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Europe’s ‘ghost town’ refineries spook oil company results

Screen Shot 2014-07-24 at 00.07.20Extracts from a Reuters article by Christopher Johnson published Wednesday 23 July 2014

LONDON, July 23 (Reuters) – Europe is coming under increasing pressure to close oil refineries as chronic over-capacity hits processing margins, dragging down group profits and hitting share prices.

Poland’s PKN Orlen and Czech processor Unipetrol both announced unexpected large losses on Wednesday after impairment charges at processing plants.

Larger oil peers Royal Dutch Shell, BP and Eni will report next week and refining is expected to weight heavily on the results.

Stephen George, principal consultant at KBC Advanced Technologies and a specialist in global refining economics, says many European refiners will have to close eventually, no matter how strong the political pressure to save jobs.

“I don’t like to play the grim reaper,” George told Reuters’ Global Oil Forum, “But when you consider the market, there are challenges both to scale and product/market alignment.”

“Some sites will certainly close.”

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