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Oil refiners shut plants as demand losses seen continuing

FILE PHOTO: Pump jacks operate at sunset in Midland, Texas U.S. February 11, 2019. REUTERS/Nick Oxford/File Photo

REUTERS August 14, 2020

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HOUSTON/MANILA (Reuters) – Oil refiners are permanently closing processing plants in Asia and North America and facilities in Europe could be next as uncertain prospects for a recovery in fuel demand after the coronavirus pandemic triggered losses.

The pandemic initially cut fuel demand 30% and refiners temporarily idled plants. But consumption has not returned to pre-pandemic levels and lower travel may be here to stay, leading to tough decisions for permanent shutdowns. Here are some of the plants involved:

Royal Dutch Shell will permanently shut its 110,000-barrel-per-day Tabangao facility in Philippines’ Batangas province, one of only two oil refineries in the country. Shell blamed a pandemic-led slump in margins for turning the plant into an import terminal.

There have been no permanent plant closures in Europe due to the virus. However, Gunvor Group said in June it was considering mothballing its 110,000 bpd refinery in Antwerp as COVID-19 hurt the plant’s economic viability.

Marathon Petroleum, the largest U.S. refiner by volume, plans to permanently halt processing at refineries in Martinez, California, and Gallup, New Mexico. The larger plant in California will become an oil-storage facility and may convert to produce renewable diesel, a fuel made from industry waste and used cooking oil.

Other plants in Japan, Australia and New Zealand could be likely candidates for closure ahead, said Mia Geng, at consultancy FGE.

Energy consultancy Wood Mackenzie separately estimated 1.4 million barrels per day, about 9%, of refining capacity in Europe is at risk of shut-downs by 2022-2023. It put plants in Netherlands, France, and Scotland on a list of potential closures.

Reporting by Ahmad Ghaddar, Enrico Dela Cruz, Seng Li Peng and Erwin Seba; editing by David Gregorio

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