Nov. 30 (Bloomberg) -- French refinery losses may reach a combined 800 million euros ($1.06 billion) this year due to “abysmal” crude-processing margins, according to the head of an oil companies’ association.
“Refining margins are weak with losses harking back to 2009,” said Jean-Louis Schilansky, head of Paris-based Union Francaise des Industries Petrolieres, or UFIP, which represents refiners in France including Total SA and Exxon Mobil Corp.
Lower profits from processing crude oil into fuels have forced refiners to cut costs and shut plants across Europe. Over the last two years, LyondellBasell Industries NV, Petroplus Holdings AG and Total have decided to stop refining at their plants at Berre, Reichstett and Dunkirk due to lower European demand. After these closures, France will have nine working plants compared with 24 in 1977.
European refining margins slumped to $13.40 a ton in the third quarter compared with $16.40 a ton the year earlier and $16.30 a ton during the previous three-month period, according to the most recent data available on the website of Total.
French refiners lost 1 billion euros in 2009 when margins averaged 15 euros a ton and “hundreds of millions of euros” more in 2010, the organization has said in previous years, estimating that crude-processing margins of about 25 euros a ton are needed for profitable operations.
“European refining is in a crisis,” Pierre-Marie Abadie, energy director within the French environment ministry, said today at an energy conference in Paris.
Total has reduced refining in Europe through the closure of its plant near Dunkirk, as well as a capacity reduction at Normandy and the sale of its 49 percent stake in Spain’s Cia. Espanola de Petroleos SA. Total is also trying to sell its Lindsey plant in the U.K.
French demand for oil products fell 2 percent in October compared with the same month last year, according to UFIP.
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