Total’s Refining Margin Reaches 5-Year Low on Low Demand
Total SA (FP), Europe’s biggest refiner, said third-quarter crude-processing margins shrank to the lowest level in almost five years as fuel demand continued to slide.
Total earned $10.60 a metric ton, compared with $51 a ton a year earlier, it said today on its website. The indicator, which was $24.10 a ton in the second quarter, has dropped to its lowest since at least early 2009, according to company data.
“Refining margins were ugly” in the third quarter, Bertrand Hodee, an analyst at Raymond James in Paris, said in a note. He had previously estimated $12 a ton.
European refiners have suffered a slump in demand after economies slowed. In response, Total is curbing oil-processing and petrochemicals operations in the region and expanding in Asia and the Middle East. The Paris-based company unveiled a plan last month to shut a steam cracker at its Carling plant in France, and has acquired gas stations in Pakistan and Egypt.
The average European refining margin was 20 euros ($27.01) a ton in the first six months of 2013, down from 34 euros in 2012, the Union Francaise des Industries Petrolieres lobby said on its website. Oil-product use will drop 5 percent in the Organization for Economic Cooperation and Development in the decade through 2020, and grow elsewhere, Total said last month.
The company failed to sell its Lindsey refinery in the U.K. and fought with the French government in 2010 over a proposal to shutter a plant at Dunkirk. Strikes against the plan led to nationwide fuel shortages and forced Total to guarantee not to shut another French plant for five years.
The company reports third-quarter results on Oct. 31.
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