Industry and Energy

Industry and Energy

BP cuts some oil refinery runs as profit margins fall

20 April 2009 12:12 (UTC +04:00)

Baku. Vugar Israfilov â€“ APA-Economics. BP Plc, Europeâ€™s second-largest oil company, is slowing production at some of its refineries, joining Repsol YPF SA and Total SA in curbing output as the recession lowers fuel consumption, Bloomberg reported.

â€œWeâ€™ve trimmed runs in some refineries and brought forward some maintenance in one or two places to take advantage of the timingâ€ of weaker second-quarter demand, Iain Conn, BPâ€™s head of refining and marketing, said in an interview in London today.

Refining margins will remain â€œchallengingâ€ this year because of lower demand, he said. Profits for refiners turning a barrel of crude into fuels averaged $4.60 between April 1 and April 8, about half that of the second quarter 2008, according to data on BPâ€™s Web site.

Repsol will idle its 100,000 barrel-a-day Cartagena plant in Spain in the coming days because of weak margins, the company said yesterday. Total, Europeâ€™s third-largest oil company, said three weeks ago it is cutting output at its Port Arthur, Texas, refinery in response to weakening demand.

The International Energy Agency last week slashed its forecast for oil demand to the lowest since 2004, predicting a 2.8 percent contraction this year to 83.4 million barrels a day as the economic slowdown worsens. The Organization of Petroleum Exporting Countries also reduced its world demand forecast yesterday, estimating a 1.6 percent decline for 2009.

London-based BP owns, or has a stake in, 17 refineries around the world, including plants in Rotterdam and Texas City, Texas.
â€œI am not a gloom and doom merchant because the world needs refining and needs refining to be economic,â€ Conn said. â€œWhat I have never believed in is the golden age of refining people were forecasting three, four years ago.â€
Conn spoke while attending BPâ€™s annual shareholders meeting
Conn spoke while attending BPâ€™s annual shareholders meeting today.

Petroplus Holdings AG, Europeâ€™s largest independent refiner by capacity, said on Feb. 5 it plans to run refineries 24 percent below capacity this year because of falling demand for fuel.

In January, ConocoPhillips said it expected â€œcontinued economic run reductionsâ€ at its Wilhelmshaven refinery in Germany during the first quarter, and Royal Dutch Shell Plc, Europeâ€™s largest oil company, also said some of its plants would operate at reduced rates.