By Ahmad Ghaddar
LONDON, Nov 12 (Reuters) - Permanent refining capacity
closures expected for 2020-2021 have risen to about 1.7 million
barrels per day (bpd) as the COVID-19 pandemic hammers demand
for oil products, the International Energy Agency said on
Thursday.
About a dozen refinery closures have been announced in the
past few months, the IEA said, with the bulk of capacity
closures - over 1 million bpd - happening in the United States.
"There were capacity shutdowns planned for 2020-2021 prior
to COVID-19, but the bulk of the new announcements reflect
pessimism about refining economics in a world suffering from
temporary demand collapse and structural refining overcapacity,"
the IEA said in its monthly report.
In 2019, global crude refining capacity stood at 102 million
bpd, catering for 84 million bpd of refined oil products demand.
That shrank to 76 million bpd in 2020 and is expected to be 80
million bpd in 2021, the IEA said.
This week, Royal Dutch Shell said it will halve
crude processing capacity and cut jobs at its 500,000 bpd Pulau
Bukom oil refinery in Singapore.
In Europe, Petroineos plans to mothball nearly half of its
200,000 bpd refinery at Grangemouth in Scotland, and Gunvor will
shutter its 110,000 bpd Antwerp oil refinery in Belgium.
The outlook for refining remains mixed, with traditionally
low-value naphtha and fuel oil possible bright spots in the new
year, Vitol chief executive Russell Hardy told the Reuters
Commodity Trading Summit this week .
He said the 1.6-1.7 million bpd of capacity closures already
announced to take place by the end of 2021 to early 2022 could
grow by a further 1 million bpd.
Plateauing fuel demand, tightening environmental rules and
overseas competition have prompted several European and U.S.
refiners to opt for converting plants to produce biofuels.
(Reporting by Ahmad Ghaddar; Editing by Jan Harvey)