(Corrects units in paragraph 12 to tonnes from barrel)
* Strong refining profits offset slump in oil productionrevenue
* More than 1.5 mln bpd of European refining capacity atrisk
* Total, Eni, BP eye more shutdowns and sales
By Libby George and Ron Bousso
LONDON, Feb 13 (Reuters) - Refining is propping up Europeanoil majors hit by a sharp drop in the price of crude, butexecutives are making it clear -- more refineries will close asa result of overseas competition and weak domestic demand.
Profit from processing crude oil into products such asdiesel, gasoline and aviation fuel more than doubled on averagein the fourth quarter of 2014 as the rapid decline in oil pricessince June boosted margins.
The results from refining and trading, known as downstream,were critical in offsetting a slump in profits from crude oilproduction, which suffered along with oil prices in the secondhalf of 2014, according to company results.
But despite the "refining spring", as much as 2 millionbarrels per day in European capacity is destined for the axe. Total, Royal Dutch Shell, BP and Eni plan to sell, close or cut millions of bpd of refining.
"Even if we have good results, the fundamentals in Europeare still the same," Total's Chief Executive Patrick Pouyannesaid this week after unveiling plans to halve production at its207,000-bpd Lindsey refinery in Britain.
Pouyanne, who until October led Total's refining division,said at least 10 percent of European refining capacity, some 1.5million bpd, still needed to close. Total would announce areduction in its French refining capacity in spring, he said.
Italy's Eni also plans to slash its refiningcapacity.
Analysts at Vienna-based JBC Energy say that figure couldeasily swell to 2 million bpd, or roughly 10 European plants, asultra-modern mega-refineries in the Middle East swamp Europewith refined products.
"We are redoubling our efforts on downstream costs," ShellChief Executive Ben van Beurden said.
BP said it planned to sell around $5 billion of assets in2015, including in downstream, having closed or sold 14refineries worldwide since 2000.
Swiss bank UBS said in a note that nearly 500,000 bpd ofclosures could come this year, citing Total's 153,000-bpd LaMede as the most vulnerable, along with Eni's Taranto andLivorno, as well as the already planned closure of Tamoil's55,000-bpd Collombey refinery in Switzerland.
SWAN SONG
Total's refining margins in Europe nearly tripled in thefourth quarter, rising to $27.6 per tonne from $10 per tonne ayear earlier.
Margins can vary hugely among refineries, but the downstreamprofits bear testament to the rosy picture.
At BP, refining and trading profits shot up in the fourthquarter to $1.21 billion from $70 million a year earlier, whileShell marked a near-tripling in downstream earnings to $1.55billion. Total's refining and chemicals division profits morethan doubled to $956 million.
Storage, an unlikely star of the fourth quarter because of amarket structure in which future prices are higher than currentlevels, is also on the block.
The no-holds-barred strategy is no surprise in a world awashwith refined products, and as oil majors continue to shedassets.
"Refineries, downstream: they are a low-margin business,"said oil analyst Michael Dei-Michei of JBC Energy. "They will gowhere they can get a better return ... the view of the future isupstream." (Editing by Dale Hudson)
