* Rare major investment in struggling European sector
* New unit to turn high sulphur fuels into diesel
LONDON, July 2 ExxonMobil Corp. will
invest $1 billion in its 320,000 barrel per day (bpd) Antwerp
refinery, the company said on Wednesday, even as many firms pull
back from a European industry hammered by low refining margins.
ExxonMobil said it would install a new unit at the Antwerp
plant to turn high sulphur oils created as a byproduct of the
refining process into various types of diesel, including
shipping fuels that will meet new environmental laws.
The investment is significant as it shows major firms still
see a future in oil refining in Europe, despite a series of
closures in recent years as they adjust to lower demand and
increased competition from overseas.
"Despite extremely low margins and industry-wide losses in
Europe, due primarily to excess refining capacity, ExxonMobil is
investing for the long term in its strategic Antwerp refinery,"
the company said in a statement.
"The investment addresses an industry shortfall in
capability to convert fuel oil to products such as diesel."
The company said it was taking a long-term view of the
European sector and was evaluating other potential investments
to strengthen "strategic" refineries in the region.
Refining margins in Europe have fallen close to multi-year
lows as demand has been hit by policies designed to reduce oil
consumption, and as new mega-refineries in India and the Middle
East have started to compete for market share.
The United States has also become a bigger exporter of oil
products like diesel to Europe, as its refineries have benefited
from lower domestic crude oil costs created by the shale oil
Industry analysts estimate that at around five plants will
need to close in Europe to balance the market, but unprofitable
plants often struggle on, sometimes with support from
governments fearful of becoming reliant on other countries for
their fuel needs.
(Reporting by David Sheppard; editing by Tom Pfeiffer)