the two crude distillation units and related units, including a hydrogen unit and a vacuum diesel desulfurization unit. The main conversion units are in a separate area. The refinery was working to identify and fix the fault, after which it will restart the halted units in sequence, the refinery said.

** The hydrocracking unit at Orlen Unipetrol’s Litvinov refinery in the Czech Republic has been shut down following an explosion and a fire, the company said late July 20. “On Wednesday before 11 pm an explosion and subsequent fire occurred inside our chemical complex in Litvinov due to a technical fault at the hydrocracking unit,” Orlen Unipetrol said in a statement. The fire has now been extinguished, the company said. The hydrocracking unit remains shut down and excess production is being burned off in a controlled manner. The company plans to assess the extent of the damage July 21 and an investigation has been launched to determine the cause of the accident.

** The Holborn refinery near Hamburg, northern Germany, had to briefly halt some units following power cut on July 23. The refinery is now fully operational.

** Operations at France’s Feyzin, which have been halted since July 9, were restarting, according to local media reports on July 21. Separately, the CGT labor union has called a strike at the refinery on July 28. The strike has been called following an incident earlier this month at the site. The strike action was called following a fire at a transformer July 9, caused by a short circuit, which resulted in a power cut and flaring. The fire was extinguished quickly and power restored on one of the two electrical lines feeding the refinery shortly afterwards, but the refinery has been put in safe mode. The union has argued that the staff reaction to the incident demonstrated high professionalism.

** The three main unions of Repsol workers, CCOO, UGT and STR, have called for six days of strike action in July and August, according to a joint statement issued July 13. The strike days will fall on July 15 through July 17 and Aug. 13 through Aug 5. Workers are seeking a salary increase that reflects current inflation levels, the unions said. The strike action will take place at gas stations as well as refineries and other work centers, the unions said. Repsol said that it respects the right to strike and reiterates its desire to reach a solution that satisfies both parties. The company said the call to strike came amid “important advances in the negotiations.” It did not say what impact the strike might have on production.

** Bosnia’s Brod refinery, which has been closed since 2019 for an upgrade, remains offline, according to local media reports July 2022. The refinery had been expected to resume operations after connecting to a gas pipeline, allowing it to switch to powering its operations with natural gas. The connection to the gas pipeline was completed in December 2021, according to Zarubezhneft’s website. The plant is usually supplied with crude oil via a branch line of the Adria, or JANAF, pipeline, which starts at the Croatian terminal of Omisalj on the island of Krk.

** Bavarian authorities have agreed to significantly increase the daily capacity of the Trans-Alpine Oil Pipeline with effect from July 15, Czech Prime Minister Petr Fiala said July 14. Fiala’s announcement at a press conference followed a meeting with Markus Soder, president of the Bavarian regional government.

The Czech Ministry of Finance said in a statement July 14 that the increased TAL capacity could add 1.5 million-2.0 million mt/year of extra oil deliveries to the country compared with the current volume of deliveries of 3.0 million-4.0 million mt/year.

The TAL pipeline starts at the Italian port of Trieste and runs through Austria and Germany. It splits near the Bavarian city of Ingolstadt with one arm branching westwards to Karlsruhe and the second east to the Czech Republic and the Kralupy refinery via the IKL pipeline. TAL supplies around 50% of the Czech Republic’s crude oil demand, with the other half supplied via the east-west Druzhba pipeline.

NEW AND ONGOING MAINTENANCE

Near-term maintenance New and revised entries

** Portugal’s Galp said it will carry out a planned maintenance at its Sines refinery in Q4, without providing details. The company said that nonetheless, it sees full-year 2022 refinery throughput at 90 million barrels of oil equivalent (246,975 b/d), a level that would be 9% above the nameplate capacity. The company processed 23 million barrels of oil equivalent (about 252,750 b/d) in Q2, it said, taking its first half volume to 44.8 million boe.

The company said it sees Q3 volume remaining strong and that high cracks are likely to persist this summer due to seasonality, but expects some pressure from high commodity prices.

** Eni’s Sannazzaro de Burgondi refinery in Northern Italy, which is partially offline, plans to restart its crude refining activities at the end of July, sources close to the refinery said. To do so, the refinery owned by Italian oil giant Eni is working on restarting its primary distillation Hydrocracking-2 plant, the sources said. The plant is also running maintenance on some other units. When the plant was partially placed offline some months ago, a large portion of the refinery personnel was sent to other refineries around Italy, and now Eni is working on transfering them back to Sannazzaro for the planned Hydrocracking-2 restart, one source said.

Some eight units, including the refinery’s visbreaking plant and its gas depuration unit, were placed offline some eight months ago at Sannazzaro. Since then, the refinery has only returned its I-Gas unit back to operations, with the others still remaining inactive, the sources said. No refining activity was ongoing at the plant, the sources said.

The refinery’s EST plant had originally been scheduled to restart in past years but has been kept offline so far amid the nationwide slump in demand due to the COVID-19 pandemic.

** MOL’s Duna (Danube) refinery in Hungary will undergo partial maintenance for about one month each in August and again in October, Peter Ratatics, head of Hungarian operations at MOL told Hungarian news portal Portfolio on July 10. In August, the Danube refinery will operate at about 35% of its capacity.

** An ongoing turnaround at MOL’s Bratislava refinery will end on July 20 as planned, Peter Ratatics, head of Hungarian operations at MOL told Hungarian news portal Portfolio on July 10. Slovakia’s Bratislava refinery started maintenance May 19 to last until July 20. The turnaround would involve 21 units and will take place in two time blocks. Among the units involved were distillation, hydrocracker and key petrochemical units such as the LDPE4 plastics production unit, “which is one of the most advanced in Europe,” the company said. During the maintenance work the refinery would replace the distillation furnace and pumps at the circulation centers and will also replace the distillation column with a new extension, “enabling a more efficient distillation process.

** A smaller 10,000 b/d reformer unit has been affected by the fire at Norway’s Mongstad refinery on July 3, according to market sources. The refinery has two reformers, with an overall capacity of around 25,000 b/d, according to S&P Global Commodity Insights. Equinor said that units involved in the production of some refined products have been affected by the fire on July 3 but the main plant remained in operation. The refinery completed scheduled maintenance, which started late April, in the last week of June.

Existing entries

** In the second half of 2022, Repsol is due to carry out a small turnaround at its Tarragona refinery, which will involve the isomax and hydrocracker units. The work was due to start Sept. 23 and continue to mid-November.

** A hydrodesulfurization unit HD2 remained offline at France’s Donges following a fire May 28. TotalEnergies halted operations at Donges on Nov. 30, 2020, due to weak margins, and restarted in early May.

** There is currently “a period of maintenance” underway at UK’s Lindsey refinery, the company said June 20. Prax Group completed an acquisition of the Lindsey refinery and its associated logistic assets in the UK from TotalEnergies in March 2021.

** Austria’s Schwechat refinery is expected to be fully operational and fully utilized in the second half of Q3 2022, OMV said. “Repair work began immediately after the incident and includes dismantling, ordering materials, and prefabrication,” OMV said. “As the damage occurred in the lower section of the distillation column, the damage site is difficult to access,” OMV also said. The refinery had some damage to its main CDU before restarting after maintenance. “During the legally required water pressure test, damage occurred to the outer shell of one of the columns of the crude oil distillation unit,” the company said. The damage occurred on June 3.

Schwechat has been undergoing a turnaround since April 19. OMV also said that for the duration of the repairs it has established a new supply system to supply the markets served by Schwechat and would also use the refinery’s smaller CDU. The measures taken allow the refinery to operate at around 20% of capacity

** Israel’s Ashdod is currently carrying out works that started in early June, the company said June 14. The maintenance, which was originally planned to start in May, has been slightly delayed.

** OMV has started the shutdown of units at the Burghausen refinery for planned general maintenance. The units were due to be halted between June 17-27. It has previously said the maintenance would last between June 22 and Aug. 7. The turnaround will include also the Borealis polyolefin production site. The last turnaround took place in 2014, followed by a partial shutdown of the refinery in May 2018. In addition, expansion work will be carried out to increase ethylene and propylene production. The expansion is expected to increase ethylene and propylene production by around 50,000 mt/year.

** Germany’s Lingen refinery will carry out a major maintenance in April 2023. Preparations for the turnaround, which takes place usually once every five years, are underway. During the maintenance, a vacuum column will be replaced.

** Eni’s Livorno refinery will restart its lubricants activities in the third quarter of 2022 after completing maintenance, restoration and upgrade works at the unit following the November fire that damaged it, a company spokesperson said.

Livorno restarted its gasoline and diesel refining units in the first week of April after wide-scale maintenance and upgrade works that had started in January were completed.

** Turkey’s Tupras plans maintenance work at Batman’s crude oil and vacuum unit lasting four weeks during Q4; at Izmir — revamping the crude, CCR & isomerization, and desulfurizer units, lasting nine weeks during Q4 and of the HYC unit lasting four weeks, also during Q4; at Izmit — periodic maintenance of the crude oil and vacuum and HYC units lasting six weeks at the end of Q3.

** Italy’s ISAB refinery in Sicily is running a series of routine maintenance and upgrade works on pumps, compressors, pipelines, jetties, desulfurization units and conversion units both at its north and south refinery plants. ISAB is made up of two refineries connected by a pipeline.

** Greece’s Hellenic Petroleum plans full turnaround at Thessaloniki in the second half of the year. The maintenance at Thessaloniki will last between six and eight weeks.

** Shell plans to end crude processing at the Wesseling site within the Rhineland refining complex in 2025 as the facilities are repurposed for non-fossil fuel feedstocks and renewable hydrogen production. Shell outlined plans for the facility to take a variety of new biogenic and waste feedstocks, underlining that no final investment decision had yet been taken, and crude processing would still take place at the adjoining Godorf site. The Wesseling portion of the Rhineland refinery accounts for half the overall refining capacity, or 8 million mt/year.

** The Gunvor Group said that its Ingolstadt refinery in Germany will undertake projects focused on heating systems and exchangers “to continue improving its energy efficiency and reduce its emissions.” A planned turnaround in 2023 will allow additional reductions, by carrying out projects on the FCC.

** Czech Unipetrol said that following the turnaround at its Litvinov plant in Q2 2020, the refinery has prepared production for a new four-year cycle. Thus, the next turnaround is due in 2024.

** The Holborn refinery near Hamburg, northern Germany, plans its next turnaround in 2023. Its previous maintenance was in the autumn of 2018. The refinery carries out major works every five years.

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Source: Platts

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