Galp stops fuel output at Porto refinery again

Portugal's Galp has shut down its fuel distillation units at its 110,000 b/d Porto refinery for the second time this year, after posting negative margins in the third quarter.

The company did not say when it will restart the units. Its larger 220,000 b/d Sines refinery is still operating.

Bitumen, base oils and wax will not be impacted by the stoppage at Porto, as they will be produced from feedstocks in storage. But Galp said it will prioritise bitumen term commitments over spot cargoes. Spot base oil volumes have been limited since June for the same reasons. Galp is focusing on the requirements of it lubricants blending subsidiary and term customers until the end of the year. Any surplus is offered to domestic customers or to traders in small quantities, for loading in trucks and flexitanks.

The firm already shut fuels production at its two refineries earlier this year to manage stock levels as lockdown measures crushed end user demand. The 110,000 b/d crude distillation unit (CDU), vacuum distillation unit (VDU), visbreaker, diesel and gasoline desulphurisation and reforming plants at Porto only came back online at the end of July. Sines was offline in May-June.

The refiner's margins dipped into negative territory in the third quarter, impacted by "extremely weak distillate cracks... during the period".

The Covid-19 pandemic has squeezed margins further for already struggling refiners in Europe. Middle distillate margins are particularly weak, with jet fuel demand devastated by travel restrictions. Diesel margins to crude in northwest Europe fell to a 21-year low at the end of September, which prompted some producers to run secondary units as low as possible.

In neighbouring Spain, Cepsa announced last week the mothballing of CDU and a VDU at its 220,000 b/d Huelva refinery in southern Spain. Repsol subsidiary Petronor has had a CDU offline since the summer at its 240,000 b/d Bilbao refinery in northern Spain also because of poor demand. Repsol said the small CDU at its 180,000 b/d Tarragona refinery is operating intermittently, depending on demand.

By Benedict George and Catherine Caulfield