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Excess Refining Capacity Weighs on Oil & Gas Majors

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This topic contains 1 reply, has 1 voice, and was last updated by  Charles Randall 9 years, 6 months ago.

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  • #2253

    basil parmesan
    Participant

    Excess Refining Capacity to Weigh on Oil & Gas Majors

    NASDAQ Community, May 20, 2011Chevron’s refining profit margins could remain suppressed if excess refinery capacity issues continue to impact the industry. The CEO of Valero Energy Corp. commented that excess capacity exists in refineries in several regions including North America, Western Europe and Japan despite several refinery closures. We believe that Chevron’s competitors like Exxon Mobil, ConocoPhillips, BP and Anadarko are also aware of the situation.

    According to EIA data for OECD refinery utilization rates, utilization declined from 88% in November 2007 to 77% in August 2009. Low utilization rates still seem to be continuing and we can expect more refinery shutdowns to ease off margin pressure.

  • #5074

    Charles Randall
    Participant

    This statement reminds me of the verse in a song “Baby you ain’t seen nothing yet”! Majors being “Aware – is one great UNDERSTATEMENTS”.
     
    Wait till all new mega refineries in Mideast, India & China are online at end the next coker cycle (2012-2016) and trying export Gasoline/Diesel their diesel driven domestic demand cannot use! All new global expansions at end of this coker cycle (2006-2011) are going to hurt utilizations (as they mention) – especially lower gasoline demands partly due to all ridiculous push for ETOH to go above 10% blends until it gets reversed by food crisis & prices/damage car MPG/consumer revolts – which has already started on E15 shoveback by consumers in Europe & some parts US.
     
    The Utilizations below 75% are not profitable or sustainable and without a over-active gasoline consuming US demand to export into – Global refining is headed back to diesel driven utilization (for non-petrochemical integrated refiners that is) which locked Africa, Latin/Sout America, Russia & Europe into the 75-80% utilizations for decades. Most of India, China & Mideast refineries will be integrated with petrochemical plants enough to avoid diesel choke point EXCEPT for those worldscale plants designed to be Export driven.
    Regards

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