BP to close third of capacity at German refinery
BP has announced plans to permanently close a third of the crude distillation capacity at its 257,000 b/d Gelsenkirchen refinery in western Germany from 2025 and start co-processing biofuels at the plant's hydrocracker.
The capacity reduction is likely to involve one of the crude distillation units (CDUs) being taken out of service, although a BP spokesman could not confirm whether it will be a CDU at the Scholven or Horst section of the refinery.
The refinery is "currently not competitive", according to a statement by refinery head Arno Appel. Challenges include being "too complex" to operate with "structural costs that are too high", he said, possibly alluding to how the refinery is spread over two separate sites.
BP plans to shift focus at Gelsenkirchen towards petrochemicals and low-emission fuels. The hydrocracker at the refinery will start co-processing biofuels, meaning that renewable components will be mixed into its feedstock. BP said this will enable output of sustainable aviation fuel (SAF) among other products.
BP said the refinery's crude capacity will fall from around 12mn t/yr now to around 8mn t/yr. Five units in total will be closed across the Scholven and Horst sites, it said. The firm declined to specify which units.
BP may yet face opposition from trade unions. The Gelsenkirchen refinery employs around 2,000 people. The planned changes will mean fewer jobs, Appel said. "We want to start negotiations with the employee representatives as quickly as possible."
Some traders who import products from the Amsterdam-Rotterdam-Antwerp (ARA) hub into Germany via the Rhine river said they expect trade volumes to rise when BP trims capacity at Gelsenkirchen. Refining capacity in western Germany was already poised to be cut next year. Shell plans to stop crude processing at its 147,000 b/d Wesseling refinery in 2025 and is also turning the hydrocracker there into a base oil plant. Wesseling is part of Shell's Rhineland refinery complex in the Cologne region.
Refineries such as Gelsenkirchen and Wesseling have had to contend with a drop in domestic demand for oil products in recent years. German diesel demand was 5-10pc lower in November and December 2023 than in the same months of 2019, according to Eurostat data. This amounts to a fall of roughly 40,000-50,000 b/d.
BP is the latest in a growing group of European refiners to acknowledge challenges around profitability and long-term viability. UK-Chinese venture Petroineos made a similar comment about its 150,000 b/d Grangemouth refinery in Scotland last year when it announced a plan to close the facility in 2025 and turn it into a fuel import terminal. BP sold the Grangemouth refinery to UK petrochemicals firm Ineos in 2005.
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Low-carbon methanol costly EU bunker option
Low-carbon methanol costly EU bunker option
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Biomethanol market slows, but shipowners eye offtakes
Biomethanol market slows, but shipowners eye offtakes
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Nayara Energy to set up two ethanol plants in India
Nayara Energy to set up two ethanol plants in India
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Europe receives straight run fuel oil from Dangote
Europe receives straight run fuel oil from Dangote
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