Total plans 1.2 billion euro investment in Antwerp refinery

LONDON Mon Sep 24, 2012 4:01pm EDT

LONDON (Reuters) - Total (TOTF.PA) plans to invest over 1 billion euros at its Belgian refining and petrochemical complex - Europe's second-largest - to boost its diesel-making capacity and create cost-cutting synergies, a senior executive said on Monday.

If Total goes ahead with the investment it could bring Europe's largest refiner extra cash of $500 million a year, Patrick Pouyanne, head of the refining and petrochemical branch, told Reuters.

The move, similar to one being carried out at its French Gonfreville refinery between 2011 and 2013, comes as the group said during its investor day on Monday that it would increase net operating income from its refining and petrochemical branch by $650 million per year from 2015.

Total wants to focus on investing in its larger, integrated petrochemical and refining plants to maximize synergies, while keeping investment at other European plants to a minimum.

"There, we will invest less. We will have to extract more value from the investments already made in the last five years," he said.

Total initiated the merging of its refining and petrochemical activities in 2011, a reshuffling of its global downstream business meant to counter declining gasoline demand in Europe and the United States.

"We are planning to invest 1.2 billion euros at our Antwerp refining and petrochemical complex with 800,000 euros for the refining side," Pouyanne said on the sidelines of the investor event.

While production capacity at the 350,000-barrels-per-day Antwerp plant would not be cut, it would produce less heavy fuel and more diesel, Pouyanne said, without specifying by how much.

Total also plans to save money by replacing costly, oil-based naphtha - used to make petrochemical products - by gas flared in the refinery.

"Our basic idea is to boost profitability of our refining and petrochemical branch in Europe," Pouyanne said.

While refining margins have increased in the past few months, in line with higher oil prices, the sector still suffers from a structural overcapacity in fuel products.

This is mainly due to falling demand and because European refineries are designed to produce more gasoline than diesel, which is mostly consumed by motorists in the bloc.

Total, which cut its European refining capacity by 500,000 barrels per day between 2007 and 2011, said it was now aiming to cut its exposure to European refining and petrochemicals by 20 percent by 2017 and wants to grow in Asia and the Middle East.

Pouyanne said Total was in discussions with Saudi Aramco to build a petrochemical platform at a refinery being built in Jubail. Talks are at an early stage.

Asked about Total's project with Kuwait Petroleum Corp and China's Sinopec (0386.HK) to invest in a refinery in southern China, Pouyanne said it was still at a very early stage, comparable to where Jubail was in 2005-2006.

(Reporting by Muriel Boselli; Editing by Dale Hudson)

(muriel.boselli@reuters.com; +33149495270)

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