European Refinery Investment Outlook – Upgrading But Competition Pressing
•Profit declines hurting cash for capital expenditures
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•Outlook for distillate demand still increasing, but recession reprieve encourages delays
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•Refinery projects are mostly in Southern Europe
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•New capacity from India and Middle East is very competitive
SThere are similarities between the U.S. and European refinery investment situations. Reduced profits are impacting capital for investment expenses, but we have seen less press about European project delays than U.S. delays.

SThe major focus of European refinery projects is increased hydrocracker capacity. However, projects also include over 300 thousand barrels per day of distillation capacity expansions and 150 thousand barrels per day of additional coking capacity.

SRefinery projects are concentrated in southern Europe (Spain, Portugal, Italy and Greece).  At about 2/3 of projects are in that region, with the other third in Eastern Europe.

SIn 2009, talk of refinery closures has increased in Europe. The recently started-up  Reliance export refinery in India and potential new capacity in the Middle East are adding to concerns already triggered by lower utilizations.  Not only does new capacity increase surplus supply, it is generally quite efficient and thus very cost competitive, adding much pressure to less efficient facilities.