Europe oil refiners optimistic after Sunoco’s exit

U.S. Sunoco Inc.’s decision to leave the refining business has brought relief to European oil refiners as price for the Nigerian light-low sulphur crude is expected to drop. Sunoco’s two refineries received some 217,000 barrels of Nigerian crude oil per day, which accounts for about 10% of Nigeria’s export volume of 1.8-2 million barrels per day (bpd). After leaving the low-margin refining business, Sunoco will focus on pipeline and retail marketing operations. This will leave the main processing units of its Philadelphia and Marcus Hook refineries idle unless it is sold by July 2012. “From the point of view of the overall oil refining sector, permanent closure of the two refineries would be the best solution because it would be another contribution towards the total of around 7 million bpd, which we assess will need to have been closed between 2008 and 2015 if refining margins are to improve in future years,” Roy Jordan of the energy consultancy Facts Global Energy in London said.
Plant closures will lower price of Nigerian crude oil
The potential closure of the two plants which have a combined capacity of about 513,000 bpd will mean a lower price for Nigerian crude oil. This could in turn lower prices for other high quality crude from the Caspian region and the North Sea. Sunoco’s capacity comprises close to a third of the total in the East Coast and is higher than Royal Dutch Shell’s Pernis plant, which has a capacity of 412,000 bpd and is Europe’s largest. The closures will also affect refining margins in the Atlantic Basin. Olivier Jakob from Petromatrix in Switzerland said, “If the refineries were to shut down this could have a significant impact on the sweet crude oil balances in the Atlantic Basin, depending of course on where some of the replacing refining capacity will be run and what sort of crude oil are then used.” (September 9, 2011)