REFINERY NEWS ROUNDUP: Plants in Europe look for alternative supplies
With the EU planning to ban Russia’s crude imports within six months, following Moscow’s invasion of Ukraine, European refiners will have to look for alternative supply, though many of them have already started diversifying their sources.
Shell and Sweden’s Preem were among the first to cease all spot purchases of Russian oil and products.
** BP, Italy’s Eni and Saras, Spain’s Repsol and Cepsa, Portugal’s Galp and Norway’s Equinor suspended all new purchases of oil from Russia.
** Finland’s Neste has “mostly replaced” Russian crude, while its remaining supply contracts will end in July.
** Austria’s OMV stopped acquiring Russian crude for its three refineries — Schwechat in Austria, Burghausen in Germany and Petrobrazi in Romania. “At OMV’s refineries we have done significant work in order to make sure that we are no longer using Russian crude in any of our refineries to mitigate the risk,” OMV CEO Alfred Stern said.
** Varo Energy, which fully owns the Cressier refinery in Switzerland and has a share in Germany’s Bayernoil, has “not entered into any new Russian crude purchases since the beginning of the conflict.”
** Gunvor’s Ingolstadt refinery in Germany is not processing any Russian crude.
** ExxonMobil’s French downstream subsidiary Esso SAF said its refineries Gravenchon and Fos are flexible with the type of crude they can take, and can source crude from the Middle East, North America, Africa and the North Sea.
** TotalEnergies pledged to end all purchases of Russian oil by year-end, after ceasing spot oil purchases. Its Antwerp refinery in Belgium has already stopped taking Russian crude.
** PKN’s Orlen Lietuva refinery in Lithuania stopped taking any Russian cargoes at the end of March and plans to process only oil from Saudi Arabia.
** Greek Hellenic Petroleum “immediately secured alternative raw material sources, without affecting the operation of our units and the continuous market supply, while taking advantage of the refineries’ flexibility to process various types of crude oil and good cooperation with other producing countries,” Group CEO Andreas Shiamishis said.
** TotalEnergies said it would end Russian oil supply contracts for its Leuna refinery in Germany “as soon as possible” and at the latest by the end of 2022, and would arrange alternative supply solutions, in particular by importing oil via Poland. Leuna receives crude via the Druzhba pipeline. Meanwhile, Poland’s Grupa Lotos is processing crude oil for the Leuna refinery in Germany to help Berlin diversify its oil suppliers, the Polish climate and environment minister, Anna Moskwa, said, adding that “Gdansk refinery is already processing oil for Leuna refinery as it can process many different types of crude.”
** Germany is looking at providing alternative crude supplies to the Schwedt refinery as well as moving “away from oil towards hydrogen” and making it into a “refinery of the future”, according to Economy Minister Robert Habeck. The plant, which is majority owned by Russia’s Rosneft and currently supplied via the Druzhba pipeline, can receive seaborne crude from the Baltic ports of Rostock in Germany and Gdansk in Poland. In the medium term, the refinery could also switch to green hydrogen, biochemistry and a circular economy. Germany is looking at various options to control the plant if needed under its Energy Security Law, including appointing a trustee that could operate it on behalf of the government.
** Poland’s PKN Orlen is ready to comply with the EU’s proposal. PKN stopped purchasing Russia’s Urals blend crude on the spot market and has reduced its level of Urals feedstock in its refineries from more than 95% in 2013 to 30%.
** Poland’s Grupa Lotos stopped buying Russian crude on the spot market in the first quarter of this year and mainly contracted feedstock from the North Sea and Norway. It continues to honor the existing forward contracts in force until the end of 2022, and noted that an early termination could result in financial penalties
** Slovakia needs a mid-term exemption from the import ban to secure oil from other sources. Oil other than Russian would present significant problems to the country’s main refining company, Slovnaft, according to Slovakia’s minister of economy, Richard Sulik.
** Czech Prime Minister Petr Fiala will discuss the possibility of increasing capacity on the Transalpine oil pipeline. The TAL pipeline runs 750 km (466 miles) from Trieste in Italy through Austria and into Bavaria, where it branches into two — one leg going to Karlsruhe in Germany, and the other to the Czech refineries of Kralupy and Litvinov.
** Bulgaria will also ask for a temporary exclusion to limit expected fuel price hikes. The country’s only refinery, Burgas on the Black Sea, is owned by Russia’s Lukoil and supplied predominantly with Russian crude.
** Portugal’s Galp might limit refinery throughput and reduce diesel exports from its Sines refinery in the coming months if it is unable to obtain sufficient vacuum gas oil, CEO Andy Brown said. Galp announced March 2 it would suspend all imports of Russian oil products, in particular VGO. Galp said it has been sourcing replacement supply from Europe and the Middle East, allowing it to go “full steam” at the refinery during April, amid refining margins “in the double digits.” The FCC and the hydrocracker units have been at full rates to meet rising jet and diesel demand. This includes increased demand for diesel exports, which are also likely to be restricted if the VGO balance tightens.
Meanwhile, refiners reported raising Q1 runs and improved results on better demand.
** Poland’s PKN Orlen said it increased throughput by 31% year on year in the first quarter because of improved macro conditions and higher fuel demand. Throughput at Plock grew 35% to 4.106 million mt and utilization increased 26 percentage points to 102%. Throughput at Orlen Lietuva in Lithuania rose 54% to 2.263 million mt and utilization was up 31 percentage points at 90%. Throughput at the Czech Unipetrol refineries rose 4% to 1.703 million mt and utilization was up 3 percentage points at 79% despite planned maintenance at the Kralupy refinery.
** Poland’s Lotos said that throughput in January-March at Gdansk fell 25.5% quarter on quarter to 1.945 million mt, although this was only a 1.5% fall year on year. Overall for 2022, the maintenance will reduce processing capacity by 7%.
** Italy’s Saras said that, based on the “positive market fundamentals” at the end of 2021 and a “very robust oil demand”, it has prepared a medium-term plan which includes “the return of a significant profitability” in 2023. Refinery operations were “modulated” last year with the production of gasoline maximized “due to its higher profitability compared to diesel, especially in the first part of the year”. The Sarroch refinery also increased the production of VLSFO “thanks to a recovering maritime traffic.” The company reiterated that it remains “a strategic player able to deliver oil products not depending on Russian crude” and that it does not use natural gas. The company said in March, shortly after Russia’s invasion of Ukraine, that its position was “not to buy from Russia at all.”
** France’s TotalEnergies reported overall higher refinery throughput in Q1. Throughput at its French refineries was up 13% on the quarter at 252,000 b/d and more than double on the year. Their throughput was 114,000 b/d in the year-ago quarter. Overall throughput in Q1 was 3% up on the quarter at 1.317 million b/d, and 15% up on the year. Utilization rates were 74% in Q1, up from 73% in the previous quarter and 58% in the year-ago quarter. Rates were based on distillation capacity at the beginning of the year, excluding Grandpuits, which has been shut down in Q1 2021, and the Lindsey refinery which has been sold in Q2 2021, the company said.
** Repsol’s Spanish refineries reported crude throughput of 8.4 million mt in the first quarter of 2022, an increase of 9% year on year. The distillation rate at Repsol’s Spanish refineries was 83% in Q1, up from 76% in Q4 2021 and 76% in Q1 2021. For the conversion units, the operating rate fell 7 percentage points from Q4 and 2 percentage points year on year to 80%, as a large part of the Bilbao refinery was offline for maintenance between mid-February and mid-April. A second, smaller maintenance was also carried out at A Coruna, which started March 10 and concluded April 12.
** Austria-based OMV expects its 2022 utilization at European refineries to be around the 2021 level of 88%. Turnarounds are planned at Schwechat in Q2 and Burghausen in Q3. Its refineries in Europe ran at 94% utilization in the first quarter, up from 81% in the year-ago quarter.
** OMV Petrom’s Petrobrazi refinery operated at a 98% utilization rate over the first quarter, up from 95% in the 2021 period. It expects above 95% utilization in 2022, compared with 97% in 2020.
** However, Italian energy group Eni said April 29 that throughput at its Italian refineries in the first quarter was 9% lower at 3.5 million mt, “due to a depressed refining scenario”. In the rest of the world, it achieved 1% higher throughput at 2.57 million mt, “thanks to higher volumes processed in Germany.” Eni owns shares in the Bayernoil and Schwedt refineries. The company reported 70% average utilization at all its refineries in the first quarter, down from 71% in Q1 2021.
** Galp, Portugal’s largest oil and gas company, said it expects refinery throughput of 90 million boe in the full year, or around 246,600 b/d, at its Sines plant in 2022, meaning the refinery would operate above its nameplate capacity of 226,000 b/d. The figure would be a 17% increase in production from 76.6 million boe processed in 2021, which was impacted by an unplanned outage in the fourth quarter.
** Greece’s Hellenic Petroleum reported lower refining production in Q1 due to maintenance at the Elefsis refinery. Its refining production amounted to 3.129 million mt, 16% down on the year-ago quarter, as Elefsis underwent a full turnaround. Its three refineries ran at a 80% utilization rate in the first quarter, down from 94% of capacity in Q1 2021. Throughput at the Aspropyrgos refinery totaled 1.886 million mt in Q1, while Elefsina processed 357,000 mt and Thessaloniki 886,000 mt.
** Finland’s Neste reported 92% refinery utilization rate in Q1, up from 83% last year.
** Turkey’s Tupras’ refinery output in Q1 2022 totaled 6 million mt, down 14.3% on the 7 million mt reported in Q4 2021, but up 30.4% on 4.6 million mt a year earlier. Overall capacity utilization for Q1 was 85% during the quarter, down from 98% in Q4 2021 but up from 65% in Q1 2021 when production and demand were still affected by coronavirus restrictions. Tupras said Q1 crude capacity utilization was 76%, down from 91% in Q4 and up from 56% in Q1 2021, with capacity utilization of semi-finished feedstock of 8%, unchanged on the quarter and down from 9% a year earlier. The company said it anticipates production at its four refineries for the whole year of between 26 million-27 million mt, at a capacity utilization of 90%-95%.
** The average run rate for Italian refineries in the month of February was 65.4%, down from 72.9% of the full 87.25 million mt/year capacity for full-year 2021, according to data released by industry group Unione Energie per la Mobilita, or Unem. The run rate was 65.5% in January.
** Spanish crude oil throughput in the first quarter of the year increased 13% year on year to 14.9 million mt as downstream demand for road fuels recovered and export volume increased, data published May 12 by Spanish reserve Corporation CORES showed. However, Q1 2022 volumes were still 11% lower than comparable Q1 2019 volume. Meanwhile, the volume of vehicle fuels supplied by Spain’s national fuel distributor Exolum to the Spanish market increased 30% year on year to 3.3 million cubic meters (2.6 million mt) in April, as kerosene volume reached its greatest monthly total since the start of the pandemic in March 2020, data published May 6 by national fuel distributor Exolum showed.
** In other news, Russia’s Gazprom Neft has reduced its stake in Serbian refiner NIS which operates the Pancevo refinery to 50%, at a time when risks to Russian oil supplies to Europe remain high due. Gazprom Neft sold a 6.15% stake in NIS to its parent company Gazprom, with the new structure coming into effect May 6, according to statements posted on NIS’ website. The change of ownership “will guarantee the smooth functioning” of the refinery, the statement said. In late April, the JANAF pipeline said that it will continue to supply crude to the plant, despite initial concerns that EU sanctions would lead to it halting supplies.
New and revised maintenance
** A large part of Spain’s Bilbao refinery was offline for maintenance between mid-February and mid-April, Repsol said. Bilbao restarted its visbreaking unit May 3. It was restarting its halted hydrogen unit (H3) April 19, the operator said, as well as the pressure swing adsorption unit of the HD3 hydrodesulfurization unit, both in Plant 2. The units were halted as part of a wider turnaround that started Feb. 15 and saw the diesel desulfurization, coker, fluid catalytic cracker, VDU and fuel reduction units all halted as well as crude distillation unit 2, which came back online April 4. The H3 hydrogen unit was previously restarted April 11. The refinery restarted its halted Vacuum Unit (V3) April 13. Bilbao restarted April 11 the H3 hydrogen units, offline since March 1, and the P2 platforming unit, offline since March 3. Those followed the restart of the fluid catalytic cracker and desulfurization units April 8. The furnace of the conversion plant 3 restarted April 1 and the alkylation unit March 28. The refinery halted its AK3 alkylation unit Feb. 17 and its vacuum unit V3 Feb 8. It halted on March 3 the P2 platforming unit and N1 naphtha desulfurization unit. On March 1 it halted the G4 diesel desulfurization unit, H3 hydrogen production unit and cogeneration CG6 units. The larger crude distillation unit 2, VDU and coker were taken offline Feb. 15.
** Repsol said that a second, smaller period of maintenance was also carried out at A Coruna, which started March 10 and concluded April 12.
** Maintenance at Poland’s Gdansk refinery started on March 9, with 50 of the refinery’s 65 units being shut down. The gradual restart of the units was completed by mid-April, although the last stage of the project, involving maintenance of the hydrogen generation unit, was not due to be completed until May 14.
** Greece’s Elefsis underwent a full turnaround, which was “safely and successfully completed” in the beginning of Q2. The maintenance included “extensive equipment inspection” as well as extensive inspection of the flexicoking unit and catalyst replacements in all key relevant units for optimum margin uplift, Hellenic said May 12.
** Turkey’s Tupras noted that planned Q1 maintenance on the crude oil and vacuum unit at its Batman refinery, on the vacuum and lube complexes at its Izmir plant, and on the Isomerization, vacuum and desulfurizer units at its Izmit plant had all been completed. Tupras plans maintenance work at Batman’s crude oil and vacuum unit lasting four weeks during Q4; at Izmir — revamping the crude, CCR & isomerization, and desulfurizer units, lasting nine weeks during Q4 and of the HYC unit lasting four weeks, also during Q4; at Izmit — periodic maintenance of the crude oil and vacuum and HYC units lasting six weeks at the end of Q3.
** Planned maintenance is expected to start on May 8 at France’s Lavera and last around two months, according to market sources. Separately, due to power being cut following a storm, the refinery had to briefly halt units April 23, according to local media reports.
** Italy’s Sarpom refinery was operating as usual and was not planning any maintenance in the near term, sources close to the company said April 26. The refinery completed wide-scale maintenance and upgrade works in 2021, which was concluded over the summer months.
** Operations at the ISAB refinery in Sicily were not affected by a fire at around 9 am local time May 12, which was quickly extinguished, sources close to the refinery said. ISAB is running a series of routine maintenance and upgrade works on pumps, compressors, pipelines, jetties, desulfurization units and conversion units both at its north and south refinery plants. ISAB is made up of two refineries connected by a pipeline.
** France’s Donges refinery was restarting as of April 28, with the gradual restart of units expected to last until May 3. TotalEnergies CEO Patrick Pouyanne also said during a conference call while presenting the company’s Q1 results that Donges “was stopped, but now it is coming back on stream after one and a half years.” The refinery was expected to restart shortly after a strike at the site was suspended in mid April, S&P Global Commodity Insights has reported. The strike, which started at the end of March, prevented the refinery from a planned restart. The refinery had commenced its restart March 16, which was due to continue for around two weeks, the refinery said previously. TotalEnergies halted operations at Donges on Nov. 30, 2020, due to weak margins. Meanwhile, a new railway to bypass the Donges plant, meaning other rail traffic will not have to pass through the site, is set to start operations in October. Work on the railway, which has been a condition for modernizing the refinery, started in 2020. The national government, local authorities, railway operator SNCF and TotalEnergies signed a memorandum of intent in 2016 to build the railway bypassing the refinery. TotalEnergies has said previously that, following the bypass agreement, it would proceed with the planned upgrade. The bypass was due to be ready in 2022.
** Lithuania’s Orlen Lietuva refinery has started its planned maintenance, a company spokesperson was quoted as saying in a local media report. “The work is proceeding to schedule,” Kristina Gendvile said, as cited by Polish state news agency PAP. Gendvile said the maintenance would last two months and include the modernization of the catalytic cracker unit. General refinery maintenance takes place every four years, with the last round carried out in 2018. The refinery has previously said it planned to suspend operations in May for major maintenance, which would last from May 22 to June 14.
** Maintenance at Austria’s Schwechat will be carried out as planned, the company said April 19. It previously said major maintenance would start April 20 and last approximately seven weeks. According to local media report, the works are expected to last until June 4. OMV previously said it was planning a turnaround at Schwechat in Q2. A major turnaround is due every six years. The maintenance this year affects only the fuels part of the refinery. Another turnaround on the petrochemical units at the site is planned for 2023, the company said.
** Eni’s refinery located in Livorno, Italy has restarted its gasoline and diesel refining units during April following wide-scale maintenance and upgrade works that started in January. However, the refinery’s lubricant unit was still undergoing maintenance and upgrade works, sources close to the plant said. It was unclear how long the works will last and when the unit will restart. A company spokesman confirmed the refinery was partially operational, as its refining activities were ongoing, adding that no date had yet been set for a restart of the lubricants business. Eni reportedly unveiled plans to stop refining crude and suspend all related activities at the Livorno refinery by the end of 2022, according to information provided by trade unions in 2021. However, the company has never officially confirmed the plan. Eni is considering converting its Livorno refinery into a biorefinery that will produce hydrogenated biofuel, according to local media reports. Livorno can also produce biojet as well as lubricants.
** Israel’s Ashdod refinery is planning full maintenance, scheduled to begin in May, the company confirmed. Market sources had previously said it is planning maintenance between May and June.
** Eni’s Sannazzaro de Burgondi refinery will delay its maintenance cycle, originally planned for May, until after the summer. Eni’s EST plant had originally been scheduled to restart in past years but has been kept offline so far amid the nationwide slump in demand due to the COVID-19 pandemic.
** Norway’s Mongstad will undergo planned maintenance in Q2, the company said. The works were set to start April 23 and last around six weeks. The refinery had previously postponed works that were planned for 2020.
** ExxonMobil’s Antwerp refinery is currently carrying out maintenance works, according to market sources.
** In the second half of 2022, Repsol is to carry out a smaller turnaround at its Tarragona refinery, which will involve the isomax and hydrocracker units.
** Greece’s Hellenic Petroleum plans full turnaround at Thessaloniki in the second half of the year. The maintenance at Thessaloniki will last between six and eight weeks.
** MOL will schedule the bulk of its 2022 maintenance activities in the first half of the year, including works at MOL Petrochemicals, as well as at the distillation and conversion units of its Danube and Slovnaft refineries.
** OMV plans a general maintenance at the Burghausen refinery between June 22-Aug. 7. It has previously said the turnaround would be in Q3. The turnaround will include also the Borealis polyolefin production site. The last turnaround took place in 2014, followed by a partial shutdown of the refinery in May 2018. “In order to continue to ensure safe, environmentally friendly operation and the efficiency of the plants, all plants will be shut down during the turnaround, cleaned and inspected,” the company said. In addition, expansion work will be carried out to increase ethylene and propylene production. The turnaround will be used to expand and modernize the steam cracker and subsequently increase the capacities for ethylene and propylene production, S&P Global has reported previously. The expansion is expected to facilitate increased annual ethylene and propylene production by around 50,000 mt/year.
** Shell plans to end crude processing at the Wesseling site within the Rhineland refining complex in 2025 as the facilities are repurposed for non-fossil fuel feedstocks and renewable hydrogen production. Shell outlined plans for the facility to take a variety of new biogenic and waste feedstocks, underlining that no final investment decision had yet been taken, and crude processing would still take place at the adjoining Godorf site. The Wesseling portion of the Rhineland refinery accounts for half the overall refining capacity, or 8 million mt/year.
** Shell Energy and Chemicals Park Rotterdam — formerly known as the Pernis refinery — which will undergo major maintenance between end January-end June, will ensure continuity of the plant’s operations during the works so that while one installation is shut down, another will continue production, the company said. Therefore no total shutdown will be involved, and the refinery will stock “enough product to ensure continuity of supply for the time an installation is down for maintenance.” The maintenance aims to further improve the safety, reliability and efficiency of the refinery’s installations as well as to carry out “legally required inspections and repairs,” the refinery also said.
** Gunvor Group said that its Ingolstadt refinery in Germany will undertake projects focused on heating systems and exchangers “to continue improving its energy efficiency and reduce its emissions.” A planned turnaround in 2023 will allow additional reductions, by carrying out projects on the FCC.
** Czech Unipetrol said that following the turnaround at its Litvinov plant in Q2’20 the refinery has prepared production for a new four-year cycle. Thus, the next turnaround is due in 2024.
** The Holborn refinery near Hamburg, northern Germany, plans its next turnaround in 2023. Its previous maintenance was in the autumn of 2018. The refinery carries out major works every five years.