Refinery Crunch In Europe
A few weeks ago we discussed the pressure the Greeks were under to source their energy needs from Iran since no one else would extend them credit. The European credit strain contagion now appears to be spreading rapidly as Europe's largest independent refiner by capacity, Petroplus Holdings AG, is suspending operations at three plants as banks freeze a $1bn revolving loan facility. S&P cut its rating from B to CCC+ citing a sharp deterioration in the firm's liquidity position. As a pure play refiner, meaning it needs to buy all of its crude supplies (on credit obviously) to feed its plants, it seems evident that both vendor- and bank-financing mechansims are starting to clog up very seriously if the largest independent refiner can't get credit. Bloomberg notes that refining margins are down considerably and we suspect that the closure of the Petroplus plants will help margins implicitly but as headlines show:
- *PETROPLUS SAYS TEMPORARY ECONOMIC SHUTDOWNS IN JAN. '12
- *PETROPLUS SAYS RESTART DEPENDS ON ECONOMIC CONDITIONS, CREDIT AVAILABLE
The full statement from Petroplus is here:
Petroplus Provides Update Regarding Its Revolving Credit Facility and Operations of the Petit Couronne, Antwerp and Cressier Refineries
ZUG, Switzerland--(BUSINESS WIRE)--Dec. 30, 2011-- Regulatory News:
Petroplus Holdings AG (SIX: PPHN) today announced that Petroplus held meetings with all lenders under the Revolving Credit Facility yesterday in Zurich. The discussions were open and constructive. Additional discussions between the lenders and the Company’s management will continue over the comings days in an effort to restore availability of credit facilities that ensure proper operations of its refineries.
In the meantime, the Company will start temporary economic shutdowns of the Petit Couronne, Antwerp and Cressier refineries in January 2012 given limited credit availability and the economic climate in Europe. The restart of the refineries is dependent on economic conditions and credit availability. The Company intends to provide further updates to the market as needed via press releases.
Petroplus Holdings AG is the largest independent refiner and wholesaler of petroleum products in Europe. Petroplus focuses on refining and currently owns and operates five refineries across Europe: the Coryton Refinery in the United Kingdom; the Antwerp Refinery in Belgium; the Petit Couronne Refinery in France; the Ingolstadt Refinery in Germany; and the Cressier Refinery in Switzerland. The refineries have a combined throughput capacity of approximately 667,000 barrels per day.
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things do get better in 2012 by the minute.
And it ain't even 2012 yet!
Wow, how blessed are we?
Greece's big refinery shutting down is VERY uncool. This will be a real problem for Greece to get anything done. And for anything to move. People often do not understand the how important the oil infrastructure really is. Greece will be an interesting example of what happens when one important link of the fuel production chain is broken.
It also looks like that 2012 is going to be another Year of Europe.
Petroplus owns and operates the Coryton refinery in Britain, the Antwerp refinery in Belgium, France's Petit Couronne refinery, the Ingolstadt refinery in Germany and Switzerland's Cressier refinery, with a combined capacity of about 667,000 barrels per day.
It will put stress on the supply side. Might be an opportunity.
Caviar Emptor (downthread) points out that the USA is now exporting gasoline due to lower demand here in the USA.
Generally nothing new. Canada and Mexico have always imported fuel from the US.
Shell in Canada shut down a large refinery earlier this year. Economics didn't make sense. There is more export of refined fuel from the US as a result.
Masterful plans are starting to become tangible for the rest of us to see it seems. But all this is noise. The next war will make Oil redundant as new technologies are brought to light.
The shocks are not going to be apprehendable it seems. Black swans.
ori
/the-plan/
Here is energy conservation by other means: rationing fuel by rationing credit used to buy it.
The periphery of Europe is on the way to becoming car-free, the rest sure to follow.
What takes place in Europe and elsewhere is an energy crisis in drag. When moderns realize what is happening to them it will be far too late for them to do anything about it.
As credit is stripped from economies the price of fuel will be insufficient to bring expensive replacement crude to market: deep-water, tight shale, 'tar' sands, etc.
The shortages that will take place will be permanent.
Have a nice day.
That is quite the leap, " the next war will make oil redundant" Perhaps while gaming with the U.S. navy they disclosed their warp drive technology to you and arranged a quick visit to area 51? Sometimes you make sense and sometimes I cannot tell if it is our culturural differences or your illogical leaps that make your comments incomprehensible. This time I have it nailed down.
More likely a nuclear war will kill so many people that peak oil will no longer be an issue
You sound like someone who is in the know...
Would a crunch in refining bleed into fuel prices and then into the economy and finally the downturn runs into a currency collapse in the Euro?
Clearly a TBTF, will shortly be allowed to wean at ECB's titties...
Refineries, once running, have to continuously flow oil and products through the system and many parts are very connected. Here is a quick primer:
I do not know what happened on the finance side, but if market demand is soft enough the refinery would run at a loss, unable to produce a low enough volume to hold prices. That is to say, they HAVE to produce so many barrels of gas, fuel oil, whatever because of the physics/chemistry involved and that level of supply may push prices down making a loss. A refinery can tweak operations, to get more gasoline instead of kerosene and that sort of thing, but the mass of products being produced doesn't really change much (i.e. a higher volume of lighter products or a lower volume of heavier products but mass remains equal).
EDIT: I meant to also say that if this refinery is relying on a producer that might suddenly go off line ... <AHEM> ... AND the bankers were in the know about this ahead of time ... they could be covering their ass with regards to losses.
Just some thoughts.
Regards,
Cooter
A Big Fat + 1
Some US refineries, for example, are equiped to refine the "sour heavy" crude from Venezuela (crude which is very thick AND has very toxic H2S gas). Not very many refineries can do that, very few in China for example.
Yes, re parts of the refinery affecting other parts. Also, yes re refinery tweaking to produce a somewhat different suite of products, but there are limits.
Even refineries that are equipped to handle Venezuelan heavy crude, like HOVENSA in the US Virgin Islands (350k bpd), the joint venture between HESS and PDVSA are losing money hand over fist with the crack spread as it is now.
Refining is a money-losing proposition when you have to deal with unions, OSHA and the EPA.
"Refining is a money-losing proposition when you have to deal with unions, OSHA and the EPA."
Fucking loser statement if ever I heard one.
What's happening is that we're losing economies of scale because, well, because MOTHER (fucking) NATURE says that we have to increase energy inputs in order to get more energy- EROEI.
I've been saying this for a couple of years now: We're going to experience the reversal of economies of scale and it's going to be a bitch. People will WISH that it's a union or other such thing (and idiots will buy this crap line hook and sinker).
It's the simple truth. The margins are razor thin in the industry. When you add EPA & OSHA regulations and unionized labor into the equation, you can't make money with the margins being what they are.
Look at facilities like Reliance in India. They pay the same price on the open market for crude as facilities in the US do, but they rake in money by not being subject to environmental and safety regulations or paying rates for unionized labor. It's an enormous added cost of doing business that makes the difference between losinga quarter of a billion dollars a year or making a quarter of a billion dollars a year.
The only places making coin by refining in the US are the places fortunate enough to have access to WTI.
Petroplus : stock price closed up 6% today.
strange but true,
It was down 45% earlier in the week.
Companies that are fucked often have big up days not long before the end.
Please back up your claim with a link to a 10-Q.... provide the link and I will gladly read it...
Refining is a dead business.... there will be calls to nationalize them in the future because it is something that everyone wants but no one can make any money at it....
What happens when the Cushing bottleneck is removed by reversing existing pipelines (Enterprise and Enbridge) and Keystone XL comes on line? WTI then trades at parity with Brent and no refiners make money???
If the crack spread remains as it is, then in the US, sure, why not? Find me a facility in the US making money that isn't doing it by leveraging the WTI/Brent spread. I agree, refining in the US/EU is deader than dead. Their only hope is nationalization under the guise of national security.
I can imagine people will get quite nervous when the last few US refineries start to shut down and we have to buy refined product from India, Brazil and China.
The US has about 3 times greater refinery capacity than crude production.... Quit with the hysterical bullshit...
If I was you I would be more worried about the trend in Net Oil Exports. For example, at current trends, the Saudis will have zero net exports in ~2028. You may want to refresh your knowledge about UK oil production and their Net Exports to get an idea of the levered trends in exports compared to simple production.
http://investors.petroplusholdings.com/phoenix.zhtml?c=157968&p=irol-IRHome
But in the context of this below (from the FT) you are rught - it aint looking good. Apologies for lack of perspective in my `up 6%` post.
3 days ago – Petroplus shares fell to a record low on Tuesday after the Swiss oil refiner's ... Petroplus's share price slid 46 per cent to trade at SFr1.85. ...
yep - we are literally scrapping the bottom of the barrel - the quality is lower - more energy to refine.
by the time peak oil has run its course - billions will be dead
Would someone point out to me where it says anything in this story about a Greek refinery shutting down?
Sure, it’s easy take out everything before "largest" in the second sentence except "Greeks", which you drop the s off of. Then drop that left over Greek right after largest and there you go!
I believe the disconnect was in the first paragraph. The comparison to Greece was made. This is the Largest European refinery company. It will be shutting down 3 refineries soon. No matter how you cut it, Europeans are going to start relying on shanks mare, bicycles, and very, very expensive imported petrol. If the cost of petrol rises too much, it will definitively impact import and export of goods, airliner fees, grocery costs, operational fees, electrical generation costs, and every aspect of the European infrastructure will become strained.
If the banksters know the Euro is about to go down the drain should they be making billion dollar loans in Euros or would they halt all lending and wait for the reset back to home currencies before the lending restarts ? No clue what's going on.
Why not? Thanks to securitisation, the banksters are not the ones lending the money. They are just a conduit between borrowers and suckers - in this case, Taxpayers.
Greece burns 400K barrels per day.
Every cupful of it is imported (from Iran). Earthquake prone regions generally don't have much oil. Too many millions of years of rock cracking prevents caprock from forming that seals in the oil. (Which is why Japan bombed Pearl Harbor; they were cut off from oil imports and had none of their own).
The refinery for that is in the north of Greece and the gasoline transports south to Athens.
That import of 400K bpd X Brent pricing is 5-6% of GDP, drained from the country each year. That's roughly the amount of GDP decline they are enduring.
Anyone still not understand how oil scarcity is destroying the world?
That's not scarcity- that's allocation.
Plenty of oil in the world- have to be smart enough to broker for it.
Greeks? Not so much.....
There's plenty of oil? Where? Perhaps in unextractable areas there's plenty of oil . . .
Actually, in the continental US, areas such as Bakken and Gull Island Alaska have plenty of oil available for extraction. There are many other reasons why Greece has problems obtaining oil, such as their insolvency and predilection to stiff trade creditors.
Ok, oilman, how much oil is expected to be produced in the Bakken? How does oil production in the US compare with 40 years ago? What is the largest oil field ever found in the US?
And you may want to review your notes on Gull Island. (I mean you don't really believe that the TAPS is going be abandoned when all that oil is up there, do you? Or Lindsey just told you to believe)
I'm bored, so I am entertaining myself:
Given that the US consumes about twice what it produces, I think we will continue to have oil supply risk. Is it nice to have the Bakken and the new arctic development? Yeah. Is it still a production/consumption deficit? Yeah.
Oh, and I would LOVE to see your Gull Island resources. LOL!
Regards,
Cooter
Oh, pray tell... where is all this wonderful oil? Why have Net Exports declined at 2.8% CAGR since 2005? Do you understand the concept of Net Exports?
Do you understand the difference between C+C, NGL, Bio-fuels and Refinery Gains? Could you even make a comparison of the Net Energy from "All Liquids" in 2005 compared to 2010? Do you understand the question?
LOL- that's cute.....
One question:
When was the last time you couldn't get any oil? Or anyone?
Quit letting the men behind the curtain scare you into the Left Wing of the world.
Duh...........
The last time I could get oil at $10 was about 11 years ago... the last time I could get oil at average monthly price of $38 was in 2005 or so....
http://205.254.135.7/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RBRTE&f=M
Well, I asked you some very simple questions about the global oil market and you balk.... So this tells me that you have no fucking idea what you are talking about and are afraid to put your ignorance on parade...
Oil, food, water, electricity etc can be had for the right price. The higher the price, the fewer people can afford it in the same quantities. I don't believe there will be a peak oil shock, but rather a gradual decline in living standards as energy prices increase and people have less money to spend on other goods. The only way to escape this mess is with mass transit.
I suspect that you meant this as sarcasm.
Demand is being crushed. It was ALWAYS going to happen. But now we're going to see what happens when you are unable to take advantage of the "positive" leverage of economies of scale. This will be THE vortex that takes it all down.
Anyone still not understand how oil scarcity is destroying the world?
Very well stated Crash. Most of the populace outside of ZH and TOD miss it, but we know the PTB gets is. That's why we're barrelling headlong into totalitarianism. Peak oil isn't itself frustration, it's how the malevolent and malicious PTB is hitting the accelerator straight towards the brick wall that's right in front of us instead of taking corrective action. I suppose for the few dozen running the world it'll be amusing to watch the lower 99.99999% implode.
Greece sans Euro = Albania
we always have to look into the future and pay the price today of what will be orchestrated later.
Like we will pay high price of oil today because some traitors think that in 2099 demand will be bigger...
Happy holidays every1 and remember - there is no sex after marriage.
http://www.youtube.com/watch?v=osQMG9f0HC0
Price of making moltov cocktails in Greece goes up.
Soon they will change molotov to urinarry cocktails.
What's the price of olive oil compared to gasoline?
I hear they've got some olive production in Greece....
i think bike sales in Greece will skyrocket. No more polution.
Athens are horrible, cant even breath there.
I wonder how the 10 million non pussies do it everyday?
What''s next, the phones or the water?
neither, toilet flushes.. on a one off derivative play it's time to short water as people will drink less as the price of flushing goes parabolic.
How much more strained and twisted is the global economy going to get...
We ain't seen nothin' yet.
File this under SUPER BULLISH!
Don't forget your motorcycle helmet and baseball bat.
and Molotovs.
Gasoline sales are down, perpetuating the trend which started in 08. In the US gasoline sales are at 1999 levels. Down on even a per capita basis. Total vehicle miles driven are also down 1.4% for 2011 and the trend is down.
Yet gasoline prices in the US for Nov and Dec are at all time highs. Gasoline exports pick up the slack. For refiners they can't make up the tighter crack spread on volume into the weakening demand picture. And exports are costly.
Gasoline prices have backed off a little bit in the past few weeks where I live.
Hmm, we're exporting gasoline now... Thanks for that tidbit of info. So have a + 1 on me!
The price of Brent (the real price of oil) will close today at the all time high closing price for a year. Dec 31, 2010 the closing price was the all time high closing price for a year AND a decade. We'll beat that and set a new record today.
The same will happen this afternoon for WTI. All time high, for the second straight year.
This all began in 2008, when the oil spike took place before any QE or printing began.
Oil scarcity will destroy civilization and kill billions and there is nothing anyone can do about it.
Heh heh heh ... he said "crack spread"!
Heh heh heh ... He said "tighter crack spread"!
Yeah! Heh heh heh!
I see gas lines in our future.
I see dead people.
But... you assume that people could AFFORD it!
Dr. Engali looked into his crystal ball:
They'll need to dust off those "NO GAS" signs.
Anyone know if Petropluss sources their crude from Iran?
I take advantage of your comment on Iran to mention another thing about Iran. They only have ONE refinery that produces gasoline. That country has ample reason not to stoke up a war. One bomb takes out the main distillation tower at the refinery, and before long Iran WALKS everywhere (they import the rest of their gasoline).
The statements actually aren't mutually exlusive... but my internet is CRAWLING today... perhaps someone can pull up output product %s for them, the "truth" should be somewhere in the middle, unless your talking about whether Iran actually wants to live with the domestic consequences of shutting the Straights, which no one but a crazy 12th Imam nutjob would be eager for...
Good catch! My understanding (was) that only Isfahan produced any significant amounts of gasoline. Refining capacity is a real vulnerability of Iran. Looks like they are working on that problem.
What's important, especially for oil IMPORTERS, is how much oil is EXPORTED! Since Israel and it's puppet state -the US- are all hell-bent on disallowing Iran to construct nuclear plants for energy that means that they have to get energy from somewhere: guess what that is (you only get three letters!).
http://www.reuters.com/article/2011/05/24/us-iran-refinery-fire-idUSTRE7...
Does it matter if they have 1 or 100 refineries? They would all be destroyed on the first day by JDAMs, along with electrical and water infrastructure.
"A few weeks ago we discussed the pressure the Greeks were under to source their energy needs from Iran since no one else would extend them credit."
Opening sentence of the article, but I don't know if they actually cut deals with Iran yet. If not, expect them to soon.
Just tell Petroplus to call the Bernake. He has plenty of dollars to lend, and especially loves big bailouts. In fact, if they ask for a $10 billion line of revolving credit, he would probably be even more likely to help. After all, $1 billion is such a paltry sum.
I was thinking the same thing, surely it isn't illegal for Bernanke to extend a line of credit to a foreign industrial company.
Call Joe Biden instead, he & Hil travel with US checkbook.
How many more companies need credit, maybe the grocery chains?
PS. thanks for justifying me on this, couldn't figure out the down arrows
about this
Colleagues look TLT
Is so strange TLT up and Equities up...
VIX up slightly. VIX up and equities up before Christmas as well. Someone is buying protection.
Headlines from the future.
we should drawn them in their own paper contracts.
The wall street attack on Europe continues............
Europe has to be forced into submission and stand behind the UK/US Alliance for Israel and against Iran.
Remember who really owns Wall Street.
Print more Oil
Gotta love our bizarro world where a REAL company cannot access liquidity in the honest sense of the word, but where a bank can access as much as needed due to INSOLVENCY.
pods
Puns intended.
Perhaps we need to try a different solvent...Benzene?
Too long of a wait. For the banksters I would say a water cannon filled with HF myself.
pods
Not all that bizzare. Banks are just pushing electronic bits, and this is to fill their holes. They can make it look like something is happening without worry about having shelves overflowing (tankers sitting around w/no demand [because people can't afford it- can't push on a string]).
C´mon, the Greeks don´t need gasoline anyway, they have mules. Enough to bring your olive oil and feta cheese to the local market.