December 30, 2011 / 2:50 PM / 7 years ago

REFILE-European motorists unscathed if refineries close

* Petroplus to close French, Belgian refinery
    * Imports, strong supply will limit impact
    * Inland nations more vulnerable

    LONDON, Dec 30 (Reuters) - European motorists and
households should expect a smooth start to 2012, free from
shortages or queues for fuel, even if Europe's largest
independent refiner shuts all five of its plants, because rival
suppliers will jump into the breach.   	
    Cash-strapped Petroplus will begin shutting down
its Antwerp refinery on Sunday or Monday unless crude shipments
arrive, a union in Belgium said, and it is closing down its
162,000 barrel per day Petit Couronne plant in France on Monday.
 	
    There is no assurance that its three other plants -- 
Ingolstadt in Germany, Cressier in Switzerland and Coryton in
Britain -- will remain operational, which means other refiners
would have to ramp up processing to fill the gap.	
    But excessive refining capacity in Europe means this can be
easily achieved. Rivals will be more than happy to process more
crude after the profitability of turning crude into products --
or margins in industry jargon -- jumped this week after
Petroplus revealed its troubles with creditors. 	
    U.S. refiners, which traditionally ship large volumes of
diesel to Europe, also will be happy to make up for any
Petroplus deliveries.	
    "The collapse of the Petroplus refining system in Europe
would be good news for the U.S. Gulf refiners, because there is
not enough demand in the U.S. for their level of refinery
utilisation, hence the U.S. Gulf refineries will need to
maintain a high level of product exports," said Olivier Jakob,
with the Petromatrix consultancy.	
    Petroplus accounts for more than 4 percent of the European
Union's refining capacity, but previous overcapacity in the
market, slack demand in the midst of a euro debt crisis and the
ability to replace lost capacity with imports from the United
States and Asia mean that end-users will not be severely
affected if the refineries shut.	
    	
    WHOLESALE MARKET, NOT RETAIL	
    Traders' costs and wholesale prices are likely to rise
ultimately, but that rarely translates into hikes in retail
prices, which are much more affected by changes in taxation.	
    A nationwide refiners' strike in France in 2010, which
knocked out much more refining capacity, led to a massive change
in flow of oil and oil products across the continent and led to
some local shortages but still had a minimal impact on prices at
the pump.	
    "Import substitutions are relatively straightforward for
coastal locations," said Alan Gelder, head of Oils Research at
Wood Mackenzie, adding that inland locations such as Switzerland
could present some challenges.	
    "The closure of sites such as Cressier will be a lot more
movement of products down the Rhine and benefits (other)
refiners inland such as Exxon and Shell,"
Gelber said.	
    But Niklaus Boss, director general of the Swiss oil industry
body, said the closure of the Petroplus Swiss refinery should
not lead to major problems there.	
    "It supplies 25 percent of the Swiss market, but we have so
many other ways to get imports of crude and products. There is
the pipeline from Marseille and railways as well as ships on the
Rhine. We can cover it without any problem."	
    Oil products such as gasoline, diesel and heating oil are
barged down the Rhine. A dry autumn in Europe led to low water
levels that increased the cost of freight, but these costs
retreated recently as the river rose due to higher rainfall.	
    Gasoil futures have gained over 1 percent this week,
while Brent crude has lost nearly 1 percent, and the
gasoil premium to Brent is up around 12 percent to around $16 a
barrel.
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