With the advent of a decarbonized society, the business environment surrounding the global oil industry is undergoing drastic changes. Especially in Europe, it is clear that many oil refiners are finding a way out in biofuels. (Photo quoted from Neste's official website)


In Neste, Finland, plans are underway to shift refinery operations and focus on renewable fuel production. To begin with, the company completely closed its Naantali refinery (with a refining capacity of 55,000 BPD) in March this year.


In Belgium, major trader Gunvor closed the Antwerp refinery (with a refining capacity of 115,000 BPD) in 2020. In the UK, Petroineo is considering suspending some equipment at the Grangemouth refinery (with a refining capacity of 420,000 BPD) on the east coast of Scotland.


Spanish energy giant Repsol has already shut down its crude oil atmospheric distillation unit at the Puertollano refinery (with a refining capacity of 150,000 BPD) in central Castile-La Mancha in April of this year.


While oil refineries that close refineries are prominent, there are also moves to switch to biofuels. In September 2020, France's Total decided to develop biorefinery at the Grandpuits refinery (refining capacity of 100,000 BPD), bioplastic manufacturing, installation of plastic recycling equipment, and construction of solar power generation facilities. ..


In Sweden, Preem has canceled the Residence Oil Conversion Complex (ROCC) project to build a slurry-catalyzed residual oil hydrocracking unit at the Lysekil refinery (refining capacity of 220,000 BPD), making it the largest renewable in Scandinavia. To become a fuel company, Lysekil refinery has begun to convert to bio-refinery.


Italy's Eni is said to have begun remodeling work about a year and a half ago with the aim of making the Gela refinery on the Mediterranean island of Sicily biorefinery. There is also information that the construction of the BTU (Biomass Treatment Unit) plant has been completed. The Gela refinery has introduced a hydrorefining process for biofuel production jointly developed by Eni and Honeywell UOP.


The new BTU will be biodiesel, bio naphtha, bioGPL (bioLPG) and biodiesel, bio naphtha, bioGPL (bioLPG) and oils produced by the processing process of fish and meat in Sicily, waste cooking oil, and castor oil produced in Tunisia, Africa. It is expected to become a pretreatment device that produces bio jets.


Eni plans to double its biorefinery production capacity to approximately 2 million tonnes / year by 2024 and to 5-6 million tonnes / year by 2050. It is also reported that the Livorno refinery in northwestern Italy (with a refining capacity of 84,000 BPD) is considering converting to biorefinery.


With headwinds in the refining business, energy companies seek to survive by working on biofuel development. On the other hand, there are also moves to postpone investment decisions. In addition to forecasting a decline in fuel demand due to the spread of the new coronavirus (COVID-19), there is a move to review the business itself from the perspective of imposing a burden on the environment.


Vattenfall, a major power and energy company headquartered in Stockholm, Sweden, announced in late June that it would reconsider its investment decision for a biomass power plant (120 MW scale) project to be built in Diemen, the Netherlands. The reason is that local residents and environmental protection groups are campaigning against construction. The company has said it will continue discussions, but has already announced that it will postpone its final investment decision (FID) after this summer.


The International Energy Agency (IEA) said in its Global Oil Demand Forecast Report that "the outlook for the refining business is still bleak." In particular, refineries in Europe are "excessive" in refining capacity while demand is declining.


Some experts say, "As the transition to a decarbonized society accelerates, refinery operations will become increasingly difficult. European energy companies leading decarbonization policies will eventually move to other countries and regions." 


Jiro Arihara

Journalist based in Tokyo. In addition to approaching trends in international politics and the world economy from the perspective of resources such as energy, minerals, food & grain etc.