* European gasoline demand expected to rise in coming years
* Coastal refineries with high gasoline output could benefit
* Change in EU diesel tax benefits could cost 16 billioneuro
By Ron Bousso and Libby George
LONDON, Sept 25 (Reuters) - Some of Europe's strugglingrefineries could get an unexpected boost from Volkswagen's diesel emissions scandal if once-dominant gasolineregains its popularity.
Europe's refineries, many of which were built in the 1950sto support booming petrol demand, have been hit over the past 20years by shrinking fuel demand and government incentives thatskewed car sales toward diesel engines, which were seen as moreefficient and emitted less carbon dioxide.
The rise of the diesel car, which accounted for 50 percentof car sales last year, has forced Europe to rely on dieselimports while its refineries struggled to find overseas marketsfor excess gasoline, which has put heavy pressure on profits andprompted a wave of plant closures in recent years.
Volkswagen's diesel emissions rigging scandal in the UnitedStates could reverse the fortunes of refineries with highgasoline output such as Valero's 220,000 barrel per day(bpd) Pembroke refinery in Wales, which has a 49.4 percentgasoline yield, and Exxon Mobil's 273,000 bpd Fawleyrefinery in southern England, with 41.6 percent gasoline yield,according to consultancy Wood Mackenzie.
"If Europe... became more gasoline-driven it would be verygood for us because we would have to export less products,"Patrick de la Chevardiere, Chief Financial Officer at Total, Europe's largest refiner, said this week.
Europe's most advanced plants such as Exxon Mobil's 320,000bpd Antwerp refinery, which is planned for a $1 billion upgradeto boost its diesel yield and Royal Dutch Shell's 404,000 bpd Pernis refinery, stand to benefit less from highergasoline demand.
"Coastal refineries would get the benefit of being able tosell more of their production into the local market and soachieve higher prices. Their surplus would also get a bettervalue in the export markets," said Jonathan Leitch, WoodMackenzie's research director.
"Inland refineries would get a benefit from increased local(gasoline) demand and could maintain import parity pricingrather than export parity pricing in some cases."
Already, an unexpected jump in global gasoline demand thisyear as a result of collapsing oil prices has led many plantsaround the world to maximise their gasoline yield.
"It's not so easy to increase gasoline output," said MattiLehmus, vice president of oil products for Finland's Neste, whose 206,000 bpd Porvoo refinery is one of Europe'smost advanced plants. "Typically, it means constructing newunits... Step changes in gasoline takes significant investment."
WoodMackenzie estimates that most refineries can only shift3-5 percent of their output from one fuel type to the other.
ECONOMIC SENSE
Ultimately, money could tip the balance for Europe's fuelconsumption.
A rollback of the favourable retail tax treatment of dieselacross Europe would cost drivers 16 billion euros in the firstyear, making it economically advantageous for 15 percent ofdrivers to switch to gasoline cars, according to Wood Mackenzie.
Already, diesel demand in Europe is slowing.
"I do think the 'dieselisation' has plateaued and there willbe a little bit of a comeback of gasoline, particularly forsmall vehicles and hybrids," said Dario Scaffardi, generalmanager of Italian refiner Saras.
"Today it makes more sense from technical standpoint forsmall engines to be gasoline."
Despite a spectacular surge in refining profits over thepast year as a result of surging global fuel demand,particularly for gasoline, following the oil price collapse,more refinery closures are expected in Europe by the end of thedecade, including by Total and Italy's Eni.
Still, Leitch, Scaffardi and others note the nearly threedecades of "dieselising" Europe's fleet and an average 12-yearlifespan for diesel cars means any switchover would be slow.
"Over the next few years, things are going to get tough forEuropean refiners," Leitch said.
"But this could help some of them." (Additional reporting by Karolin Schaps, editing by DavidEvans)
