LONDON (Reuters) - 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 revolution.
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