August 22, 2020 Read More →

Refiners face ‘adapt or die’ scenario in wake of pandemic

Dawn:

THE state of activity in the refining sector is an interesting barometer for the things to come in the crude sector. After all, we use products and not crude. And crude is converted into the required products by refineries. The rate of conversion thus remains a ‘good’ indicator of crude demand.

And today, the refining industry is not in the best of the shapes.

Several refiners and oil majors have announced permanent closures in the United States and Asia, while analysts believe that some high-cost refineries in Europe could also be shut down over the next few years as margins for processing crude into fuels are expected to remain depressed, Tsvetana Paraskova, said in a piece for oilprice.com.

Kathy Hipple, an analyst with the Institute for Energy Economics and Financial Analysis (IEEFA), while talking to CNBC termed petrochemicals “the last frontier for the oil and gas industry”. Yet, petrochemicals were “a poor bet” from the beginning, even before the coronavirus crisis, underlined Hipple.

The current state of the global refining industry is enough to underline; the demand for most of the products is declining and that the energy sector is past its peak.

[Syed Rashid Husain]

More: Murky outlook for oil demand

Posted in: IEEFA In the News

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