European oil companies have been reporting strong refining results for the second quarter amid strong margins and healthy demand.
** Essar, the owner of the UK’s Stanlow refinery, said its domestic sales over April-June — the company’s first quarter — amounted to 1.72 million mt, up 10% year on year, and were up 8% at 3.2 million mt in the first half of 2022.
Essar Oil UK also said it maximized diesel production and sourced non-Russian diesel in support of the UK’s ban on Russian imports. The increased demand “for locally produced fuel amidst the tight global supply situation” has driven its stronger financial performance over April-June.
** Spanish integrated energy group Repsol saw its second-quarter domestic refining margin jump more than threefold against the previous three months to a record $/b. The Q2 figure was a 243% increase from Q1’s $/b margin and 16 times greater than its Q2 2021 figure of $/b, according to a provisional report filed at the Madrid stock exchange. “A reduction in European refining capacity since 2010, growing competition in other regions and the perspectives from the energy transition have also created challenges for the sector, which has increased its activity to meet the demand amid difficult circumstances,” it said. Repsol’s refining rate in Q2 increased to 91% from 83% in Q1 and from 71% in Q2 2021, it said. Its conversion rate also increased to 97% in Q2 from 80% in Q1 and 73% in Q2 2021. In its petrochemicals business, the company reported a margin of Eur1,/mt in the quarter, from Eur1,/mt in Q4 2021, but wider than the /mt recorded in Q1 2021.
** Cepsa’s second-quarter refinery output rose 5% year on year to 5.4 million mt, or 414,000 b/d, with record high margins. The utilization of Cepsa’s refining capacity was 90% in the quarter, up from 81% in the year-ago quarter and 83% in Q1.
The company said its Q2 refining margin jumped fourfold year on year to a record high of $/b, from $/b in Q2 2021. The margin surged eightfold from $/b in Q1.
** Portuguese integrated energy group Gap reported record high refining margin in Q2 of $/b — a nine-fold increase year on year and threefold increase quarter on quarter. Galp boosted throughput at the 220,000 b/d Sines refinery by 9% year on year and 5% quarter on quarter to 22.9 million barrels (about 251,000 b/d).
** Independent commodity trader Gunvor’s earnings surged in the first half of 2022 despite trading volumes slipping 16% on the year, as the company benefitted from major trade disruptions in the wake of the invasion of Ukraine, it said in a statement July 21. “Particularly encouraging is the return of substantial profitability in our refining operations and our shipping. This has resulted mainly from tight refining capacity worldwide and strong demand, specifically in Europe, for middle distillates, including diesel, heating oil, and jet fuel. As a leading global ship charterer, Gunvor benefitted from strong demand for spot charter capacity,” CEO Torbjorn Tornqvist said in the statement.
** Austrian OMV said its new refining indicator margin for Europe based on Brent jumped to $/b in Q2, up from $/b in Q1 and from $/b a year earlier. Its previous indicator margin was based on Russia’s Urals crude values, which are no longer a relevant reference after falling sharply due to Western sanctions. OMV also reiterated that its Schwechat refinery in Austria is expected to be fully operational in the second half of Q3 2202. it said it expects the total financial impact from the June 3 damage to the plant which occurred while restarting after maintenance to be around Eur200 million ($202 million).
** TotalEnergies’ average refining margin more than tripled to a record high in the second quarter of 2022 as Europe’s biggest refiner benefitted from a strong post-COVID recovery in fuel demand outstripping available refining capacity. TotalEnergies’ “variable cost margin” for its European refineries averaged $/mt, or about $/b, in the second quarter, compared with $/mt in the previous quarter and $/mt in the year-earlier period, it said in a July 15 trading statement.
Separately, strong demand continued to define the European market.
** Italian demand for refined oil products in June rose by 151,000 mt, or 3.1%, to 5.1 million mt from the same month last year, data from industry group Unione Energie per la Mobilita (UNEM) showed. Monthly demand was slightly above June 2019, which was prior to the outbreak of the COVID-19 pandemic, when oil product demand was 4.9 million mt, the association said.
Overall, gasoline gained 3.3%, or by 22,000 mt compared to June 2021. Diesel, meanwhile dropped 0.5%, or by 10,000 mt compared to the same month last year.
Jet fuel demand jumped 126% last month compared to June 2021 to 379,000 mt, though was still down 19% compared to the same month in 2019. Bunker fuel demand jumped 12% in the month of June compared to 305,000 mt in the same month last year.
** Spanish national distributor Exolum said the volume of vehicle fuel it supplied to the domestic market in the second quarter was up 21% year on year to 9.9 million cu m (7.9 million mt), on the back of surging kerosene volumes.
Kerosene volume, buoyed by rising air traffic as European travel restrictions were increasingly lifted, was 1.6 million cu m in Q2, a 170% increase year on year and included 578,000 cu m in June, the highest monthly volume since October 2019 but still 16% lower than June 2019.
Meanwhile there have been new incidents at European refineries.
** The units in Spain’s Bilbao refinery 1 were halted mid-afternoon July 7 following an electric fault at the main substation to the refinery. Refinery 1 has the smaller of the two crude distillation units and related units, including a hydrogen unit and a vacuum diesel desulfurization unit. The main conversion units are in a separate area. The refinery was working to identify and fix the fault, after which it will restart the halted units in sequence, the refinery said.
** The hydrocracking unit at Orlen Unipetrol’s Litvinov refinery in the Czech Republic has been shut down following an explosion and a fire, the company said late July 20. “On Wednesday before 11 pm an explosion and subsequent fire occurred inside our chemical complex in Litvinov due to a technical fault at the hydrocracking unit,” Orlen Unipetrol said in a statement. The fire has now been extinguished, the company said. The hydrocracking unit remains shut down and excess production is being burned off in a controlled manner. The company plans to assess the extent of the damage July 21 and an investigation has been launched to determine the cause of the accident.
** The Holborn refinery near Hamburg, northern Germany, had to briefly halt some units following power cut on July 23. The refinery is now fully operational.
** Operations at France’s Feyzin, which have been halted since July 9, were restarting, according to local media reports on July 21. Separately, the CGT labor union has called a strike at the refinery on July 28. The strike has been called following an incident earlier this month at the site. The strike action was called following a fire at a transformer July 9, caused by a short circuit, which resulted in a power cut and flaring. The fire was extinguished quickly and power restored on one of the two electrical lines feeding the refinery shortly afterwards, but the refinery has been put in safe mode. The union has argued that the staff reaction to the incident demonstrated high professionalism.
** The three main unions of Repsol workers, CCOO, UGT and STR, have called for six days of strike action in July and August, according to a joint statement issued July 13. The strike days will fall on July 15 through July 17 and Aug. 13 through Aug 5. Workers are seeking a salary increase that reflects current inflation levels, the unions said. The strike action will take place at gas stations as well as refineries and other work centers, the unions said. Repsol said that it respects the right to strike and reiterates its desire to reach a solution that satisfies both parties. The company said the call to strike came amid “important advances in the negotiations.” It did not say what impact the strike might have on production.
** Bosnia’s Brod refinery, which has been closed since 2019 for an upgrade, remains offline, according to local media reports July 2022. The refinery had been expected to resume operations after connecting to a gas pipeline, allowing it to switch to powering its operations with natural gas. The connection to the gas pipeline was completed in December 2021, according to Zarubezhneft’s website. The plant is usually supplied with crude oil via a branch line of the Adria, or JANAF, pipeline, which starts at the Croatian terminal of Omisalj on the island of Krk.
** Bavarian authorities have agreed to significantly increase the daily capacity of the Trans-Alpine Oil Pipeline with effect from July 15, Czech Prime Minister Petr Fiala said July 14. Fiala’s announcement at a press conference followed a meeting with Markus Soder, president of the Bavarian regional government.
The Czech Ministry of Finance said in a statement July 14 that the increased TAL capacity could add 1.5 million-2.0 million mt/year of extra oil deliveries to the country compared with the current volume of deliveries of 3.0 million-4.0 million mt/year.
The TAL pipeline starts at the Italian port of Trieste and runs through Austria and Germany. It splits near the Bavarian city of Ingolstadt with one arm branching westwards to Karlsruhe and the second east to the Czech Republic and the Kralupy refinery via the IKL pipeline. TAL supplies around 50% of the Czech Republic’s crude oil demand, with the other half supplied via the east-west Druzhba pipeline.
