More than 20% of global refining capacity is at risk of closure

Energy consultancy Wood Mackenzie said in a recent report that more than 20 per cent of global refining capacity would be at risk of closure, as refining margins would fall in line with falling demand and carbon taxes could also place a heavy burden on refiners.

Wood Mackenzie analysis shows that the global refining capacity at risk of closure is 20.2 million barrels per day, accounting for 21.6% of total refining capacity. European refineries are at higher risk of closure.

European refiners' profit margins will start to fall from 2030 due to the removal of free carbon allowances, while transport fuel demand in developed countries is expected to decline from 2025, Wood Mackenzie said. In addition, Europe's long-standing trade in fuel exports to Nigeria is likely to fall sharply when the Dangote refinery, Africa's largest, comes on stream this year.

At the same time, oil majors have also announced that they will close refineries in Europe and convert them into biofuel production facilities. Such as Eni's refinery in Livorno, Italy, and Shell's refinery in Wesseling, Germany, the latter will be converted into base oil production plants.