OSLO, Nov 25 (Reuters) - An increasing number of European oil refineries face early closure as developing nations build their own capacity and rising volumes of fuel do not need refining, the International Energy Agency’s chief economist said.
A large number of Europe’s refineries already are idled or operating below capacity as consumers such as India and China increasingly prefer importing crude to refined products and Middle East producers prefer exporting products to crude, economist Fatih Birol told a conference in Oslo.
“There is a growing share of natural gas liquids coming to (the market) as a byproduct of gas production, and they do not need to go to refineries,” Birol said.
“We already have spare and idle capacity in the refinery market, and on top of that we are seeing new refining capacity built, especially in emerging countries,” she added.
”We are going to see, we believe, a substantial amount of refineries risking closure ... in the next 20 years and a significant portion of them will be in Europe.
A flood of U.S. and Asian diesel and shrinking overseas demand for gasoline have been pummelling European refiners, raising fears over more closures.
European refinery output fell 6 percent in October from a year earlier as plants cut production due to poor margins in addition to seasonal maintenance.
Birol added that top Middle East producers are also becoming big product consumers because of their own growing industries, which creates incentives for them to build refining capacity to stop having to import back their own oil in refined form.
Close to 2 million barrels per day of European capacity have been mothballed since 2009, and ageing plants that rely more heavily on gasoline exports are most vulnerable, experts said. (Reporting by Balazs Koranyi; editing by Jane Baird)