Gunvor considers mothballing loss-making Antwerp oil refinery
The energy trader said it had been exploring options to keep operating given a difficult environment for European refiners even before the COVID-19 pandemic disrupted energy demand
LONDON: Gunvor Group is considering mothballing its oil refinery in the Belgian city of Antwerp because it is expected to be loss-making in the near term, it said on Monday.
The energy trader said it had been exploring options to keep operating given a difficult environment for European refiners even before the COVID-19 pandemic disrupted energy demand.
“[Gunvor Petroleum Antwerp] has had and will now certainly continue to experience negative cash flow on a magnitude that is not affordable for the group,” Chief Executive Torbjorn Tornqvist said in a statement.
A Gunvor spokesman said the time needed to decide the refinery’s fate would depend on consultations with the works council over the future of some 230 jobs.
The International Energy Agency said oil demand fell by a record 21.8 million barrels per day (bpd) in April compared with a year ago and it expects full year consumption to fall by 8.1 million bpd to 91.7 million bpd.
The agency doesn’t expect demand to recover to pre-virus levels before 2022.
“Even when demand returns to pre-pandemic levels, it will take time to reduce the substantial global overhang of oil products, particularly gasoil, which is a key output for GPA,” Gunvor said.
The surplus, however, means storage is lucrative and Gunvor plans to continue operating the refinery’s 1.1 million cubic metre storage terminal.
Gunvor stopped crude processing in May at the refinery – a simple hydroskimming plant with capacity to refine 110,000 bpd of crude – because of a lack of demand.
It said the factors determining whether it will be mothballed for the foreseeable future include competition from new complex refiners and costs related to maintenance and changing environmental requirements.
It has also been affected by reduced availability of medium sulphur crude oil, which the refinery is designed to process.