Squeezed by demands for cleaner, lower carbon fuels, anemic demand, a weak margin outlook and the growing demand for low sulfur middle distillates, European refiners face a "deep crisis" without incentives to ease the pain, Maugeri said.
Speaking at a refining conference in Brussels, Maugeri called for intervention on a European level to close excess gasoline capacity and favor investments to increase gasoil production and deep conversion projects.
Fiscal measures by EU member states could accelerate the closures of sites and restructuring of less competitive ones, especially sites configured towards gasoline output, he said.
Specifically, Maugeri suggested incentives to promote less-profitable refineries' partial or full repurposing towards other industrial uses according to their location.
Maugeri also called for fiscal bonus and incentives for investments, including grace periods for investment cash flows, allocation of specific funds for converting gasoline units into diesel production and for installing new middle distillates units.
Since European demand for diesel overtook gasoline in around 1998, the trend of declining gasoline demand has persisted, leaving a sharp and growing overhang of European gasoline production.
Weak global fuel demand recovery, the related structural loss of gasoline export trade to the US, and competition from new export-oriented refineries in the Middle East has left many European refiners more vulnerable than ever to weak margins, Maugeri said.
While much of Europe's growing diesel deficit has been met by Russian middle distillates imports, new competition for the Russian product from Asian consumers could also threaten these supplies, he said. He said some oil companies are reluctant to push for the introduction of fiscal incentives,
however, amid concerns over falling foul of anti-competition laws.
Led by BP and Shell, oil majors have sought to close or sell off their less complex, weakest-performing plants in Europe over recent years to focus on larger, highly complex refining assets.
China Chemical Weekly: http://news.chemnet.com/en/detail-1411716.html
