EN    EN EN 
 
EN    EN  EUROPEAN COMMISSION 
Brussels, 17.11.2010 
SEC(2010) 1398 final 
  
COMMISSION STAFF WORKING PAPER 
ON REFINING AND THE SUPPLY OF PETROLEUM PRODUCTS IN THE EU 
 
 
Accompanying document to the 
  
COMMUNICATION FROM THE CO MMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMI TTEE OF THE REGIONS 
  
Energy infrastructure priori ties for 2020 and beyond -  
A Blueprint for an integrated European energy network 
  
{COM(2010) 677 final}  
 
EN 2   EN TABLE OF CONTENTS 
1. Executive summary...................................................................................................... 4 
2. Introduction................................................................................................................ .. 5 
3. Overview of refining and the supply of petroleum products in the EU....................... 6 
3.1. Key facts on EU refining and trade in petroleum products.......................................... 6 3.2. Current and future key challeng es of the EU refining sector....................................... 7 
3.2.1. The evolution of demand ............................................................................................. 7 3.2.2. Demand & supply imbalance and dependence on trade .............................................. 9 3.2.2.1. EU refining supply out of step with evolving demand ................................................ 9 3.2.2.2. Growing trade deficits................................................................................................ 10 
3.2.3. Supply challenges....................................................................................................... 12 
3.2.3.1. Falling productions of North Sea Crud e and variations in crude quality................... 12 
3.2.3.2. Adapting supply to regulation.................................................................................... 13 3.2.4. The profitability of the EU refining industry ............................................................. 14 3.2.5. Global competition coming to the EU ....................................................................... 15 3.2.6. Investments in upgrading the EU refini ng sector: increasing middle distillates 
capacity ...................................................................................................................... 1 6 
3.2.7. Impacts of restructuring of the sector: reducing gasoline capacity............................ 18 
3.2.8. Long-term – 2050 and beyond: Preparing for a “decarbonisation era” in the EU..... 20 4. Impacts of future demand developments on the refining industry by 2030............... 21 4.1. Demand projections according to im plemented and adopted policies....................... 21 
4.2. The impact of demand projections on the EU refining industry................................ 24 4.2.1. Impacts in terms of refining investments................................................................... 24 4.2.2. Utilisation of refining units ........................................................................................ 26 4.2.3. CO2 emissions ........................................................................................................... 27 
4.2.4. Summary: impact of demand projec tions on the EU refining industry ..................... 28 
1. Annex 1: Refining and applic ations of refining products .......................................... 29 
1.1. Introduction to refining .............................................................................................. 29 1.2. Refined products ........................................................................................................ 29  
1.3. Refinery processes ..................................................................................................... 29 
 
EN 3   EN 1.3.1. Separation.............................................................................................................. ..... 30 
1.3.2. Treating ................................................................................................................ ...... 30 
1.3.3. Conversion .............................................................................................................. ... 30 
1.4. Types of refinery units ............................................................................................... 30 1.5. Refinery yield............................................................................................................ . 32 
2. Annex 2: Characteristics and evol ution of the EU refining sector............................. 33 
2.1. Description of the EU refining sector ........................................................................ 33 2.1.1. Capacity................................................................................................................ ...... 33 
2.1.2. The players in the EU refining mark.......................................................................... 33 2.1.3. Refining margins........................................................................................................ 36 
2.2. Role of the EU refining sector in  the supply of petroleum products ......................... 39 
2.2.1. Output of the EU refining sector................................................................................ 39 2.2.2. Utilisation rates ....................................................................................................... ... 40 
2.2.3. EU demand for petroleum products ........................................................................... 42 2.2.4. Imports and exports of petroleum products to/from the EU ...................................... 45 3. Annex 3: Description of scenario  analysis and model assumptions .......................... 48 
3.1. PRIMES demand projections..................................................................................... 48 
3.1.1. Description of main assumptions in th e PRIMES 2009 Baseline and the Reference 
scenario ...................................................................................................................... 4 8 
3.1.2. PRIMES petroleum products demand projections..................................................... 50 3.2. Description of OURSE refining modu le of the POLES energy model...................... 52 
4. Annex 4: Summary of key projects & pla nned/actual divestments in the EU refining 
sector ......................................................................................................................... . 54 
5. Annex 5: Non-EU refining capacity  developments & divestments........................... 56 
 
EN 4   EN 1. EXECUTIVE SUMMARY  
1. Falling demand in petroleum products in the EU  in the last few years at a time of 
stable levels of refining capacity has in tu rn affected refining margins, which in 2009 
were at their lowest leve ls in the last 15 years. 
2. The EU petroleum product market is a matu re market. On top of long-lasting effects 
of the global financial and economic cr isis, EU regulations to tighten fuel 
specifications, reduce emissions from refineries and cars as well as to provide support for the development of non-fossil fuels point towards a future of diminishing demand for petroleum-based products. 
3. The demand for certain products, in particul ar middle distillates such as jet fuel, 
kerosene and gasoil, including marine gasoil, is however expected to continue to 
grow for a few more years. On the other hand, gasoline demand in the EU is widely 
expected to fall further. 
4. In 2008, net imports of gasoil/diesel amount ed to 20 million tonnes, equivalent to 
6.9% of EU gasoil/diesel consumption while net exports of gasoline amount to 43 million tonnes, equivalent to 31% of EU  gasoline production. If net imports of 
kerosene and jet fuels are taken into account , the EU shortfall in middle distillates 
amounts to upwards of 35 million t onnes of net imports per year. 
5. In order to contain or reduce these trade deficits, the EU refining industry would 
have to invest significantly in additi onal refinery conversi on capacity to produce 
more middle distillates, and it would ha ve to reduce gasoline-focussed refinery 
capacity. 
6. The additional units ne eded to produce increasing am ounts of middle distillates are 
more energy intensive, and emit more CO2 than other types of units. The EU 
refining sector, which is included in the EU Emissions Trading Scheme, will 
therefore have to pay more for the CO2 em issions from (more complex) refineries 
producing more of the products which the EU requires (i.e.:  middle distillates) 
7. Overall, known planned/actual divestments and shutdowns in EU refining capacities 
since the start of the crisis in 2008 exte nd to 18 out of 104 refineries in the EU, 
representing some 134 million tonnes per year/2.7 million bbl/day of crude capacity, 
equivalent to 17% of total EU refining cap acity. Only two of these facilities have 
been sold, others have been put up for sale for some time but have found no buyers, 
others yet have been shutdown for exte nded maintenance until market conditions 
recover. It is not known how many employees these 'vulnerable' refineries represent. 
8. While the industry employs di rectly some 100,000 people in the EU, it is estimated 
that perhaps as much as 400,000 to 600,000 Eur opeans in total are directly dependent 
on the EU refining industry for their livelihood. This does not include other 
dependent industries, the largest of which, the petr ochemical industry, employs 
778,000 staff in the EU. 
 
EN 5   EN 9. EU refining capacity upgrading is expected to lead to quite significant reductions in 
exports of (excess supply of) gasoline by 2030, while it is expect ed that the import 
dependence of the EU in gasoil/die sel will continue to increase by 2030.  
10. Even under a scenario of increasing EU depe ndence in gasoil/diesel, the industry will 
be faced with necessary investments in Eur opean refining capacity upgrades in order 
to cope with further growth in demand for middle distillates (incl uding as a result of 
changing sulphur fuel speci fications for ships).  
11. Depending on assumptions on the development of the crude diet in Europe between 
2005 and 2030 and taking into account ad opted and implemented EU policies, 
investments required to upgrade European refining capacities in that period could 
amount to between 17.8 and 29.3 billion Eu ros, of which between 3.3 and 11.7 
billion Euros alone wi ll account for future marine sul phur fuel specification changes 
to be transposed into EU regulation by the end of 2010.  
12. It is estimated that the amount of investme nts that the refining industry in Europe has 
already committed to spending (in what it calls firm projects) between 2010 and 
2020 is of the order of 13.3 billion Euros.  
13. In spite of projections of declining dema nd for fossil fuels, processing intensity in 
refining will increase as a result of more stringent product specifications, in 
particular as a result of new IMO changes. One possible consequence is that refinery 
CO2 emissions will increase betwee n 2005 and 2030, by around 6%  (and increasing 
by 12% between 2005 and 2020), mainly as a di rect result of the needs for hydrogen 
in refinery units geared towards produci ng higher proportions of new IMO compliant 
fuel. 
14. Significant falls in the projected EU demand for transport gasoline by 2030 
according to PRIMES (20.7% in the Reference scenario) point to the need for gasoline-focussed refinery plant restructur ing, with up to a third of necessary 
capacity reductions, depending on the type of unit.  
2. 
INTRODUCTION  
In November 2008, the Commission announced in the Second Strategic Energy Review1 
(SER2) that a Communication on Refining Capac ity and EU Oil Demand would be prepared 
in 2010. SER 2 focussed on energy security and, given the EU's dependence on oil imports and also on the exports and imports of petr oleum products, highlight ed both the need to 
improve the level of transparency of the dema nd-supply balance for refining capacity as well 
as concerns regarding the pot ential availability of diesel fuel in the future. 
Since November 2008, the concern has shifted from being mainly one of security of supply to 
considering also how the EU refining indu stry's adaptation to a changing business 
environment is likely to impact the EU a nd on how EU policies to decrease the EU's 
dependence on fossil fuels will further add pressure  on the EU refining sector. In light of these 
developments, it was decided th at a factual study, in the form  of a Staff Working Document, 
would be prepared instead of th e Communication announced in SER2. 
                                                
 
1 COM(2008) 781. 
 
EN 6   EN This Document accompanies the Communication on the energy infrastruc ture priorities for 
2020 and 2030 in which the continued contribution of oil to the EU energy mix and to the transport sector up to 2030 is underlined and where it is highlight ed that the future shape of 
crude oil and petroleum product transport infr astructure will also be determined by 
developments in the European refi ning sector. In that context, the focus of this document is to 
provide some light specifically on the refini ng activity and the supply of petroleum products 
in the EU, and as such to highlight and explai n key current and future challenges of the EU 
refining industry as well as to report some  initial quantification of a number of those 
challenges in terms of the impacts by 2030 of PRIMES EU petroleum product demand 
projections. It also contai ns a detailed, factual ac count of the characteris tics of the EU refining 
industry and some comparisons to other parts of  the world in order to  provide the necessary 
background and context for th ese challenges and impacts. 
3. O
VERVIEW OF REFINING AND THE SUPPLY OF PETROLEUM PRODUCTS IN THE EU 
3.1. Key facts on EU refining and trade in petroleum products 
• In May 2010 there were 104 refineries operating  in the European Union. The EU's crude 
refining capacity currently represents 778 m illion tonnes per year (or 15.5 million barrels 
per day), equivalent to 18 % of total global capacity; 
• The EU is the second largest producer of petr oleum products in the world after the United 
States;  
• There are refineries in 21 Member States w ith the exceptions of Cyprus, Estonia, Latvia, 
Luxembourg, Malta, and Slovenia; 
• The global financial and economic crisis that began in 2008 has impacted margins in all 
regions of the world. If aver age annual margins are compared, North-West Europe has 
however fared rather better th an other regions in comparis on in the last three years; 
• The average utilisation rate2 in OECD Europe in 2009 amounted to 79%, compared to 85% 
the previous year. So far in  2010, utilisation rates averag ed 76%, showing a continuing 
downward trend. This needs to be put in the context of  previous utilisati on rates for the EU 
close to 90% as recently as 2005; 
• Looking at the evolution of the petroleum pr oduct demand mix in the EU, the share of jet 
fuel and kerosene has increased between 1990 and 2008 from repres enting 5.5% to 9.4%; 
the share of gasoil (including diesel but not heating oil) fr om 17.7% to 31%; the share of 
gasoline from 22.7% to 16.1% and the share of heavy fuel oil from 16.3% to 6.4%; 
• The two key trade petroleum products in the EU in terms of volume have been gasoline 
and gasoil/diesel (inc lude heating oil), gasoil/diesel being the main petroleum product 
imported into the EU while gasoline is the main product exported from the EU. The EU is 
also very import-dependent on jet fuel and kerosene; 
• Russia is the biggest supplier of gasoil/diesel to the EU, followed by the United States, 
while the United States is the largest recipi ent of gasoline from th e EU. In the case of 
kerosene/ jet fuels imports, the third largest traded produc t, the EU mainly relies on a 
number of Middle Eastern countries. 
                                                 
2 Based on crude throughput as a proportion of operable refining capacity. 
 
EN 7   EN 3.2. Current and future key challenges of the EU refining sector 
3.2.1. The evolution of demand It is widely considered that the EU petroleu m product market is a mature market which has 
more than likely already hit its peak. Between 1990 and 2008, EU demand for petroleum 
products grew by an average of only 0.2% a year , recording its highest  level in 2005 after 
which it fell every year, register ing a 3% fall between 2005 and 2008.  
EU 27 Petroleum product demand evolution, 1990-2008 
0100200300400500600700
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Mtoe
LPG Naphta Gasoline Jet fuel & kerosene Heating oil Gas oil Heavy fuel oil Other Maritime bunker
 
Source: EUROSTAT/PRIMES 
Analysing the progression of demand in individua l petroleum products reveals very different 
trends. Between 1990 and 2008, jet fuel and kerosene consumption almost doubled; consumption in gasoil
3 registered a steady and sust ained growth; demand for naphta 
registered an initial increase and then a fall; demand for gasoline and heating oil fell quite sharply, while demand for heavy fuel oil
4 fell significantly. 
Projecting forward towards the short-to-medium term, what is relatively certain is that the fall 
in heavy fuel oil will continue, given the gradua l eradication of the us e of such products due 
to regulation on the specification of petroleu m fuels towards cleaner, less polluting fuels.  
With regard to the evolu tion of middle distillates5, it is expected that  heating oil should 
continue to fall as more efficient and environmentally friendly district heating systems continue to replace traditional oil burners. Gasoil evolution will depend on a number of 
variables, such as whether EU support to promote the wider use of non-fossil fuels is 
successful; whether tighter marine fuel specifications will lead to a broad switch from residual 
                                                
 
3 Unless otherwise specified, gasoil refers to transpor t diesel fuel, of which ov er 90% is used in road 
transport. 
4 Heavy fuel oils other than bunker fuels are used in medium to large industrial plants and power stations 
in combustion equipment such as boilers and furnaces.  
5 Middle distillates include heating oil, diesel, kerosene and aviation/ jet fuel. Heating oil is mainly used 
in domestic heating, while diesel is used as a motor fu el and also as a fuel in agricultural vehicles, small 
boats and trains. Jet fuel and kerosene are used to power airplanes and kerosene is also sometimes used 
in domestic heating. 
 
EN 8   EN fuel to marine gasoil rather than desulphurised residual oil; and, to a le sser extent, whether the 
EU-wide tax differential between road diesel and gasoline6 is maintained7. Kerosene/ jet fuel 
demand is however expected to continue to grow until large scale use of suitable renewable fuels in airplanes. 
Equally, the direction of growth of the dema nd for light distillates (LPG, gasoline and 
naphta), will depend on a number of considerations . In particular, the development of demand 
for gasoline will depend on the growth and succe ss of alternative fuel vehicles and energy 
taxation (as for gasoil), as well as developments  in the penetration of sustainable, renewable 
fuels in the US (see section 3.2.2.) and gasoline engine efficiency. 
Other than economic developments, the two factors most likely to impact future demand for 
petroleum products in the EU are the forthcomi ng revision of the Sulp hur Content in Liquid 
Fuels Directive (SCLFD) to integrate tighter in ternational regulations on the sulphur content 
of marine fuel
8 as well as recent legislation to re duce CO2 emissions from new cars and 
transport fuels9. 
The requirement to supply future marine fuel wi th a maximum sulphur content of 0.1% in the 
Baltic Sea and the North Sea & English Channel could amount to an increase in demand for 
middle distillates of around 15 million tonnes per year from 2015 (which represents close to 
8% of EU gasoil demand in 2008).  
This very much depends on how the new changes are dealt with. There is the possibility that 
ships will widely opt to conti nue using high sulphur fuel oil af ter having installed on-board 
scrubbers to remove sulphur from fuel oil.  
Notwithstanding the fact that ship owners switc hing to gasoil will likely have to pay more for 
their fuel than if they continued to use fuel oil10, a key advantage for ships from scrubbing is 
                                                 
6 According to June 2010 figures from the Commission Oil Bulletin, while pre-tax consumer prices of 
premium unleaded gasoline are lower than for diesel in  all but 1 of the EU 27 Member States (Malta), 
higher taxes and duties on gasoline means that the pri ce of diesel is cheaper at the pump in 26 of the 27 
EU Member States (with the exception of the United Kingdom). See more details in annex. 
7 A future revision of the Energy Taxation Directive may address this differential, but even if it proposed 
changes which would lead to the disappearance of th is differential across the EU, it would take a while 
to have an impact given 10 to 15 year replacement cycles for cars and given that most diesel is still used 
by commercial vehicles where the possibility to switch to gasoline is more limited.  
8 The 2008 revised International Maritime Organi sation MARPOL Annex VI regulation on sulphur 
restrictions in marine fuels provides for a shift to lo w sulphur fuel for maritime transport first within the 
European Emission Controlled Areas (the current fuel sulphur limit of marine fuels would be reduced from 1.5% to 1.0% by 2010 and then to 0.1% by 2015) and in a second phase, globally where the 
maximum permitted sulphur level would be reduced from 4.5% to 3.5% by 2012 and then to 0.5% by 
2020 (with an alternative date of 2025 if suitable fu el is not available, to be decided by 2018). The 
European Emission Controlled Areas are the Ba ltic Sea and the North Sea & English Channel. 
9 Adopted in April 2009 along with the climate and en ergy package, it requires re ductions in the average 
fuel consumption of new cars, w ith binding targets of 130g/km (from 140g/km) by 2010 and 115g/km 
by 2020. The Fuel Quality Directive amended at the same time further tightens fuel specifications and 
introduces a requirement to lower life cycle GHG intensity of transport fuels by 6% by 2020. 
10 The key deciding factor will probably be the eventual  price of low sulphur marine fuels. According to 
Purvin & Gertz, bunker fuel for use in the emissions  control areas would be expected to cost in the 
range of $250 to $300 per tonne more for the 0.1% maximum sulphur content quality than the 1.5% 
maximum sulphur content quality. This represents an increase in the cost of the fuel of 60% to 75%. 
They estimate that 0.5% maximum sulphur content bunker fuel is expected to cost in the range of $120 
to $170 per tonne more than the current high sulphur quality. This represents an increase in the cost of bunker fuel in the range of 30% to 50%. Purvin & Gertz conclude that stack scrubbing is economically 
attractive for fuel cost price differentials well below $ 100 per tonne, and that stack scrubbing is likely to 
be very attractive economically compar ed to the price differentials above.  
 
EN 9   EN that it would allow them to meet sulphur cap requirements wherever the ship trades. There is 
however some scepticism on this option given th at many ships have held back from making 
the necessary investments to prepare for compliance with the existing EU requirement in the SCLFD of the use of marine fuels used by ship s on inland waterways and at berth in any EU 
ports containing no more than 0.1% of sulphur by January 2010
11.  
While sulphur fuel specifications could repres ent a source of increasing demand for (marine) 
transport fuel from EU refiners, it is expected  that CO2 emissions legi slation will contribute 
to improved efficiency of vehicles such as through increased penetrat ion of hybrid vehicles, 
thereby reducing the demand for transport fossil- fuels such as gasoil and gasoline. It is 
expected that this regulation will lead to a pe netration of conventional hybrids equivalent to 
27% of the total passenger fleet by 203012. 
3.2.2. Demand & supply imbalance and dependence on trade  
3.2.2.1. EU refining supply out of step with evolving demand 
Two trends which have characterised the growth  in demand for petroleum products in the EU 
since 1990 have been the continued, strong growth in middle distillates such as jet fuel and 
kerosene and gasoil on the one hand and the para llel strong falls in demand for gasoline on the 
other.  
Between 1990 and 2008, demand for middle distil lates (including heati ng oil) grew by 35% 
(and demand for jet fuel/kerosene and diesel increased by 82%), while demand for gasoline 
fell during that same period by 26%. In parallel , EU supply of middle di stillates between 1990 
and 2008 grew by 28%, while gasoline supply only fell by 4%. 
These developments resulted in a supply/demand imbalance in the EU w ith regard to such 
products which has led it to be dependent on tr ade in order to balan ce out demand and supply. 
                                                 
11 This led to a Recommendation by the Commission to Member States to request from ships that have 
failed compliance by that date to provide detailed evidence of the steps they are taking to ensure compliance, including a contract with  a manufacturer and an approved retrofit plan to be completed by 
no later than 1
st of September 2010.  
12 As contained in the PRIMES Reference scenario. 
 
EN 10   EN Evolution of EU net imports in  key petroleum products, 2000-2008  
-45,000-40,000-35,000-30,000-25,000-20,000-15,000-10,000-5,00005,00010,00015,00020,00025,00030,000
2000 2001 2002 2003 2004 2005 2006 2007 2008
ktGasoline
Gasoil and diesel
Kerosene & jet fuels
Naphta
Residual fuel oil
 
Source: EUROSTAT 
By 2008, gasoil/diesel (including heating oil) wa s the main petroleum product imported into 
the EU, reaching 20 million tonnes of net import s, equivalent to 6.9%  of EU gasoil/diesel 
consumption. In contrast, the main product ex ported from the EU was gasoline, with net 
exports of 43 million tonnes in 2008, equi valent to 31% of EU gasoline production. 
With regard to gasoil/diesel imports, Russia is by far the largest supplie r of the product into 
the EU, having exported 13.7 million tonnes of ga soil/diesel in 2008 to the EU. Though this 
amount only represents 4.8% of total EU demand of 288 million tonnes of gasoil/diesel for that year, it amounts to 35% of total gasoil/diesel imports. With  regard to gasoline, the EU 
exported 18.7 million tonnes of excess gasoline  to the US that same year, which was 
equivalent to 13.6% of EU gasoline production (of 137 million tonnes) and 37% of total EU 
gasoline exports in 2008.  
If net imports of kerosene and jet fuels are taken into account, the EU shortfall in middle 
distillates amounts to upwards of 35 million t onnes of net imports per year, imports of 
kerosene and jet fuel coming mainly fr om several Middle Ea stern countries.  
3.2.2.2. Growing trade deficits 
Should EU demand for middle distil lates continue to grow (which  is generally expected), and 
should the current structure of  EU refining remain unchange d, it will mean processing more 
crude and obtaining more middle distillates but also more gasoline, thereby leading to a 
widening of the EU supply/demand imba lance for diesel and gasoline.  
So far the US has served as a convenient outlet for excess EU gasoline but it is widely 
predicted to reduce its consum ption of gasoline going forward. While the US vehicle stock 
will continue to be dominated by gasoline in the foreseeable future, it is suspected that the demand for it has already peaked as more efficient vehicles are produced and as the 
proportion of biofuels (mainly ethanol) progressi vely grows to represent a greater proportion 
of US vehicle fuel use
13.  
                                                 
13 In its Annual Energy Outlook 2 009 reference case, the US Energy Information Administration projects 
falls in the growth of motor gasoline consumption in the US equivalent to -8.4% between 2010 and 
 
EN 11   EN But should there be other potential markets to which the EU could export its surplus gasoline 
production, keeping the status quo (in terms of refining capacity) could be an option for the 
industry. The most obvious markets are Africa and th e Middle East as thes e are the closest to 
Europe and both are expected to experience growing demand in gasoline going forward. 
However future gasoline trade deficits in both these regions are likely to be well short of 
current EU gasoline export levels. 
In terms of increasing imports of gasoil/diesel, while Russia has been a reliable source of 
supply to date, it could prove difficult for it to meet any substantial increases in EU demand 
for diesel imports given that Russian refinery capacity today remains at the same level as it 
was in the late 90's14 and also taking into account relativel y modest developments in capacity 
expected in the near future.  
On the other hand, it can be expected that th e situation which currently prevails in Russia 
which leads its refiners to proc ess more crude than is required  for domestic consumption in 
order to export the excess will remain in the foreseeable future. This situation is largely the result of the current tax regime which taxes crude exports more high ly than product exports. 
Russian oil export tariffs on light  oil products are typically 70% of export tariffs on crude oil, 
and export tariffs on heavy oil products repr esent only around 40% of crude export tariffs
15. 
Thus it can be expected that Russia will cont inue to run a trade surplus in diesel in the 
forthcoming years. 
Other countries like China, India or Saudi Ar abia have greatly expanded diesel capacity in 
recent years and could be relied upon to supply th e EU market (with the fa rthest locations still 
being open to debate, as mentioned in the gl obal competition section). This being said, 
demand for diesel is expected to grow signifi cantly across the globe, with the Asia Pacific 
region in particular foreseen to be running a large diesel deficit going forward as diesel 
experiences the fastest growing demand of refi ned products in the region. And while North 
America is currently the second biggest supplier of diesel to  the EU, running a surplus in 
diesel capacity of upwards of 30 million tonnes, it is expected  that it will run only a slight 
diesel surplus from 2015 as it becomes the fast est growing refined product in demand there, 
reflecting increasing volumes of road freight and some dieselisation of the private car fleet16. 
In conclusion, should the refini ng industry opt for the status quo in an environment of 
growing demand for middle distilla tes, the EU's import deficit in middle distillates will extend 
further. This is not only a problem for the EU in terms of growing import dependence for such 
products, it is also a problem for the EU refini ng industry in terms of growing pressures to 
                                                                                                                                                         
2020 and -5.2% between 2020 and 2030 (equivalent to a fall of -13.1% between 2010 and 2030). 
Upcoming emission standards as well as the passing of the 2007 US Energy Independence and Security 
Act which promotes the use of biogasoline represent key influences on future US demand for gasoline. 
In addition, the Obama administration has brought forward a requirement for better vehicle fuel consumption. By 2011, the Corporate Average Fuel Economy requirement on car-manufacturers will 
shift from an average consumption of 27.3 miles pe r gallon from the current requirement of 35.5 miles 
per gallon. 
14 According to Russian oil refining capacities containe d in the BP Statistical Review of World Energy 
2009. Note however that in his re port to the State Duma on the 2nd of December 2009, the Russian 
Energy Minister announced that between 1.2 to 1.4 trillion roubles (32 billions Euros) would be 
invested into upgraded refinery capacity in Russia. 
15 The Russian Ministry of Economic Development has recently prepared amendments to customs tariffs 
which provides for more equal export tariffs for light and heavy products. 
16 Projections by Wood Mackenzie, as part of its work evaluating the impact of biofuels on the EU 
refining industry for the European Commission. 
 
EN 12   EN export excess gasoline supply to other markets, which is not evident given expected future 
developments in world demand for gasoline and diesel.  
3.2.3. Supply challenges 
3.2.3.1. Falling productions of North Sea Crud e and variations in crude quality 
North-Sea crude production (from Norway, UK, Denmark) fell from 6.4 to 4.3 million barrels 
per day between 2000 and 2008. Over the same period, the supplies to Europe of heavier, sourer/more sulphurous, crudes from Russia and Africa have been growing. The result has 
been an increase in the proporti on of heavy and sulphurous crude s coming into EU refineries, 
as well as a higher dependence on oil imports from third-part y countries which represented 
80% of EU crude refinery inta ke in 2008 against 75% in 2000. 
The impact on the EU refining industry of light er crude being replaced by heavier crude has 
varied according to region, with North-Western European (NWE) refineries being especially 
concerned
17. Conversely, in Central Europe, refine ries are often located on the Druzhba 
pipeline, and the great majority of their intake is Urals crude. In the Mediterranean area, the 
larger proportion is Arabian Gulf, which is ag ain heavier than Urals crude, with similar API18 
but higher sulphur content, followed by Urals crude.  
Falling productions of North-Sea crude in an  environment of growing demand for lighter 
distillates represents a major concern for the NWE refining industry. Lighter crude oils such 
as North-Sea crude produce a higher share of more valuable, light products that can be 
recovered with simple distillation, while heav ier crude oils produce a greater share of lower-
valued products (such as fuel oil) with simp le distillation and ther efore require additional 
processing to produce higher value products.  
North-Sea crudes have an addi tional attractive property, in having low sulphur content. 
Higher sulphur crudes are natura lly less valuable in an environment of lower sulphur fuel 
specifications, such as in the EU. In additi on, the impurities in heavy, high sulphur crudes, 
such as nitrogen and metal, ge nerally increase as the crud e becomes heavier and further 
increase the processing severity required to  convert the heavy crude s to light products.  
The quality of crude oil thus di ctates the level of processing and re-processing to achieve the 
optimal mix of product output, with a trend towards heavier and more sulphurous crudes 
leading to a more complex, and costlier, refi ning process, such as via the use of deep 
conversion and/or desulphuriz ation units, also leading to higher CO2 emissions. 
Going forward, it isn't clear how Europe will be affected by the changing global crude diet. In 
the short term, according to the IEA, the averag e crude density may slightly lighten with a 
marginal decrease in th e sulphur content until 2014 mainly due to the impact of growing 
condensate19 volumes produced by OPEC countries. Li ghter supplies from Russia, Africa and 
the Middle East are also expected to increase according to the IEA, pa rtly offset by expected 
Canadian crude mix, where new production from heavy oil sands is mostly sour. 
In the longer run, it is expected that NWE crude intake from the Urals, the Caspian region and 
the Middle East will gradually come to represent growing proportions. This trend may 
                                                 
17 Nearly 100% of the crude refinery intake in Ireland and Denmark is North-Sea originated, followed by 
the UK (80%), Sweden (57%), Germany (27%), France (21%), Finland (17%), the Netherlands and 
Belgium (14%).  
18 API expresses a crude's relative density, with th e higher the API gravity, the lighter the crude. 
19 Condensate is a very light, liquid hydrocarbon stream that is recovered from the processing of gas and 
the gas from oil reservoirs and can be regarded  as almost identical to a light sweet crude. 
 
EN 13   EN become a key challenge for refiners in that region, pushing them towards investments for the 
adaptation of their plants  in order to refine the changing flow of crude. 
3.2.3.2. Adapting supply to regulation  
The impact of biofuels20 
In the EU, it is expected that much or all of the growth in motor-fuel supply, which represents 
the biggest use of processed crude oil, will be  in biofuels in the next twenty years. 
A key driver of the supply of biofuels in the EU will be the Renewable Energy Directive 
which sets a 10% target for the use of renewabl e energy in the transport sector by 2020, the 
majority of which is expected to be contribut ed from biofuels, which have to meet certain 
specific sustainab ility criteria.  
The increasing use of biofuels will have an imp act on EU refiners in terms of a reduced need 
for the supply of conventional fossil transport fuels. In the case of biodiesel, it has the 
potential to reduce the growing pr essure on the need for diesel..  
On the other hand, increasing the share of bioga soline blendstocks such as ethanol in the 
European gasoline pool could reduce further the market for refinery-produced gasoline, which 
would be problematic to refiners given that th ere is already an exce ss of gasoline-producing 
refinery capacity in Eu rope, as noted earlier.  
Tightening marine sulphur fuel restrictions & increasing supply of  middle distillates 
The future marine sulphur fuel specification requirements mentioned above are likely to pose 
difficulties to the industry in supplying the resulting demand. While supplying 1% sulphur 
fuel should not pose significant problems for re finers – blends can simply be modified to 
redistribute the higher sulphur components - the real challenge will be the changes to 0.1% 
sulphur content and 0.5% respectiv ely for the ECAs and the rest of the world, as these will 
likely require the conversion of bunker fuels to diesel21. This will require investment in 
desulphurisation or c onversion capacities. 
However, the production of additional gasoil, wh ether for the marine se ctor or in order to 
meet current EU demand, poses an additional problem for the EU refining sector as it implies further cracking/breaking up of th e heavier remaining products. Complex refineries are more 
energy intensive, and emit more CO2 than si mple refineries. Ever y additional cracking 
process and every additional desulphurisation step needs energy and thus increases CO2 
emissions. Thus, increasing gasoil production in the context of ever tighter sulphur 
specifications will lead to an increase in  CO2 emissions by the EU refining sector
22.  
                                                 
20  A detailed analysis of the impact of the use of biofuels on EU oil refining will be published by the 
European Commission in the Autumn of 2010. 
21 Current technology cannot achieve reductions in the sulphur content of residues to 0.1% unless a very 
low sulphur feed is used. If it was possible, it is questionable whether refiners would not rather prefer to 
focus instead on converting residual fuel to other lighter, more valuable fuels, and decide to stop 
supplying the bunker market altogether. 
22 2009 estimates of the costs of changes in marine sulphur fuel specifications by Purvin & Gertz for the 
European Commission, are for 7 million tonnes per year of extra carbon dioxide emissions by 2015 (due to changes to 0.1% sulphur content), representing an increase of 5% versus Baseline carbon 
dioxide emissions of 142 million tonnes in 2015. Including the change to 0.5% globally, total increases 
in CO
2 emissions by 2020 could reach 11.8 million tonnes per year. 
 
EN 14   EN The EU refining sector, which will  be required either to purchase permits to emit CO2 or to 
improve the CO2 emission efficiency of its plants23, will therefore have to pay more for the 
CO2 emissions from (more complex) refineries  producing the products which the EU requires 
(i.e: middle distillates). For the same reason, careful consideration of the impact on refineries 
needs to be given when designing the implementation measures to reduce fuel life cycle Green House Gas (GHG) emissions (contai ned in the Fuel Quality Directive). 
This leaves the EU with the dilemma of on the one hand becoming more heavily reliant on 
imports of petroleum products into the EU or  on the other hand, hoping that the EU industry 
will produce more of the required products, even if (all else being equal) it means emitting 
more CO2, and therefore having to pay for it.  
The future price of carbon in the ETS scheme is therefore a crucial issue to the industry and to 
the EU, as the higher it is, the more the risk that  it exceeds the freight costs that an importer of 
refined products such as diesel would incur from shipping the product from abroad, with no 
overall benefit in te rms of CO2 emissions. 
According to the refining industry, it would ha ve to buy about 25% of its allowances to 
maintain activity which, inclusive of the addi tional costs of CO2 in purchased electricity, 
should cost the sector over 1 billion Euros a year based on a price of 30 Euros per ton
24. 
3.2.4. The profitability of the EU refining industry 
Falling demand for petroleum products at a time of stable levels of capacity have in turn 
significantly affected refining margins25. The impact of the recent crisis on refining margins 
has been particularly significan t, as the chart below shows, w ith both simple (hydroskimming) 
and complex (cracking) margins hitting 15 year lows in 2009. 
                                                 
23 As the EU refining industry is included in the EU  Emissions Trading Scheme (the ETS). Note that the 
EU refinery industry has been recognised as being at risk of carbon leakage, on the grounds that crude oil and derived products are moved around the world in a very open market in which there is complete 
exposure to worldwide competition, which will allow the industry to obtain free permits for the first two 
years of the third phase of the EU emissions tr ading scheme (2013-2014). Free allowances will in 
principle be allocated based on product-specific benchmarks for each relevant product. The starting 
point for the benchmarks is the average of the 10% most efficient installations, in terms of greenhouse 
gases, in a sector or sub-sector in the Community in the years 2007-2008. The use of such benchmarks 
is to ensure that the allocation takes place in a manne r that gives incentives fo r reductions in greenhouse 
gas emissions and energy efficiency efficient techniques. Furthermore, given that the benchmarks will 
be stringent, only the most efficien t installations will have any chance of receiving all of their needed 
allowances for free.  
24 It is however worth noting that the carbon price in the EU Emissions Trading Scheme has been trading 
at prices much below 30 Euros per ton, a combinati on of the crisis, higher than expected energy prices 
and the build up of considerable buffer of unused fr eely allocated allowances, which can be carried over 
into phase three (2013-2020) of th e ETS. The ETS carbon price in th e PRIMES Reference scenario in 
2030 is 19 Euros per tonne of CO 2, much lower than the PRIMES Baseline (of 39 Euros) due to the 
achievement of the renewables targets and additiona l efficiency measures, which decrease electricity 
demand and emissions.  
25 The refinery margin is the profitability that results from processing a barrel of crude oil. It reflects the 
difference between the market value of the combination of products produced by the refinery and the 
cost of buying the crude at market price as well as the operating costs incurred in the refining process. 
 
EN 15   EN Refining margins for simple and complex refiners Jan 1995 – Feb 2010 
-10-5051015
janv-95
juil-95
janv-96juil-96janv-97
juil-97
janv-98juil-98janv-99
juil-99
janv-00juil-00
janv-01
juil-01
janv-02
juil-02
janv-03
juil-03janv-04
juil-04
janv-05juil-05janv-06
juil-06
janv-07juil-07janv-08
juil-08
janv-09juil-09
janv-10US $/bbl
NWE Brent Cracking MED ES sider cracking MED Urals cracking NWE Urals cracking
NWE Brent hydroskimming MED ES sider hydroskimming MED Urals hydroskimming NWE Urals hydroskimming 
Source: IEA 
Going forward, there are divergent views on when  the sector will experience a recovery in 
margins, and to what extent. While acknowledging a recovery in margins at the start of 2010 
due to a drawdown in oil product invent ories and recovering demand, the IEA26 predicts that 
the construction of refineries gl obally over the past two years a nd a massive contraction in oil 
consumption during the recession have led to a gl ut of capacity at the global level. It thus 
maintains a bearish short-term ou tlook for the industry globally.  
Looking further ahead, the combination of th e prospect of increasing demand for middle 
distillates – including widespread global dieselisation (as menti oned above) – with consequent 
increases in low-sulphur fuel/middle distillates27 prices as well as  rising crude prices28 lend 
support for a recovery in complex ma rgins in the coming years in the EU29.  
3.2.5. Global competition coming to the EU 
Asia and the Middle East have been building ne w, larger, more cost effective and generally 
more complex refining units in recent years, su ch that they are becomi ng key players in global 
refining markets.  
In spite of the crisis, Asia and the Middle Ea st have added 1.6 million bbl/day of new crude 
distillation capacity in 2009, and at least a further 600,000 b/day is expected in 2010. In terms 
of expected refining projects in the next five years, the two regions combined will add nearly 
three quarters of all additional capacity in  the world (see annex 5 for more details). 
                                                 
26 January 2010 Oil Market Report. 
27 According to Purvin & Gertz, tightening sulphur marine fuel sulphur speci fications would lead to 
increases in the prices of bunker fuels of between 30% and 75% in the Emission Controlled Areas by 
2015. 
28 Hydrocracking margins tend to be highest when cr ude prices are high and there is a wide price 
difference between light and heavy crudes, as hydroc rackers can take lowest-cost heavy crude and sell 
products into a high price market. 
29 As part of its work evaluating the impact of biofuels on the EU refining industry for the European 
Commission, Wood Mackenzie presen ted projected NWE Urals cracking margins (more relevant going 
forward than Brent cracking margin s) to reach $3.45/bbl in 2010 co mpared to $2.62/bbl 2009 and 
$4.62/bbl in 2008. According to the consultant, margin s should continue to rise slowly, reaching levels 
of $5.13/bbl in real (2010) terms by 2015. 
 
EN 16   EN Given the closeness of the region to Europe, expectations are that the Middle East will likely 
become a key provider of refined products, es pecially of middle dis tillates, to Europe. 
European imports of kerosene and jet fuels al ready mainly originate from that region. The 
region is currently planning some  1.7 million bbl/day of additional capacity which is expected 
to come on stream by or around 2015. New proj ects include several large export-focussed 
refineries which are being co-financed by European -based oil majors such as Shell and Total.  
For some, the idea of even importing refined produc ts from places as far from Europe as Asia 
is not far-fetched, with the view that operators of large refineries ther e could prove able to 
deliver products to the EU at pr ices competitive with home production30. While this may be 
true, the extra freight and logi stics costs of importing from su ch distant places could mean 
that the price of end-products will rise, to the disadvantage of  end-users. Admittedly, freight 
and logistics costs could also  go down going forward, should the size of vessels employed to 
import refined products increase31.  
In practice, Asian oil firms are already ey eing the EU market. India's Essar has been 
expanding its home refinery at Vadinar with th e aim to export to Europe, and it has been 
negotiating with Shell for a number of months on the acquisition of three of its Europe-based 
refineries (Stanlow in the UK and Heide a nd Hamburg-Harburg in Germany) with the 
intention to close these refineries and turn th em into import terminals. PetroChina has also 
been in talks with Ineos over an investment  in its Grangemouth refinery in Scotland. 
Additionally, state subsidies ar e supporting some refineries in  such countries, with the 
example of Chinese refiners which have been  running record high throughputs in 2009 due in 
part to guaranteed margins. For instance Sinopec, a state-controlled refiner, is subsidising its 
refineries to export products, thereby en couraging them to ma intain high throughputs32. 
The industry believes that with limited domesti c demand for high-quality fuels, Indian and 
Middle Eastern refiners will s eek to use the EU market as a temporary outlet for excess 
production until local markets grow sufficiently to absorb production. It warns that over time, 
the combination of domestic market growth a nd tightening product specif ications could then 
see such players refocus on their domestic ma rkets, with consequen ces for a more import-
dependent Europe33. 
3.2.6. Investments in upgrading th e EU refining sector: incr easing middle distillates 
capacity 
As mentioned previously, a growing trade gap is avoidable should EU refiners decide to 
invest heavily in upgrading existing capacities to make them more complex and thus able to 
skew the production mix towards mo re diesel and less gasoline.  
According to the industry, in order to fill an  annual gap in demand of 30 million tonnes of 
gasoil and jet fuel (in 2008, EU net imports of gasoil/diesel and kerosene/jet fuel amounted to 
36.7 million tonnes), the EU refining sector woul d need to build about 20 large hydrocrackers 
at a cost of more than 8.5 billion Euros34.  
                                                 
30 View expressed in April 2010 article of the Petroleum Economist "Downstream depression". 
31 Until now, logistics have favoured transporting crude rather  than refined products as the transportation 
of crude is less costly, due to larger vessels being employed to transport crude, than refined products. 
32 Oil Market Report, March 12 2010. 
33 White Paper on EU refining, Europia, May 2010 
34 Ibid, 33. 
 
EN 17   EN As was already highlighted, an additional 15 million tonnes per year of low sulphur gas 
oil/diesel is expected from marine sulphur fuel restrictions being lowere d from 1% to 0.1% by 
2015. Producing an additional 15 million tonnes of ga soil a year would require investment of 
more or less 4.5 billion Euros, representing 10 upgrading projects, according to the industry35. 
This would come on top of th e 20 projects cited previously. 
Taking also into account the furthe r costs that would need to be incurred to meet the proposed 
MARPOL global specification changes from 3.5 % currently to 0.5% sulphur content globally 
by 202036, additional costs associated with the full changes in sulphur fuel specifications 
could run into as much as 23 billion Euros by 2020 in the EU37.  
According to the industry, capital expenditure associated with previously announced projects 
to be built in the EU within the next six to eight years was in the or der of 34 billion Euros. 
However, in a context of low refining ma rgins, many of these projects may not be 
implemented and the latest estimate is that only some 14 billion Euros of investments might 
be spent improving the European refining syst em in the next six to eight years, again 
depending on economic conditions38. 
Good and stable economic conditions – ensuring high and stable margins - are important for 
investment in new refining and conversion capacity to occur, as a number of years can come 
to pass between the decision to build a refinery  and the start of produc tion. Yet as has been 
said before, though margins are trending upwards again, they are still low and there is some 
uncertainty as to how they will develop. 
Even if prospects were more positive however , there would be no guarantee that the EU 
refining industry would make the necessary investments to meet the shortfall in the supply of 
middle distillates. Tightening fuel specifications  as well as the demand focus on diesel are not 
new phenomena in Europe, and yet the industry has been slow to adapt. This is because until 
now, there has been a market for the excess ga soline produced by refi ning units in the EU, 
such that the industry could opt  not to carry out all of the investments required for more 
hydrocracking units39 to produce more middle distillates and deep conversion units such as 
cokers and residue cracking installations  to produce low sulphur marine fuel. 
Also, while the European refining industry ha s been faced with dramatic reductions in 
demand for fuel oil since the 1980's, at the sa me time the rapid development in North Sea 
                                                 
35 Ibid, 33. 
36 Which would require an additional 100 hydrocracking projects globally in the next decade at a cost of 
46 billion Euros (White Paper on EU refining, Europia, May 2010). 
37 Estimates by Purvin & Gertz for the European Commission, 2009. These assume that 20 million tonnes 
of marine bunker fuel would need to be produced to a maximum of 0.1% sulphur content by 2015, rising to 24 million tonnes per year by 2020. Investments in delayed coking and hydrocracking are 
assumed to be needed to meet the new SECA specifications. In addition, middle distillate streams 
produced from delayed coking require additional hydrotreating before they can be used for the 
production of diesel or gasoil. Additional hydrogen plant capacity is also needed to produce hydrogen 
for the hydrocracking and hydrotreating units and sulphur recovery units are needed to handle the 
additional sulphur removed.  
38 Historically, according to Europia (White Paper on Refining), Europ ean refiners have invested an 
average of around 5 billio n Euros each year over the past 20 y ears in desulphuri sation capacity of 
distillates and gasoline, the upgrading of production facilities and processes and the installation of 
emission abatement equipment and energy savings. 
39 One alternative approach to dealing with increas ing demand for diesel and falling demand for gasoline 
would be to implement changes to the catalytic-cr acking process (rather than develop hydrocrackers), 
such that these units could process heavy residues in to diesel. One example of a specialist heavy residue 
cat-cracker in existence is a unit at Shell's Pervis, Netherlands, refinery.  
 
EN 18   EN crude production, along with increasing demand for bunker fuel , allowed especially coast-
based North Western EU refiners to a void fuel oil convers ion investments. 
Last but not least, while the EU refining industry has suffered on a number of occasions in the 
past as a result of economic downturns and oil shocks, there have always been prospects of 
recovery and continued growth in demand which ev entually did take place. In this instance, 
future EU demand prospects are bleak, especially if put in the context of growth prospects in 
other regions of the globe such as th e Asia Pacific and the Middle East.  
In conclusion, while there is a considerable ne ed for further investme nts by the EU refining 
industry, and in the case of falling gasoline expor ts, a real incentive for the EU industry to 
invest, there are many developments which put together make such investments unlikely, not 
least the growing costs of refi ning in the EU, the falling supply of North-Sea crude and 
uncertain prospects in te rms of refining margins. 
3.2.7. Impacts of restructuring of the sector: reducing gasoline capacity 
Summary of EU refineries planned/actual  divestments and shutdowns since 2008  
0100,000200,000300,000400,000500,000600,000700,000800,000900,0001,000,000
Sold since
crisisOn sale since
crisisSale
w ithdraw n -
future
uncertainExpected to
be put on saleExtended
maintenanceShutdow n &
conversion
plannedCapacity in bbl/day
 
Source: European Commission. Note: This information has not been confirmed by the EU refining industry and 
is contained here for illustrative purposes. 
Overall, known planned/actual di vestments and shutdowns in EU refining capacities since the 
start of the crisis in 2008 extend to 18 out of 104  refineries in the EU, representing some 134 
million tonnes per year/2.7 million bbl/day of cr ude capacity, equivalent to 17% of total EU 
refining capacity. Only two of these units have b een sold, others have been put up for sale for 
some time but have found no buyers, others  yet have been shutdown for extended 
maintenance until market conditions recover. 
The most vulnerable types of units are either small to medium-size and/or gasoline-oriented 
refineries, which are less adapted to current demand patterns. The industry however warns 
that restructuring of gasoline capacity could also affect dies el production if, instead of 
divesting only of gasoline units such as Fl uid Catalytic Converter s (FCCs) or catalytic 
reformers, EU refiners opt to shut  down entire refineries altogether40.  
                                                 
40 White Paper on EU refining, Europia, May 2010. 
 
EN 19   EN Assets which have been put on sale since the crisis and are still awaiting buyers amount to 
close to 900,000 bbl/day. It is expected that at least another 400,000 bbl/day of capacity is 
likely to be formally put on sale in the fore seeable future as a result of the crisis. 
In addition, refining capac ity that is known to ha ve been temporarily sh utdown as a result of 
the crisis amounts to some 900,000 bbl/day. Th ese units could either be restarted or 
eventually also be put on sale , depending on market conditions. 
Note that no complete shutdowns have been  announced by EU refiners. Since the beginning 
of the crisis, uneconomic assets that have not b een put on sale have generally been subject to 
extended maintenance/temporary shutdowns, while a ssets that have been formally 'shut down' 
are in fact being converted to depots/storage fa cilities (equivalent to 258,000 bbl/day, to date). 
Opinions on the amount of capacity that n eeds to be shut-down in the EU abound. These 
range from between 640,000 to upwards of 2 milli on bbl/day, equivalent to between 4% and 
15% of total EU capacity, with the view that such decreases are necessary for a return to 
acceptable margins and in order to prevent fu rther increases in the volumes of gasoline 
supplies going forward. 
If 2009 utilisation rates for OECD Europe (cal culated as a proportion of product consumption 
to total capacity) of 79% is a good guide of the likely long r un utilisation rate for the EU 
industry, then it could be ar gued that there is 21% excess capacity. This exceeds the total 
capacity of the 18 refineries in question.  
It is not known how many employees these 'vulnera ble' refineries represent, and estimates are 
imperfect as indicators such as capacity, ut ilisation and complexity cannot by themselves 
provide an accurate guide. In addition, while th e number of direct employees is known for 
some refineries, there are a number of add itional indirect employments which depend on a 
refinery for their livelihood, whether as sub-cont ractors working on-site or as providers of 
products/ services either  to the refinery or to employees  of the refinery. The number of 
dependent indirect employments as a multiple of direct employments for a refinery can be of 
the order of 3 to 5, according to representatives of the industry. 
Thus while the industry itself employs directly only 100,000 people in the EU, it can be 
considered that as much as 400,000 to 600,000 jobs  are directly dependent on the EU refining 
industry41. 
The gradual disappearance of the refining activity  in the EU would also  have consequences 
for the industries for which a local refining presence is important. The EU petrochemical 
sector, which employs 778,000, is perhaps the best example of such an industry. 
There are 58 steam crackers42 in the EU, 53 of which are curr ently in operation, while 77% of 
the feedstock of those 53 crackers in operatio n comes from refineries. Of the 58 steam 
crackers in existence, 41 are directly integrated refinery/steam crackers. 
According to the petrochemical industry, having  refinery and interdependent industry on the 
same site brings a number of synergies in term s not only of the supply of energy but also in 
terms of support services and product exchanges43. The relationship is therefore mutually 
                                                 
41 Not included in this number are the further 600,000 jobs in logistics and marketing.  
42 Which crack naphta/LPG feedstock into lighter olefins such as ethylene - one of the most important raw 
materials of the organic chemical industry - and propylene - used in the manufacture of resins, fibres 
and plastics. 
43 Over 5.3 M/tons of products from crackers are sent back to refineries, equivalent to 12.5% of total 
refinery transfers to steam crackers. This include s hydrogen, which is produced in excess by the 
crackers and which refineries are normally short of an d which is used by refineries in hydrocrackers in 
 
EN 20   EN beneficial, though integrating refineries and stea m crackers is not the strategy employed by all 
the oil majors, and while Tota l as well as ExxonMobil are high ly integrated (upwards of 
74%), BP and Shell have relativ ely lower levels of integratio n (24% and 39% respectively). 
The degree of integratio n with the petrochemicals industry is  also only one of several factors 
that will influence how vulnerabl e a refinery is to being clos ed down. Other key aspects will 
likely include how clean and efficient (in terms of CO2 emissions and pollutants) the refinery 
is and its flexibility and fit in  terms of meeting market demand. The cost of access to crude oil 
is another factor. 
3.2.8. Long-term – 2050 and beyond: Preparing fo r a “decarbonisation era” in the EU 
Looking beyond the next twenty years, up to and as far as 2050, the key challenge for the EU 
refining industry on the basis of current EU ambitions with regard to the environment and 
climate change is less one of  partial restructuring and adap tation/upgrading of refining 
capacity and more of a paradigm shift with a radical departure from oil being used as the main 
transport fuel or as a key source of energy. 
The energy and transport sectors are the targets of the vision to a move towards a low carbon, 
resource efficient and climate resilient ec onomy by 2050, and as an energy-intensive industry 
supplying mainly fossil-based fuels to the tran sport sector, the EU re fining industry will be 
concerned by developments to implement such a vision. 
Transport in particular has been the sector mo st resilient to efforts to reduce CO2 emissions 
due to its strong dependence on fossil energy sour ces. Currently, the sector is responsible for 
about a quarter of EU CO2 emissions and also contributes significantly to reduced air quality 
and related health problems, par ticularly in urban areas. While energy and transport efficiency 
as well as effective transport demand manage ment can all contribute  to reducing emissions, 
the ultimate solution to near full decarbonisati on of transport is the substitution of fossil 
sources by CO2-free alternative fuels for transport. 
Such a vision is guided less by idealistic ambiti on than practical as well as moral imperatives: 
(1) Oil, the main energy source for transport overall, supplying nearly 100% of road 
transport fuels, is expected, with pr esent knowledge, to reach depletion by 2050. 
Substitution of oil therefore needs to start as soon as possible and increase rapidly to compensate for declining oil production, expected  to reach its peak within this decade. 
Climate protection and security of ener gy supply objectives would therefore both 
benefit from building up CO2-free and largel y oil-free energy supply to transport with 
a time horizon of 2050
44. 
(2) By 2030, the global car fleet is predicted to grow from 800 million to 1.6 billion 
vehicles and to 2.5 billion by 2050. This will be  accompanied by an increasing scarcity 
and cost of energy resources. These trends wi ll have to be addre ssed by a step change 
in technology to ensure the sustai nability of mobility in the long-term45.  
As the EU progressively decarbonises the trans port sector, it is inevitable the sector must 
directly consume less fossil energy since it is unlikely ever to be viable to capture CO2 emissions on vehicles.  
                                                                                                                                                        
 
order to upgrade heavier fractions into lighter products, such as diesel, naphta and kerosene. It also 
includes butanes and gasoline. 
44 Report of the European Commission Expert Group on Future Transport Fuels, forthcoming. 
45 Communication on a European strategy on  clean and energy efficient vehicles. 
 
EN 21   EN While the oil industry does not foresee the en d of oil as a major energy source by 2050, a 
number of its companies have already made significant investments to move away from 
dependence on oil and offer some examples of how some of the actors present in the EU 
refining market are looking at the longer-term. 
4. IMPACTS OF FUTURE DEMAND DEVELOPMENTS ON THE REFINING INDUSTRY BY 2030 
4.1. Demand projections according to implemented and adopted policies 
This chapter provides a quantitative assessmen t of the medium-term impacts of expected 
demand developments in EU petroleum products on the EU refining industry. 
It presents the results of running the PRIMES 2009 Baseline [business as usual] and PRIMES 
2009 Reference [policy] scenario petroleu m product demand projections on the OURSE 
refining module of the POLES energy model46 in order to estimate the impacts of evolving 
demand in terms of: 
1. Capacity requirements and capital investment requirements for additional process 
capacity or upgrade of existing capacity; 
2. Production levels; 3. Levels of CO2 emissions; 4. EU import and export levels of petroleum products. 
PRIMES projections were also run sepa rately in the CONC AWE refining model
47, and results 
have also been reported below, fo r comparison with OURSE outputs.  
The PRIMES 2009 Baseline demand projections result from developments in the assumed 
absence of new policies beyond those implemented by April 2009. It is not a forecast of likely developments, given that policies will need to develop. Therefore, ther e is no assumption in 
the Baseline that national/overall green-house gas (GHG) or renewable energy sources (RES) 
targets are achieved, nor of non-ETS (EU Emi ssion Trading System) targets; CO2 emissions 
and RES shares are modelling results. 
In contrast, the PRIMES Reference scenario rev eals the effects of agreed policies, including 
the achievement of legally binding targ ets on 20% RES and 20% GHG reduction for 2020. 
More details on both the PRIMES 2009 Baseline  and Reference scenarios can be found in 
annex 3. 
The impacts of the PRIMES demand projecti ons are reported with  a variation on the 
assumptions of the refining model with regard to  future marine sulphur fuel specifications 
which are expected to be transposed into EU  regulation. The impacts of such changes are 
reported separately due to the important investme nts that they will require by the EU refining 
                                                
 
46 The POLES (Prospective Outlook for the Long-term Energy System) model simulates the energy 
demand and supply for 32 countries and 18 world regions. Further details on the OURSE refining 
module of POLES can be found in annex. 
47          CONCAWE is the oil co mpanies' European association for enviro nment, health and safety in refining 
and distribution. The CONCAWE EU refining model simulates the EU (incl. Switzerland and Norway) 
refining system. More information on the model can be found on the internet site of the association 
(www.concawe.be).  
 
EN 22   EN industry if it decides to produce shipping fuel that meets the ne w specifications. Specifically, 
the variations in fuel specification cha nges that are modelled here are as follows: 
Case A: assumes a change in maximum permitted sulphur content in marine fuel for Emission 
Controlled Areas (ECAs) in the EU (the Bal tic Sea and the North Sea & English Channel) 
from 1.5% to 1% by 2010 and th en down to 0.1% by 2015; and for the rest of the world: from 
4.5% to 3.5% in 2012 and then down to 0.5% from 202048. 
Case B: assumes no changes in maximum perm itted sulphur content in marine fuel beyond 
2012, i.e: ECAs remain at 1% and the rest of the world remains at 3.5%. 
Note that in comparing a case including futu re IMO changes to one excluding them, in the 
latter case the changes to 1% and 3.5% respec tively for the ECAs and the rest of the world 
have been taken for granted. As was explained prev iously in this document, this is because it 
is generally regarded that such changes wi ll not pose significant problems for refiners – 
blends can simply be modified to redistribute the higher sulphur compon ents - while the real 
challenge will be the change s to 0.1% sulphur c ontent and 0.5% respec tively for the ECAs 
and the rest of the world, as these will likely require the conversion of  bunker fuels to diesel49. 
This will require investment in desu lphurisation or conversion capacities. 
The context for the impacts on the EU refining i ndustry which are reported below in terms of 
key additional outputs from the OURSE model, is as follows:  
(1) Production of petroleum products : the production levels of EU refineries during the 
period 2005 to 2030 is projected to fall by 14%, si milar to the projected fall in demand 
in the PRIMES Reference scenario over that period50; 
(2) Trade flows: it is expected that Russia wi ll have sufficient refinery capacities in 
middle distillates during the projection period to continue  to supply the EU, while 
North-America will not continue  to absorb the excess gasolin e that the EU is projected 
to produce, such that new markets will ha ve to be found. According to the OURSE 
model, by 2030, the EU net exports of gasolin e will total 19.4 mtoe, equivalent to 18% 
of EU gasoline production for th at year while EU net import s of gasoil/diesel will be 
37.7 mtoe, equivalent to 15% of EU di esel/gasoil demand in 2030. In comparison, 
OURSE numbers for 2005 show that the EU net exports of  gasoline amounted to 32.4 
mtoe, equivalent to 21.5% of its gasoline production in 2005, and gasoil/diesel net imports were equivalent to 28.2 mtoe, amoun ting to 9.7% of EU gasoil/diesel demand 
in that year
51. In short therefore, the OURSE mode l projects resultant trade flows for 
the economically optimal capacity required to  satisfy the PRIMES reference demand 
which amount to falling gasoline exports and increasing gasoil/d iesel imports by 2030 
compared to 2005. 
                                                 
48  The CONCAWE EU refining model makes the same assumptions as OURSE with regard to the timing 
and nature of the fuel specification changes in the EC AS, while for the rest of the world it assumes that 
the change from 4.5% to 3.5% already occurs in 2010.   
49 Current technology cannot achieve reductions in the sulphur content of residues to 0.1% unless a very 
low sulphur feed is used. If it was possible, it is questionable whether refiners would not rather prefer to 
focus instead on converting residual fuel to lighter, more valuable fuels, and decide to stop supplying 
the bunker market altogether. 
50        The CONCAWE model supply growth projections reveal an 11% drop in the 2005-2030 period.  
51  The CONCAWE European refining model is run with fixed imports and exports outside the EU, and 
therefore keeps the trade situation constant over time. The sensitivity of the model to trade flows was 
however tested by changing the assumptions made with respect to the volumes of exports and imports 
to reflect the trade situa tion projected by the OURSE model as described above. 
 
EN 23   EN A key assumption of the OURSE model is with re gard to the evolution of the EU crude diet. 
Globally, it assumes that by 2030, the API degree of conventional crude oil will have slowly 
decreased while sulphur content shou ld increase slightly. However, it  is expected that this will 
be balanced by an increasing share of conde nsates used in refinery production and the 
availability of upgraded  crude oil from extra-heavy oil. In the case of the EU, the OURSE 
model assumes relative stabili ty between 2005 and 2030, both in terms of the API degree and 
sulphur content of refineries supply, as along with an increas ing share of condensates, the 
assumption is included of an expected doubli ng of the share of hi gh medium distillate 
yielding crudes52 . 
Note in addition that the OUR SE model treats th e EU27, Switzerland, Norway and Turkey 
together as forming the region of Europe, broke n down into two zones: Z3 (Northern Europe) 
and Z4 (Southern Europe). Impacts are th erefore reported for th e EU27 + these three 
countries. While it cannot be easily estimated what amount of the investments and CO2 
emissions are EU27 specific, it is useful to note that IFP simulate EU27 demand into the 
OURSE model by using topping unit53 capacity proportions. By th at measure, Norway and 
Switzerland represent 4% of Z3 capacity  and Turkey, 12.5% of Z4 capacity. 
EU petroleum products demand projections, PRIMES 2009 Baseline and Reference 
scenarios compared 
707580859095100105
2005 2010 2015 2020 2025 2030Light distillates REF
Light distillates BL
Middle distillates REF
Middle distillates BL
Heavy distillates REF
Heavy distillates BL
Total demand REF
Total demand BL
 
As the chart above reveals, whether business as usual or policy targets beyond April 2009 are 
assumed makes little differences in terms of the demand projections in petroleum products for 
the EU. The general trends in both cases can be summarised as follows: 
(1) A general fall in the level of c onsumption of petroleum products; 
(2) The continued gradual erosion of demand for high sulphur resi dual inland fuel and 
marine bunkers (which make up heavy distillates); 
                                                 
52         The CONCAWE model assumes no change in crude mix over time. 
53 Topping refining is the simplest configuration of re fining, and a part of the distillation process. It thus 
involves no treating or conversion.  
 
EN 24   EN (3) An initial increase in demand for middle dis tillates (including gasoil, heating oil, 
kerosene and jet fuel) followed by an eventual  and overall fall, ma inly resulting from a 
decrease in road diesel dema nd due to regulation to restri ct CO2 emissions from cars 
becoming effective54 as the car parc is gradually renewed and due also to the spill over 
effects from more efficient car engines to those of trucks (truck diesel consumption 
stabilises between 2020 and 2030);  
(4) A continued fall in the demand for gasoline (i ncluded in light dist illates, along with 
naphta). Note that the PRIMES demand pr ojections do not assume a change in the 
current taxation regime in the EU, which di fferentiates between diesel and gasoline in 
favour of the former. 
It is important to note that in both scenario s, the proportion of middl e distillates in total 
demand increases quite significantly between 2005 and 2010, after which it remains fairly 
stable.  
PRIMES Reference scenario EU demand pr ojections split by type of product 
29% 29% 28% 28% 28% 28%52%55% 56% 57% 57% 56%19%16% 16% 15% 16% 16%
0%10%20%30%40%50%60%70%80%90%100%
2005 2010 2015 2020 2025 2030Light distillates Middle distillates Heavy distillates 
 
4.2. The impact of demand projections  on the EU refining industry 
4.2.1. Impacts in terms of refining investments According to the OURSE model, the impacts of  the Reference scenario in terms of the 
investments required to upgrade EU+3 refi ning capacities amount to 17.8 billion Euros 
between 2005 and 2030, of which 3.3 billion Euros account for IMO changes
55.   
                                                 
54 The CO2 from cars regulations in cluded in the PRIMES Baseline and Reference scenarios require 
strong reductions in the average fuel consumption of new cars. Binding targets are 130g/km by 2010 
and 115g/km by 2020.  (it should be noted that the Regulation contains a provisional goal of 95g/km for 
2020) 
55  Note that the differences between demand projections under the Baseline scenario and the Reference 
scenario are not significant enough to make any notable difference in terms of investments according to 
the OURSE model outputs. 
 
EN 25   EN This results primarily from investments in extra gasoil hydrodesulfurisation units which will 
be in short supply on the basis of both the Ba seline and Reference Scenarios projections. The 
chart below shows the volumes that will be need ed to meet demand in the Reference scenario, 
though there is little difference between the two scenarios (Baseline demand will require 
slightly more investments in all of the same types of units, excepting cokers56). Note that the 
new IMO regulations will require  14.3 million/t year of extra capacity by 2030 (the difference 
between case A and case B in the chart belo w), mainly in terms of extra hydrocraking57 units 
(amounting to 6.6 million t/year), hydrodesul phurisation of residuals (amounting to 5.4 
million t/year) and hydrotreating of vacuum gasoil58 (4.2 million t/year). 
Thus, the levels of investments required in orde r to supply initially rising (but over the whole 
period, falling) levels of middl e distillates is quite consid erable, and even with such 
investments, imports are pr ojected to rise further. 
One variation that has been undertaken on the OURSE model runs of the PRIMES Reference 
demand projections is with regard to crude o il supply projections. As was highlighted above, 
the OURSE model projections assume a ba lanced crude diet between 2005 and 2030 in 
Europe, which along with an increasing share of condensates relies on a doubling of the share 
of high medium distillate yielding crudes. Simply keeping the share of such crudes constant 
during that period (with the consequence of an  important increase in the overall sulphur 
content) in the OURSE model however result s in total investments between 2005 and 2030 of 
29.7 billion Euros of which 9.3 billion Euros alone account for IMO changes.  
Running the PRIMES Reference scenario projec tions on the Concawe model  while keeping 
trade levels between 2005 and 2030 constant w ould require 29.2 billion Euros of investments 
in that period, of which 13.3 billion Euros w ould have to be spent due to the new IMO 
changes. The same demand projections combined with an augmentation in the importation of 
gasoil/diesel between 2005 and 2020 from 20 Mt/year  to 40 Mt/year (and staying at that level 
every year thereafter to 2030) will however require total in vestments of 25.8 billion Euros 
between 2005 and 2030, of which IMO changes alone amount to 11.7 billion Euros.  
Concawe estimates that the amount of investme nts that the refining in dustry in Europe has 
already committed to spending (or what it calls  firm projects) between 2010 and 2020 is of 
the order of 13.3 billion Euros.  
Note in addition that according to the C oncawe model results, cumulative refining 
investments between 2005-2020 are higher than  for 2005-2030, a reflection of falling demand 
in petroleum products according to the PRIM ES demand projections. This highlights a 
particular dilemma faced by refiners of investin g early in capacity that will only be partially 
utilised at a later point in tim e in the non too-distant future.  
                                                 
56 Delayed coking units are a type of deep conversion un it, which are the most sophisticated refining units. 
Cokers crack residual oil hydrocarbon molecules into coker gas oil and petroleum coke.  
57 The process whereby hydrocarbon molecules of petroleu m are mainly broken into jet fuel and diesel oil 
components by the addition of hydrogen under high pressure in the presence of a catalyst 
58 Hydrotreating of vacuum gasoil is a process that removes sulfur and nitrogen from vacuum gasoil, 
which is the product recovered from vacuum distillation.   
 
EN 26   EN OURSE model investments in refining capacity in EU+3, 2005-2030, on the basis of the 
Reference demand projections, split by type of unit 
11.6 11.683.687.96.65.45.3
5.14.23.7
1.5
020406080100120140
Case A Case BMillion t/ yearOther
HDT vacuum gas oil
Reforming unit and Isom.
HDS residuals
Hydrocraking
HDS gas oil
Coker (CKR)
 
4.2.2. Utilisation of refining units  
According to OURSE model result s, in terms of changes in re fining capacity from 2005 levels 
by 2030, whether new IMO regulations  are assumed or not, similar reductions in the use of 
simple refining capacity can be expected to occur,  while similar increases in the use of cokers 
and hydrodesulphurisation units should result. In addition, assuming IMO changes will require significant increase in the use of residual hydrod esulphurisation and some 22% 
increase in the use of hydrocracking units. Note  again that there is very little difference 
between the PRIMES Baseline and Reference ca ses in terms of the demand projections in 
petroleum products for the EU as there is littl e difference between the two in terms of the 
demand projections in petroleum products for the EU. 
 
EN 27   EN Necessary changes in refining capacity use in EU+3, 2005-2030, on the basis of the 
reference demand projections 
-14%-8%51% 53%85%
-13% -32% -16%48%
22%
-32%53%
-24%-40%-20%0%20%40%60%80%
Topping
Cat. Reformer
FCC
Coker
HDS gas oil
HCK 78% conv
HDS residuals
Case A Case B
 
4.2.3. CO2 emissions  
Whether IMO changes are assumed or not in the OURSE model makes little difference in 
terms of CO2 emissions from EU+3 refine ries by 2030, which are projected to emit around 
100 million tonnes of CO2. This compares  to 118.5 million tonnes of CO2 in 200559, the fall 
in emissions resulting from falling production of  petroleum products. Note however that in 
both cases, a growing proportion of the CO2 emissions will come from the needs for 
hydrogen in refineries (hydrocracking units us es hydrogen to upgrade heavier fractions into 
lighter products while hydrodesu lphurisation units use hydrogen to chemically remove the 
sulphur), such that by 2030, 20% of all CO2 emi ssions from EU refineries will come from 
hydrogen production, compared to only 14% in 2005. Specifically, CO2 emissions due to the 
IMO changes amount to 3.3 million tonnes of CO2 in the reference case, essentially as a result of the extra emissions from hydrogen use. 
Changing the crude supply assumptions towards an  increase in the sulphur content of the EU 
crude diet (by keeping the proportion of high middl e distillate yielding crudes, as explained 
above) would however result in  a level of CO2 emissions of 110.3 million tonnes in 2030, 5.6 
million tonnes as a direct result of new IMO changes. 
In contrast, the Concawe refining model results reveal that in spite of declining market 
demand for fossil fuels, processing intensity in re fining increases as a re sult of more stringent 
product specifications, particularly in the case including IMO changes, and consequently that 
refinery CO2 emissions will increase somewh at between 2005 and 2030, by around 6% (and 
increasing by 12% between 2005 and 2020).   
                                                
 
59 IFP estimations of EU refineries CO2 emissions. In comparison to 118.5 million tonnes of CO2 emitted 
in 2005. Note that this does not include emissions related to petrochemical activities. 
 
EN 28   EN OURSE model CO2 emissions of EU refinerie s by 2030 in EU+3, on the basis of the 
Reference demand projections 
77.3 78.023.4 19.8
020406080100120
Case A Case BMillions of tons
Processing units Hydrogen production
 
4.2.4. Summary: impact of demand projec tions on the EU refining industry  
EU refining capacity upgrading is expected to l ead to significant reductions in exports of 
(excess supply of) gasoline by 2030, while it is expected that the import dependence of the EU in gasoil/diesel will c ontinue to increase by 2030.  
Depending on assumptions on the development of the crude diet in Europe between 2005 and 
2030 and taking into account adopted and implemen ted EU policies, investments required to 
upgrade European refining capacities in that  period could amount to  between 17.8 and 29.3 
billion Euros, of which between 3.3 and 11.7 billion Euros alone will account for future 
marine sulphur fuel specification changes to be  transposed into EU regulation by the end of 
2010. These figures result from a scenario of incr easing import dependence in gasoil/diesel.  
It is estimated that the amount of investments that the refining industry in Europe has already 
committed to spending (in what it calls firm projects) between 2010 and 2020 is of the order 
of 13.3 billion Euros.  
In spite of projections of declining demand for fossil fuels, processing intensity in refining 
will increase as a result of more stringent product specifications, in particular as a result of 
new IMO changes. One possible consequence is that refinery CO2 emi ssions will increase 
between 2005 and 2030, by around 6% (and increasing by 12% between 2005 and 2020), 
mainly as a direct result of the needs for hydr ogen in refinery units geared towards producing 
higher proportions of ne w IMO compliant fuel. 
Significant falls in the projec ted EU demand for transport gasoline by 2030 according to 
PRIMES (of 20.7% in the Referenc e scenario) point to the need for gasoline-focussed refinery 
plant restructuration, with necessary capacity reductions by up to a third, depending on the 
type of unit.  
 
EN 29   EN 1. ANNEX 1: REFINING AND APPLICATIONS OF REFINING PRODUCTS  
1.1 Introduction to refining 
An oil refinery represents one link in the chain of an integrated business that provides oil 
products to Europe’s consumers. From e xploration and production through to crude oil 
trading and refining to distribution, finished pr oducts trading and sales to end-consumers. 
The role of refineries in the supply chain of the petroleum indus try is to process crude oils 
into the finished products that are needed by the market. Refineries can use a variety of 
processes and can have very different configurations. 
Essentially, refining breaks crude oil down in to its various components, which are then 
selectively reconfigured into new products such as fuels an d lubricants for automotive, ship 
and aircraft engines. Refining by-products can th en be used in petroc hemical processes to 
form materials such as plastics and foams. 
Crude oil can be used in many different ways  because it contains a broad mix of hydrocarbons 
(i.e. molecules made of hydrogen and carbon atom s which range from very light to very 
heavy) of varying molecular complexity: diffe rent masses, forms and lengths. Such various 
structures mean differing prope rties and thereby uses. These hydrocarbons must be separated 
and refined prior to commercial use. 
1.2. Refined products 
Refined products are commonly split into light , middle and heavy distillates and specialty 
products. 
Light distillates include gaso line, which is mainly used as a motor fuel, LPG (liquid 
petroleum gas) which is commonly used as a fu el in heating appliances and vehicles, and 
naphta, used as feedstock in the production of  petrochemicals such as  plastics and fibres. 
Middle distillates include gasoil, diesel, kerosene  and aviation/ jet fuel. Gasoil is mainly used 
in domestic heating, while diesel is used as a motor fuel and al so as a fuel in agricultural 
vehicles, small boats and trains . Jet fuel and kerosene are used to power airplanes and 
kerosene is also sometimes used in domestic heating. 
Heavy distillates are composed of bunker fuels for large ship engines and heavy fuel oil for 
industrial installations such as  power stations and boilers. 
Specialty products include bitumen (used to ma ke road asphalt and roofing materials), waxes 
(including polishes, candles, food paper), lubricants and grease s for automotive and industrial 
applications, coke for specialty applications  like electrodes and hydrocarbon solvents, 
primarily used in specialty industrial applications. 
Most refineries are known as 'fuels refineries' and usually produce a mix of the main products, 
which are diesel, gasoline, heatin g gasoil, jet fuel and heavy ga soil as well as LPG. Other 
refineries, known as 'specialty refineries', spec ialise in one or a combination of the specialty 
products above. 
1.3. Refinery processes 
The processes used by refineries can be classifi ed into three categories: separation, treating 
and conversion. 
 
EN 30   EN 1.3.1. Separation 
The first process of any refinery is the sepa ration or fractionation of  crude into different 
fractions by distillation, known as atmospheric distillation. 
Separation is achieved by raising temperature of the input crude to circa 360°C. This 
vaporises individual fractions of the crude feed which then condense and separate out 
according to the varying boiling points and densities of petroleum products. Lighter fractions such as LPG, naphta and kerosene have lower boiling points, lower car bon content and higher 
hydrogen content than heavier f actions such as vacuum gasoil and vacuum residues.  
This process is known as simple distillation, al so referred to as topping or hydroskimming 
when done in the presence of hydrogen. The use of  a vacuum enables th e products to vaporise 
at lower temperatures, which is  known as vacuum distillation.  
1.3.2. Treating 
Treating improves the quality of petroleum fr actions distilled in order to meet the 
specifications of finished produc ts. Hydrotreating processes us e hydrogen (a by-product of the 
reforming process) and catalysts to remove su lphur and other contaminants such as salts, 
nickel, vanadium and nitrogen oxides. Exam ples of hydrotreating processes include 
hydrogenating, hydrofining and hydrodesulphurisation.  
1.3.3. Conversion 
Cracking, visbreaking and coki ng processes break down (conve rt) large, less valuable, 
hydrocarbon molecules into smaller,  more valuable, lighter ones.  
In a cracking refinery, atmospheric residue (an output from distillation) is further distilled 
under vacuum conditions to recover vacuum ga soil (VGO). A vacuum residue also results 
from vacuum distillation. VGO is then fed into a cracking unit that convert s part of it into a 
mix of hydrocarbons that boil in the atmospheric distillation range. The most common 
crackers are fluid catalytic cr ackers (FCCs) and hydrocrackers. 
Conversion refineries such as FCCs and hydrocrackers usually co ntain all the processing units 
of a hydroskimming refinery to which a numbe r of conversion units are added. Conversion 
refineries would typically require more ener gy per unit of crude intake compared to 
hydroskimming refineries. They would therefor e also generate more Green House Gases 
(GHG) per unit of crude oil intake. 
Deep conversion units are the most sophisticated  types of refineries. They convert vacuum 
residue into lighter prod ucts. Such refineries are becoming more and more the norm, with the 
increasing demand for lighter, cleaner products and the rapi dly declining use of heavy 
residual fuels. Deep conversion refineries ar e even more energy inte nsive than conversion 
units and as a consequence generate more GHG emissions per unit of crude oil intake. 
1.4. Types of refinery units 
The topping unit is the simplest configur ation, with no conversion or  treating. It is able to 
produce a number of products suitable for direct use in the end-market such as LPG, kerosene (which can be used directly as a heating fuel or can be upgraded to jet fuel) and heating gasoil, if produced from very low sulphur crud es. However, no crude oil can produce gasoil 
that meets current EU diesel quality specifica tions without desulphuris ation, therefore topping 
refineries cannot produce diesel  for the EU market. Topping al so produces naphta, fuel gas 
 
EN 31   EN (which is used as a fuel for the refinery) and residue. The atmo spheric residue is a fuel oil 
with a quality that varies according to the quality of the crude processed. 
Hydroskimming  units upgrade naphta to gasoline and ga soil to diesel and heating oil. Such 
refineries are equipped with astmospheric dist illation, naphta reforming and the necessary 
treating processes. Note that hydroskimming re fineries must normally produce some gasoline 
in order to have the hydroge n needed to produce diesel, wh ich limits the possibilities to 
optimise gasoline and diesel production independ ently. These units generally do not contain 
catalytic conversion processes and therefore th eir product distribution reflects closely the 
composition of the crude oil processed. 
Hydrotreating  units use hydrogen (a by-product of the reforming process) and catalysts to 
remove sulphur and other contaminants such as  salts, nickel, vanadium and nitrogen oxides. 
Examples of hydrotreating processe s include hydrogenating, hydrofining and 
hydrodesulphurisation.  
Isomerisation and reforming  units are used to rearrange the structure of petroleum 
molecules to produce higher-value molecules of a similar size. These new molecules could have a higher octane number than  the original ones and are ther efore a more valuable gasoline 
blending component
60. For example, catalytic reforming units  are used to convert low 
octane petroleum refinery naphtha into high- octane liquid products called reformates which 
are components of high-octane gasoline.  
A fluid catalytic cracker  (FCC) uses catalysts and high temperature to crack/break down 
vacuum gasoil or residue into mainly gasolin e and a small volume of (poor quality) gasoil. 
The proportion of gasoline and gasoil produced by an FCC refinery is relatively fixed. The 
ability to change yields and reduce gasoline production is limite d by a number of constraints. 
FCC units were the main choice of European refineries in the 1970s and 1980s when there 
was a strong growth in demand for gasoline.  
A hydrocracker  uses catalysts, hydrogen, high pressure and high temperature to crack 
vacuum gasoil or residue into mainly (good qua lity) gasoil and jet fuel. Note that hydrogen 
produced from reforming is insufficient to feed  a hydrocracker, such that a hydrocracking unit 
needs an additional dedicated hydrogen supply. Hydrocracking refineries can be designed 
with a greater ability to vary th e relative yields of diesel and gasoline, resulting in increased 
refinery flexibility. In the 1990s , when EU demand began to switch from gasoline to diesel, 
gradually more investment went  into hydrocracking units, alt hough catalytic crackers are still 
the dominant configuration in Europe. 
A coker unit converts vacuum residue or residu e into low molecular weight hydrocarbon 
gases, naphtha, light and heavy gas oils, and petroleum coke. The process thermally cracks 
the long chain hydrocarbon molecule s in the residual oil feed into shorter chain molecules. 
Examples of deep conversion  units are residue FCCs, which is an FCC unit designed to crack 
residue as well as VGO; residue hydrocrackin g, which cracks residue rather than VGO and 
delayed coking which is a very high-severity  form of thermal cracking. Deep conversion 
capacity accounts for less than 3.5%  of crude distillation capacity. 
                                                 
60 The octane rating of gasoline is an indicator of how much the fuel can be compressed before it 
spontaneously ignites. When gas ign ites by compression rather than b ecause of the spark from the spark 
plug, it causes 'knocking' in the engine, which can damage an engine. Lower-octane gasoline can handle 
the least amount of compression before igniting.  
 
EN 32   EN 1.5. Refinery yield 
The yield from a refinery will depend on the processes that it has and the type of crude oil that 
it processes. 
Once a refinery has been built with a certain configuration and designed for a certain type of 
crude, there is little it can do to change its yield structure significantly without major 
investment in new processes. 
Comparison of average yield of crude  distillation and market demand 
Naphta 21%K erosene 7%D iesel/ 
gasoil 24%Residue 45%
Naphta 
& gasoline 38%Jet/ Kerosene 11%Diesel/ 
gasoil 33%Fuel oil 18%
0%10%20%30%40%50%60%70%80%90%100%
Crude oil Market demand
 
Source: Purvin & Gertz 
The average yield obtained from crude distil lation does not match the proportion of products 
demanded by the market. To rectify this, refine rs use different combinations of conversion 
and treating processes to produce lighter products from residue. For comparison, a 
hydroskimming refinery designed to  process North Sea Crude woul d achieve a fuel oil yield 
of approximately 33% of total finished products . An FCC refinery processing the same crude 
would have a fuel oil yield of only 13% of finished products while the fuel oil yield of a 
hydrocracking refinery would be similar to that of an FCC refinery with the additional 
advantage that a greater proporti on of the yield would be made up of middle distillates and a 
smaller proportion of the yi eld would be gasoline.  
The costs of building FCC and hydrocracking refineries are comparable and much more 
expensive to build than h ydroskimming refineries.  
 
EN 33   EN 2. ANNEX 2: CHARACTERISTICS AND EVOLUTION OF THE EU REFINING SECTOR  
2.1. Description of the EU refining sector 
2.1.1. Capacity In May 2010 there were around 104 refineries operating in the European Union. The EU's 
crude refining capacity currently represents 7 78 million tonnes, equivalent to 18% of total 
global capacity. The EU is the second largest producer of petroleum products in the world 
after the United States. There are refineries in 21 Member States with the exceptions of 
Cyprus, Estonia, Latvia, Luxe mbourg, Malta, and Slovenia.  
Over half of the refining capacity in the EU is  in North Western Europe (NWE), slightly more 
than a quarter in the Mediterra nean region (MED) and the rest in Central and Eastern Europe 
(CEE)
61. These regional groupings are based on the st ate of infrastructure and geographical 
accessibility to different crude streams and transportation routings. Usually, the crude intake in NWE is mainly a mix of North Sea crude, followed by Urals, which has a lower API
62 and 
higher sulphur content. Conversely, in Centra l Europe, refineries are often located on the 
Druzhba pipeline, and the great ma jority of their intake is Urals crude. In the Mediterranean 
area, the larger proportion is Arabian Gulf, which is again h eavier than Urals crude, with 
similar API but higher sulphur cont ent, followed by Urals crude.  
EU refineries by region, by number and capacity 
Source: European Commission. Note: capacity refers to crude processing capacity.  
 
                                                 
61 NWE: Austria, Belgium, Denmark, France, Ge rmany, Ireland, Netherlands, Sweden, UK. MED: 
Greece, Italy, Portugal, Spain. CEE: Bulgaria, Czech  Republic, Finland, Hunga ry, Lithuania, Poland, 
Romania, Slovakia. 
62 API expresses a crude's relative density, with th e higher the API gravity, the lighter the crude.  
REGION NUMBER OF 
REFINERIES CAPACITY 
MT/YEAR CAPACITY 
MBBL/DAY CAPACITY % 
North West Europe (NWE) 56 465 9.3 60 
Mediterranean (MED) 31 212 4.2 27 
Central and Eastern Europe 
(CEE) 17 101 2 13 
Total 104 778 15.5 100 
 
EN 34   EN EU refinery numbers and capacity, in mi llion tonnes per year, by Member State  
 
Source: European Commission 
EU refinery numbers and capacity, by Member State  
Country Number of refineries Crude refining capacity 
    kt/Year bbl/day 
Austria 1 10,006,852 200,000 
Belgium 4 39,907,326 797,600 
Bulgaria 1 8,806,030 176,000 
Czech Republic 3 9,606,577 192,000 
Denmark 2 8,680,944 173,500 
Finland 2 12,783,752 255,500 
France 12 99,578,190 1,990,200 
Germany 13 121,743,365 2,433,200 
Greece 4 21,264,560 425,000 
Hungary 1 8,055,516 161,000 
Ireland 1 3,552,433 71,000 
Italy 16 111,333,164 2,225,600 
Lithuania 1 9,506,510 190,000 
Netherlands 7 64,534,191 1,289,800 
Poland 2 24,666,891 493,000 
Portugal 2 15,210,416 304,000 
Romania 6 21,388,497 427,525 
Slovakia 1 6,004,111 120,000 
Spain 9 64,315,961 1,282,500 
Sweden 5 21,864,972 437,000 
United Kingdom 11 94,990,049 1,898,500 
 
EN 35   EN Total EU 104 777,800,307 15,542,925 
Source: European Commission 
EU capacity in the global context 
World crude processing capacity split, 2008 
US
21%
S. & C. America
7%
Middle Eas t
9%
Russian Federation
6%China
9%European Union
18%Other
18%
Indonesia
1%India
3%Japan
5%South Korea
3%
 
Source: BP Statistical Revi ew of World Energy 2009 
As the chart below providing worl d trends in crude processing ca pacity shows, in the last ten 
or so years, the proportions of refining capacity in mature market s such as the EU, the US and 
Japan have trended downwards while emergi ng economies such as the Middle East, China 
and India have progressively  been building up capacity. 
World trends in crude processing capacity, 1998-2008 
US
Middle East
RussiaChina
IndiaJapanEUOther
0%5%10%15%20%25%30%35%
1998 1999 2000 2001 2002 2003 2004 2005 2006
2007
2008US
Middle East
Russia
China
India
Japan
EU
Other
 
Source: BP Statistical Revi ew of World Energy 2009 
2.1.2. The players in the EU refining market  
Total S.A. has the greatest refining capacity, and together with two other International Oil 
Companies (IOCs) (Shell and ExxonMobil), account for around half of total capacity in the 
NWE region. In the MED region, the company w ith the greatest capacity is Eni, while the 
three companies with the greatest capacity - Eni, Repsol and ExxonMobil - account together 
 
EN 36   EN for over a third of capacity in that region. In th e CEE region, the biggest player is PKN, with 
about a third of capacity. PKN, MOL and Nest e together account for around two thirds of 
total capacity in the CEE region. 
Overview of EU players active in refining crude oil 
Type of player Description Example
International Oil Companies (IOCs)Vertically-integrated with supply chain operations from 
exploration and production through to refining and retail marketing. Shell, BP, ExxonMobil, Chevron, 
ConocoPhillips and Total 
National Oil 
Companies (NOCs)Often began as state-owned/controlled companies 
with significant operations within their national 
borders, but some have undergone transformation to 
publicly quoted entities with a wide share ownership.  PKN (Poland), MOL (Hungary), 
Eni (Italy), OMV (Austria), 
Rompetrol (Romania), KPC 
(Kuwait) and PDVSA (Venezuela)
Pure-Play Refiners Specialise in refinery operations alone where they 
refine crude oil for other market players.  Their business model involves an open market for wholesale products.Ineos and Petroplus
Refiner and 
MarketersRefinery operations are integrated with retail fuel 
marketing.SARAS
Niche Refineries Specialist refinery with specific processes such as 
bitumen plants. Nynas
 
Source: Econ Pöyry AB 
2.1.3. Refining margins 
The refinery margin is the profitability that re sults from processing a ba rrel of crude oil. It 
reflects the difference between the market valu e of the combination of products produced by 
the refinery and the cost of buying the crude at  market price as well as the operating costs 
incurred in the refining process. 
Refining margins will generally rise if there is insufficient capacity to cover the demand 
needs, and will fall if the reverse is true. In Europe in the 90's, years of underinvestment in 
capacity in combination with high and grow ing oil demand kept refining margins high.  
The charts below detail the trend in refining margins for simple hydroskimming refineries and 
complex cracking refineries for various crude s in NWE and the MED in recent years.  
Looking at refining margins disp layed in the next chart rev eals more clearly the recent 
evolution of European refining margins. Wh ile a depression in margins can clearly be 
observed over the course of 2009, a pickup can also be seen at the end of the year, continuing 
into 2010.  
 
EN 37   EN Refining margins for simple and comple x refiners in the EU, Jan 1995 – Feb 2010 
-10-5051015
janv-95
juil-95janv-96juil-96
janv-97
juil-97
janv-98juil-98
janv-99juil-99
janv-00juil-00janv-01juil-01
janv-02
juil-02janv-03juil-03
janv-04
juil-04janv-05
juil-05
janv-06
juil-06
janv-07
juil-07
janv-08juil-08
janv-09
juil-09janv-10US $/bbl
NWE Brent Cracking MED ES sider cracking MED Urals cracking NWE Urals cracking
NWE Brent hydroskimming MED ES sider hydroskimming MED Urals hydroskimming NWE Urals hydroskimming 
Source: IEA 
Refining margins for simple and complex refiners Jan 2007 – Feb 2010 
-10-5051015
janv-07
mars-07
mai-07
juil-07
sept-07nov-07 janv-08
mars-08
mai-08
juil-08
sept-08nov-08
janv-09
mars-09
mai-09 juil-09
sept-09
nov-09
janv-10US $/bbl
NWE Brent Cracking MED ES sider cracking MED Urals cracking NWE Urals cracking
NWE Brent hydroskimming MED ES sider hydroskimming MED Urals hydroskimming NWE Urals hydroskimming 
Source: IEA 
 
EN 38   EN EU margins in the global context 
Refining margins for comp lex refiners Jan 2007 – Feb 2010, comparison of world 
regions 
-6-4-20246810121416
janv-07
mars-07
mai -07 juil-07
sept-07
nov-07
janv-08
mars-08mai-08
juil-08
sept-08
nov-08
janv-09
mars-09
mai -09 juil-09
sept-09 nov-09
janv-10US $/bbl
NWE Brent Cracking LLS cracking USA Dubai hydrocracking (Singapore) Dubai hydrocracking (China) 
Source: IEA 
The chart above clearly shows that the crisis ha s impacted margins in all regions of the world. 
If average annual margins are compared, North-We st Europe has even fared rather better than 
all other regions in comparison in th e last three years (table below).  
Average annual margins (in $/bbl) 
YEAR NWE BRENT 
CRACKING LLS CRACKING 
USA DUBAI 
HYDROCRACKING 
(SINGAPORE) DUBAI 
HYDROCRACK
ING (CHINA) 
2007 6.3 4.6 3.6 3.1 
2008 5.2 1.9 3.1 2.4 
2009 1.3 -0.2 -1.5 -1.8 
Source: IEA 
Margins outlook 
In its January Oil Market Re port the IEA explained that wh ile refining margins rebounded 
this winter due to a drawdown in oil pr oduct inventories and recovering demand, the 
construction of refineries over the past tw o years and a massive contraction in oil 
consumption during the recession have led to a gl ut of capacity at the global levels. It thus 
maintains a bearish short-te rm outlook for the industry.  
According to Wood Mackenzie consultancy, e xpectations in the EU are for continued 
negative simple margins, but for a recovery in complex margins to occur already in 2010. 
Wood Mackenzie project NW E Urals cracking margins63 to reach $3.45/bbl in 2010 
                                                 
63 Given the increasing relevance of Urals crude in Europe (and falling relevance of Brent crude), it is 
more useful to look at Urals cracking margins going forward. 
 
EN 39   EN compared to $2.62/bbl 2009 and $4.62/bbl in 2008. According to the consultant, margins 
should continue to rise slowly, reaching le vels of $5.13/bbl in r eal (2010) terms by 2015. 
According to the IFP, complex margins from $3.4/bbl are "perfectly satisfactory from a 
refiner's perspective"64. On this basis, should Wood Mack enzie expectations  be realised, 
complex refining in the EU should return to 'satisfactory' levels  of returns befo re the end of 
the year. 
2.2. Role of the EU refining sector in  the supply of petroleum products  
2.2.1. Output of the EU refining sector 
EU refining sector production65 evolution, 1990-2008 
0100200300400500600700800
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
2003 2004 2005 2006 2007 2008Mtoe
Ref inery Gas LPG Motor Spirit Kerosene & Jet fuel
Naphtha Gas / Diesel Oil Residual Fuel Oil Other petroleum products
 
Source: Eurostat 
                                                 
64 Panorama 2009 "A look at refining", IFP. 
65 EU refining production data shown here is equivalent to net transformation output of refineries, which 
excludes consumption in refineries. 
 
EN 40   EN EU refining sector production split, 1990-2008 
3.6% 3.7% 3.6% 3.9%2.6% 2.8% 3.0% 2.5%22.7% 23.0% 21.7%20.6%6.3% 6.3%6.5%6.8%5.0%5.8%5.5%4.6%32.0%34.0% 36.0% 39.4%20.4%16.9% 15.7% 13.8%2.7% 2.6% 2.6% 2.9%4.6% 4.9% 5.4% 5.5%
0%10%20%30%40%50%60%70%80%90%100%
1990 1995 2000 2008Other
Bitumen
Residual Fuel Oil
Gas / Diesel Oil
Naphtha
Kerosenes - Jet Fuels
Motor Spirit
LPG
Refinery Gas
 
Source: Eurostat 
Since 1990, EU refinery sector production has in creased by 0.3% per year. In that time, fuel 
oil production was significantly reduced, while mo tor spirit (gasoline) production decreased 
by 4.2%. Gas/diesel oil producti on increased by 30.4% during th at period, and it went from 
representing 32% of total production in 1990 to 39% by 2008. 
2.2.2. Utilisation rates 
Utilisation rates, OECD Europe 
687072747678808284868890
 Jan 08  Mar 08
May 08
Jul 08 Sep 08
 Nov 08 Jan 09
 Mar 09  May 09 Jul 09
 Sep 09
 Nov 09
 Jan 10  Mar 10%
 
Source: IEA 
 
EN 41   EN Utilisation rates, OECD Europe 
Year 2008 2009 2010 (3 MONTHS) 
Average of 
monthly rates 85.2 78.7 76.2 
Source: IEA 
The average utilisation rate66 in OECD Europe in 2009 amounted to 79%, compared to 85% 
the previous year. In the firs t three months of 2010, utilisatio n rates averaged 76%, showing a 
continuing downward trend. This needs to be put in the context of prev ious utilisation rates 
for the EU close to 90% as recently as 2005. 
EU utilisation rates in the global context 
Comparison of utilisation rates, different regions, 1998-2008 
65%70%75%80%85%90%95%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
US Middle East China Japan European Union 
 
Source: BP Statistical Revi ew of World Energy 2009 
In comparison to a selection of other major refining nations, the chart above reveals that 
utilisation rates in the EU sin ce 1998 have generally been high compared to the rest of the 
world. US utilisation rates were mo re constant than the EU in the first part of the last decade, 
though have trended downwards in the latter pa rt. Mature markets such as the US, EU and 
Japan have registered falls in utilisation rate s in the more recent years as China's has 
continued to increase, registeri ng the highest utilisa tion rate in 2008, while in the Middle East, 
crude capacity utilisation has been  relatively stable since 2006.  
                                                 
66 Crude throughput/production as a proportion of operable refining capacity. 
 
EN 42   EN 2.2.3. EU demand for petroleum products 
EU 27 Petroleum product demand evolution, 1990-2008 
0100200300400500600700
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Mtoe
LPG Naphta Gasoline Jet fuel & kerosene Heating oil Gas oil Heavy fuel oil Other Maritime bunker
 
Source: Eurostat/Primes 
EU 27 Petroleum product demand mix, 1990-2008 
3.7% 3.9% 3.9% 4.1% 4.2%5.5% 6.6% 6.7% 6.6% 6.3%22.7% 21.9% 20.7%17.7% 16.1%5.5% 6.3% 8.0%8.5%9.4%19.3%18.7% 16.8%15.9%14.6%17.7%19.8% 23.8% 28.2% 31.0%16.3%14.1% 10.1% 7.6% 6.4%4.5% 4.3% 5.3% 6.6% 7.4%4.9% 4.4% 4.7% 4.7% 4.6%
0%10%20%30%40%50%60%70%80%90%100%
1990 1995 2000 2005 2008Other
Maritime bunker
Heavy fuel oil
Gas oil
Heating oil
Jet fuel & kerosene
Gasoline
Naphta
LPG
 
Source: Eurostat/Primes 
EU27 demand in petroleum products increased  relatively steadily until 2005, after which it 
fell every year until 2008. This has been the re sult of opposing trends in  key products, with, at 
one extreme, jet fuel and kerosene consumption almost doubling during the period; consumption in gasoil registering steady and su stained growth; demand for naphta registering 
 
EN 43   EN an initial increase and then a fall; sustained fall s in demand for gasoline and heating oil, and 
quite significant falls in demand for heavy fuel oil. 
This has therefore meant if one looks at the evolution of the petroleum product demand mix in 
the EU, that the share of jet fuel and kerosene has increased between 1990 and 2008 from representing 5.5% to 9.4%; the share of gasoil from 17.7% to 31% ; the share of gasoline from 
22.7% to 16.1% and the share of he avy fuel oil from 16.3% to 6.4%.  
Note that almost two thirds of the total demand for petroleum products comes from the 
transport sector (industry use makes up 25%, wh ile household & services use is only 13%), 
and therefore that the evolution of the use of transport fuels is a vital element for the EU 
refining industry.  
Gasoil (diesel use in the transport sector) demand represents by far the largest single 
component of EU demand for petroleum pro ducts. Gasoil use in the transport sector 
(excluding bunkers, which are show n separately in the demand ch arts above) can be further 
broken into three uses: road, rail and inland navigation. Road diesel represents the vast 
majority of gasoil demand (96% in 2008). 
Key to understanding the important growth of  gasoil since 1990, and to appreciating the 
importance of this product to the EU consumer, is therefore an understanding of the evolution 
of the demand for road diesel. To complete the picture, the evolution of the demand of 
gasoline as a road fuel is plotted against th e evolution of demand for road diesel in the 
diagram below, in order to appreciate the re lative evolution of thes e two key road fuels. 
EU 27 transport diesel and gas oline demand evolution 1990-2008 
80100120140160180200
1990 1992 1994 1996
1998
2000 2002 2004 2006 2008Mt
0.60.81.01.21.41.61.82.02.2
Diesel/Gasoline ratio
Gasoline Diesel Ratio
 
Source: Eurostat 
It can clearly be seen that the evolution in diesel demand as a road fuel has been at the 
expense of gasoline. 
 
EN 44   EN One factor which has driven the demand for road diesel in the EU is the higher efficiency of 
diesel engines, which has meant that car consumer s in the EU have tended  to purchase diesel 
vehicles in increasing proportions, de spite their higher initial price.  
Demand for road diesel in the EU has also been growing constantly partly  as a result of a tax 
differential between diesel and unleaded gasolin e for vehicle use which has long favoured the 
former against the latter.  
As an illustration, June 2010 figures67 show that while pre-tax c onsumer prices of premium 
unleaded gasoline are lower than for diesel in  all but one of the EU 27 Member States 
(Malta), higher taxes and duties on gasoline means that the price of diesel is cheaper at the pump in 26 of the 27 EU Member States (w ith the exception of th e United Kingdom).  
Vehicle diesel and unleaded gasoline tax di fferential, excluding and including taxes, 
prices as at 14/06/2010 
AustriaBelgiumFinland
GermanyGreece
Italy
Luxembourg
MaltaSlovakiaSpain
BulgariaCyprusCzech RepublicDenmark
EstoniaFranceHungary
IrelandLatviaLithuania
NetherlandsPolandPortugal
Romania
SloveniaSw eden
United Kingdom
0.490.500.510.520.530.540.550.560.570.580.590.600.610.620.630.640.65
0.49 0.50 0.51 0.52 0.53 0.54 0.55 0.56 0.57 0.58 0.59 0.60 0.61 0.62 0.63 0.64 0.65
Price of Euro s uper 95 excl.taxesPrice of diesel excl. taxes
 
                                                 
67 European Commission Oil Bulletin, 14th of June 2010. 
 
EN 45   EN Greece
Italy
LuxembourgMaltaSlovakiaSlovenia
SpainAustriaBelgium
Bulgaria
Cy prusCzech RepublicDenmark
Es toniaFinland
FranceGermany
HungaryIreland
Latvia
LithuaniaNetherlands
PolandPortugal
RomaniaSw edenUnited Kingdom
0.901.001.101.201.301.401.50
0.90 1.00 1.10 1.20 1.30 1.40 1.50
Price of Euro s uper 95 incl.taxesPrice of diesel incl. taxes
 
Source: European Commission Oil Bulletin 
2.2.4. Imports and exports of petroleum products to/from the EU 
Evolution of EU net imports/ export s in key petroleum products, 2000-2008  
-45,000-40,000-35,000-30,000-25,000-20,000-15,000-10,000-5,00005,00010,00015,00020,00025,00030,000
2000 2001 2002 2003 2004 2005 2006 2007 2008
ktGasoline
Gasoil and diesel
Kerosene & jet fuels
Naphta
Residual fuel oil
 
Source: Eurostat 
In the last few years, the two key trade petrol eum products in the EU in terms of volume have 
been gasoline and gasoil/diesel (include heating oil), gasoil/diesel being the main petroleum product imported into the EU while gasoline is the main product exported from the EU. 
Looking back at the chart show ing the evolution of  demand in diesel and gasoline in 
transport, it is interesting to not e that the general trend in net im ports of gasoil/diesel has been 
towards increasing import dependence as the demand  for diesel in transport has been growing 
which, confirming the evolution of growth in demand and supply of gasoil/diesel and gasoline, shows that th e industry has not been able to meet the growing demand for diesel
68.  
                                                 
68 One important thing to note with regard to the evolution of gasoil/diesel imports: 2007 net imports of 
gasoil/ diesel were significantly below the preceding year and constituted a sign ificant break from the 
 
EN 46   EN The charts below provide some details of the countries from which the EU imports its middles 
distillates (gasoil/diesel  and kerosene/ jet fuels) and to where the EU exports gasoline. The 
import dependence of Russia for gasoil/diesel and the export dependence of the United States for gasoline can quite clearly be seen. In the case of kerosene/ jet fuels, the import 
dependence is more evenly spread out though the reliance on Middle Eastern countries is 
high. 
Volume breakdown of gasoil/ diesel imports into the EU, 2008 
Belarus
4%Norway
5%Canada
5%
United States
16%
Other
33%Russia
35%Venezuela
2%
 
Source: Eurostat 
Volume breakdown of EU gaso line export destinations, 2008 
Nigeria
10%
Other
26%Norw ay
2%Ukraine
3%Canada
3% Sw itzerland
4%
Libya
4%
M exico
10%Unite d State s
37%Lebanon
1%
 
Source: Eurostat 
Volume breakdown of kerosene/jet  fuel imports into the EU, 2008 
Other
37%
Saudi Arabia
12%Kuw ait
14%Russia
3%Libya
3% Venezuela
6%
Singapore
7%
United Arab 
Emirates
7%
India
9%Bahrain
2%
 
                                                                                                                                                         
trend of increasing levels of net importation in the last few years. This was a one-off event, resulting 
from quite significant falls in the level of total gasoil/ diesel imports into the EU (while exports 
remained relatively constant) due mainly to much lower gasoil/ diesel imports into Germany in 2007, 
resulting from reduced households consumption of h eating oil that year. Germans purchased much of 
their heating oil needs for 2007 in 2006, ah ead of an anticipated VAT increase on the 1st of January 
2007. 
 
EN 47   EN Source: Eurostat 
There are other important things to note in obs erving these figures denoting trade dependence: 
• The EU was also quite significantly reliant on the US for gasoil/diesel imports in 2008. 
However, this was not so in 2007 (US only ex ported 5.4% of gasoil/ diesel), while EU 
dependence on Russia in 2007 was mu ch more significant (47%); 
• Judging from 2007 and 2008 data, the only country to which the EU ex ports a significant 
proportion of its gasoline suppl y is the US (In 2007, the EU exported 32% of its gasoline 
production to the US; the next country was Mexico, to which it exported only 6% of its gasoline production); 
• The 'other 'element is significant for all pr oducts, revealing that the EU trades small 
proportions of petroleum products  with a multitude of nations. 
 
EN 48   EN 3. ANNEX 3: DESCRIPTION OF SCENARIO ANALYSIS AND MODEL ASSUMPTIONS  
3.1. PRIMES demand projections 
3.1.1. Description of main assumptions in  the PRIMES 2009 Baseline and the Reference 
scenario 
The PRIMES 2009 Baseline (BL) demand proj ections result from projections of 
developments in the assumed absence of ne w policies beyond those implemented by April 
2009. It is not a forecast of likely developmen ts, given that policies will need to develop. 
Therefore, there is no assumption in the BL that national/overall gr een-house gas (GHG) or 
renewable energy sources (RES ) targets are achieved, nor of  non-ETS (EU Emission Trading 
System) targets; CO2 emissions and RES shares are modelling results. 
The PRIMES Reference (REF) scenario reveals th e effects of agreed policies, including the 
achievement of legally binding targets on 20% RES and 20% GHG reduction for 2020. 
Macroeconomic projections in the BL and the REF reflect the recent economic downturn, 
followed by sustained economic growth resuming after 2010, but the downtu rn is expected to 
have long lasting effects lead ing to a permanent loss in GDP (GDP level in 2030 is assumed 
to end up 10% lower than before  the crisis). Average annual economic growth of 1.7% per 
annum is assumed over the period 2005-2030 in both the BL and REF.  
Oil prices are expected to reach $88/barrel in  2020 and $106/barrel in 2030, expressed in 
2008 prices, in both the BL and REF. In no minal terms, this amounts respectively to 
$112/barrel in 2020 and $164/barrel in 2030, assuming 2% inflation per annum. 
ETS carbon prices are lower in the REF than the BL due to the achievement of the RES 
targets and additional efficiency measures, wh ich decrease electricity demand and emissions. 
Thus ETS carbon prices (in real terms, 2008 pri ces) in 2030 are 39 Euros per tonne of CO2 in 
the BL and 19 Euros per tonne of CO2 in the REF. 
Non-ETS carbon values in the RE F are low due to relatively lo w energy demand (as a result 
of the crisis), policy measures (incl. for cars) and the curren tly inexpensive opportunities in 
non-CO2 GHG abatement. Non-ETS carbon value in 2008 prices is 0 Euro s per tonne of CO2 
in the BL and 5 Euros per tonne of CO2 in the REF in 2030. 
All policies implemented by April 2009 were included in the BL. This includes the effects of 
measures of the current Energy Efficiency Acti on Plan that have already been implemented, 
e.g. the five Ecodesign implementing measures  adopted by April 2009. The recast of the 
Energy Performance of Buildings Directive is not included in the assumptions, but implemented national measures on e .g. building codes are reflected.  
The BL also includes legislation to reduce CO 2 emissions from new cars and transport fuels 
which was adopted in April 2009 along with the c limate and energy package. The legislation 
sets emission performance standards for new passenger cars as part of the Community's 
integrated approach to reduce CO2 emissions from  light-duty vehicles. It  requires significant 
reductions in the average fuel consumption of  new cars, with binding targets of 130g/km by 
2010 and 115g/km by 2020. This leads to a penetr ation of hybrids, equi valent to around 30% 
of the passenger fleet by 2030, which is a po licy outcome in PRIMES, as opposed to a 
constraint. 
Policies beyond April 2009 were also included in cases where there was very little uncertainty 
about how they will evolve. Thus, the ETS Directive and its full implementation were 
 
EN 49   EN included in the BL given that clear market condi tions were already established in the directive 
and that structures and caps for ETS were ag reed before April 2009; where issues were 
pending (e.g. carbon leakage) a conservative ap proach was followed excluding auctioning for 
most branches for modelling purposes. Simila rly, a conservative view was taken on CDM 
credits and banking (allowing for the maximum possi ble) as well as regarding future specific 
CO2 emissions for cars (not yet assuming fully the indicative target for 2020).  
Regarding the non-ETS sectors, th e BL does not impose the achieve ment of the agreed targets 
for 2020 as, similar to the targets in the Re newables (RES) directive, the achievement 
depends on the forthcoming policies and measur es in the individual Member States. Pending 
the implementation of vigourous policies in the Member States, only a minimal decline of 
non-ETS emission by 2020 result in the BL. 
With regard to the RES directive, it requires Member States to submit a National Renewable 
Energy Action Plan (NREAP) to the European  Commission by 30 June 2010. Therefore, only 
the RES measures that had been already implem ented at national level have been included in 
the BL, showing that Member States need to st ep up their efforts to reach their RES targets. 
Similarly to the RES Directive, the Effort Sh aring Decision is only reflected through policy 
measures that have already been implemented. Specifically, the BL achieves 15% of RES 
share in final energy demand in 2020 instead of the 20% target, with the RES share in 
transport amounting to only 7% by 2020 instead of the 10% target. 
Specifically, the BL projects a pe netration of diesel biofuel as  a proportion of final transport 
diesel demand of 4.3%, 7.5% and 9.2% respectively for 2010, 2020 and 2030 and gasoline biofuel penetration as a proportion of final transport gasoline demand of 3.0%, 5.8% and 
7.6% respectively for 2010, 2020 and 2030.  
In addition, the overall 20% reduc tion (below the 1990 level) target for GHG is not achieved, 
the BL only achieving an 8% reduction for energy related CO2 (-14% for all GHG). 
The REF mirrors achievement of 20% RES a nd 20% GHG reduction targets for 2020, as set 
in the energy and climate package, which incl udes the achievement of national RES targets 
and the RES transport sub-target, as well as the respect of the ETS cap and the achievement of 
non-ETS national targets (GHG Effort Sharing Decision). However, energy demand declines 
significantly in the REF but not enough to reach the indicative 20% energy savings objective. 
With regard to RES transport targets, the REF projects a penetration of  diesel biofuel as a 
proportion of final transport diesel demand of 4.3%, 10.1% and 12.6% respectively for 2010, 
2020 and 2030 and gasoline biofuel penetration as a proportion of final transport gasoline 
demand of 3.0%, 8.0% and 10.2% respectively for 2010, 2020 and 2030
69.  
The penetration of hybrids as a pr oportion of total passenger car fl eet in the REF is equivalent 
to 27% of the pa ssenger fleet by 2030. 
Other policies which the REF takes into account includes legislation adopted between April 
and December 2009, i.e: the four Eco-design meas ures, the recast of the building Directive 
and the labelling of tyres. 
                                                 
69 Note that the total renewables target of 10% in the transport sector by 2020 is met in the reference case, 
with the breakdown of the 10% being split as follows: diesel biofuel 6.6%, gasoline biofuel 2.6% and 
green electricity accounting for 0.8%. 
 
EN 50   EN 3.1.2. PRIMES petroleum produc ts demand projections 
EU petroleum products demand projections, PRIMES 2009 Baseline and Reference 
scenarios compared 
707580859095100105
2005 2010 2015 2020 2025 2030Light distillates REF
Light distillates BL
Middle distillates REF
Middle distillates BL
Heavy distillates REF
Heavy distillates BL
Total demand REF
Total demand BL
 
Source: European Commission 
Overall petroleum product demand is projected to  decline by 13.8% in the REF compared to 
11.3% in the BL between 2005-2030. Both the BL  and the REF project a continuation in 
observed historical trends in a number of products, including the continued significant falls in 
demand for heavy fuel oil; continued sustained falls in demand for gasoline and heating oil; a continued slow decrease in the demand for naphta. Both the BL and the REF project a break from recent trends in the growth for other pe troleum products including continued but slower 
growth in demand for jet fuel and kerosene; and an initial but small increase in diesel, 
followed by a slow decline, leading to an overall fall. 
As noted already in this document, one of the main challenges faced by the EU refining 
industry going forward would be in terms of  continued growth in demand for middle 
distillates parallel to a fall in demand for ga soline, which poses a pr oblem to EU refiners 
given the current EU refining configuration which cannot pr oduce more middle distillates 
without also increasing the supply of gasoline. 
If a comparison of the BL demand projections for middle distillates for different years is 
made, it reveals that while 2010  volumes end up slightly be low 2005 levels, by 2015 demand 
for middle distillates is proj ected to grow by 2.3% from 2005 levels, after which it will 
gradually fall to a level in 2030  below that of 2005 (-4.7%). No te that 2015 is the turning 
point for the demand of gasoil, while the demand fo r jet fuel/kerosene is expected to continue 
growing to 2030. In the REF case, the trends ar e exactly the same, with the key differences 
that by 2015, demand for middle dist illates will grow by less than  the BL (only 1.2%), and the 
fall thereafter will be greater, (by 8.5% from 2005-2030). 
 
EN 51   EN The trend for transport diesel in the BL is fo r an overall fall by 2030 from 2005 levels of 1.7% 
compared to 5% in the REF case. In compar ison, the BL projects gasoline demand to fall by 
19.6% in comparison to a projected fall of 20.7% in the REF case. 
PRIMES Baseline and Reference transport dies el and gasoline projections comparison 
7580859095100105110
2005
2010
2015
2020
2025
2030
Gasoline BL Gasoline REF
Gas oil BL Gas oil REF 
Source: European Commission  
Key differences between the BL and the REF cases  are in terms of the assumed penetration of 
renewables and the use of alternative fuel vehicles in the transport sector70.  
The Baseline projects a penetrati on of diesel biofuel as a propor tion of final transport diesel 
demand of 4.3%, 7.5% and 9.2% respectivel y for 2010, 2020 and 2030 and gasoline biofuel 
penetration as a proportion of  final transport gasoline de mand of 3.0%, 5.8% and 7.6% 
respectively for 2010, 2020 and 2030.  
In contrast, the Reference scenar io projects a penetration of di esel biofuel as a proportion of 
final transport diesel demand of 4.3%, 10.1% and 12.6% respectively for 2010, 2020 and 
2030 and gasoline biofuel penetration as a propor tion of final transport gasoline demand of 
3.0%, 8.0% and 10.2% respectively for 2010, 2020 and 203071.  
Note in addition that the pene tration of hybrids as a proporti on of total passenger car fleet 
(assumed to be equivalent to 30% of the pa ssenger fleet by 2030 in the Baseline and 27% of 
the passenger fleet by 2030 in the Reference S cenario) contributes si gnificantly towards 
meeting the requirements of the CO2 from cars regulation.  
The penetration of electric vehicles is insignificant in both the Baseline and Reference 
scenarios.  
                                                 
70 Note that the demand projections shown above and used in the OURSE model are net of biofuel 
demand. 
71 Note that the total renewables target of 10% in the transport sector by 2020 is met in the reference case, 
with the breakdown of the 10% being split as follows: diesel biofuel 6.6%, gasoline biofuel 2.6% and 
green electricity accounting for 0.8%. 
 
EN 52   EN 3.2. Description of OURSE refining module of the POLES energy model 
The objective of the OURSE model is to represen t the refining activity at a world scale level. 
It is included in the POLES (Prospective Outl ook for the Long-term Energy System) model.  
Because the model designed to represent the wo rld-wide refining industry must have a limited 
number of equations, a representative refinery has been defined for a restricted number of 
regions in the world (corres ponding to the POLES nomenclatu re). Moreover the crude oil 
supply has been aggregated (the size of the model is di rectly linked to the number of crude oil 
which are introduced in the model). Finally, as  the model has to represent the oil product 
exchanges between the main regions in the worl d, a multi-refinery approach is considered.  
The main inputs of the model are (i) the oil product demand (in terms of both quantities and 
specifications), (ii) the crude oil availability, (iii) the CO 2 emissions restrictions and taxes. 
The main output are (i) the refi neries throughput (act ivity level), (ii) th e products blending, 
(iii) the products trade, (iv)  the investments (technology dynamic of the refining processes), 
(v) the marginal costs of o il products (supply prices), and (vi) the pollutant emissions. 
All the relevant techno-economic characteris tics of the oil refini ng industry (technical 
processes, investment and operating costs, poll utant emission factors...) are included in the 
model. 
The refining model of POLES is able  to simulate the consequences of: 
– changes of oil product demand such as a modi fication of the share of the automotive fuels 
(gasoline and diesel) 
– changes of specification of o il products (sulphur content of  oil products for instance) 
– carbon emissions regulati on (bounds and taxes) 
– adoption of alternativ e type of policies. 
As the model permits exchanges of petroleu m products between the main regions in the 
world, the refining industry has been split into  several geographical areas. In each refining 
area, it is assumed that the crude oils are pr ocessed together and that there is only one 
investment variable for each unit. Moreover the model implicitly allows  intermediate product 
exchanges inside each area. 
The geographical considerations upon crude oil supply and petrol eum product demand, and 
the technical analysis of the refineries lead to nine refining areas being defined in the world:  
Area 1 - Z1 North and Central America : Canada, USA, Mexico 
Area 2 - Z2 Latin America, 
Area 3 - Z3 North Europe : all Europe except South Europe 
Area 4 - Z4 South Europe : Italy, Greece, Port ugal, Spain, Turkey, Croatia, Slovenia, Former 
Yugoslavia 
Area 5 - Z5 Former Soviet Union (CIS) 
Area 6 - Z6 Africa 
Area 7 - Z7 Middle East 
Area 8 - Z8 China 
Area 9 - Z9 Other Asia 
 
EN 53   EN The general denominations "Latin America", "F ormer Soviet Union", "A frica", "Middle East" 
are those which are used by the International En ergy Agency (IEA) in its  statistical yearbooks 
(energy balances).  
 
EN 54   EN 4. ANNEX 4: SUMMARY OF KEY PROJECTS & PLANNED /ACTUAL DIVESTMENTS IN THE 
EU REFINING SECTOR  
Summary of EU refineries planned/actual  divestments and shutdowns since 2008  
0100,000200,000300,000400,000500,000600,000700,000800,000900,0001,000,000
Sold since
crisisOn sale since
crisisSale
w ithdraw n -
future
uncertainExpected to
be put on saleExtended
maintenanceShutdow n &
conversion
plannedCapacity in bbl/day
 
Source: European Commission. Note: This info rmation has not been confirmed by the EU refining industry and is contained 
here for illustrative purposes.  
• Known planned/actual divestments and shutdow ns in EU refining capacities since the start 
of the crisis in 2008 extend to 18 out of 104 re fineries in the EU, representing some 2.7 
million bbl/day/134 million tonnes per year of cr ude capacity, equivalent to 17% of total 
EU refining capacity.  
• Actual deals have been few and far between, with the exception of the sale of a small 
processing facility in Belgium by Petroplus  and part of a Dutch plant by Total. 
• In general, both planned and act ual divestments have been of  simple refining plants of 
mainly small capacity. 
• Assets which have been put on sale since the crisis and are s till awaiting buyers amount to 
close to 900,000 bbl/day. It is expected that at least anot her 400,000 bbl/day of capacity is 
likely to be formally put on sale in the fore seeable future as a result of the crisis. 
• All of the known potential/actual buyers of a ssets on sale are non-Europeans. Other than 
the Russian Lukoil, willing acquirers of EU refining assets include India's Essar and 
Reliance and China's PetroChina though no deal s have been concluded yet. Swiss oil 
trading firm Vitol bought Petroplus's processi ng unit in Antwerp last year (21,000 bbl/day) 
while American refiner Valero has expressed interest in purchasing Chevron's Pembroke 
refinery (202,000 bbl/day). 
• While interest in acquiring stakes in the EU  refining market by oil companies located in 
neighbouring countries such as Lukoil is to secure outlets for their crude production, the 
interest of PetroChina stems from the wish to  grow their global presence in refining, and 
they see the current environment of low marg ins, and therefore low prices, as opportune. 
Though not from a neighbouring country, India's E ssar sees the acquisition of EU assets as 
an opportunity to turn them in to import, storage and distri bution centres for its refined 
products produced at its ho me refinery in Vadinar. 
 
EN 55   EN • Refining capacity that is known to have been te mporarily shutdown as a result of the crisis 
amounts to over 900,000 bbl/day. These units could either be restarted or eventually also 
be put on sale, depending on market conditions. 
• The numbers employed in the refineries re presented by these capaci ties are not known and 
are not formally communicated by refiners.  
• Note that no complete shutdowns have been announced by EU refiners. Since the 
beginning of the crisis, uneconomic assets that  have not been put on sale have generally 
been subject to extended maintenance/temporar y shutdowns, while assets that have been 
formally 'shut down' are in fact being converted  to depots/storage fac ilities (equivalent to 
258,000 bbl/day, to date). 
• There have also been reports of planne d investments in extra diesel capacity/ 
hydrodesulphurisation/coker capacity at medium to large, more complex plants, as follows:  
ExxonMobil 
• The company announced plans in December 2008 to invest $1 billion in extra diesel 
capacity expansion (by 143,000 bbl/day) in three of  its refineries (two in the US, one in 
Belgium: Antwerp). The Antwerp refinery has a capacity of 305,000 bbl/day. 
Repsol 
• Repsol was granted a Euro 400 million loan from the European Investment Bank for the 
construction of a coker unit at its 220,000 bbl/d ay Petronor refinery in Bilbao, Spain. The 
project consists of a 2 milli on tonne/year coker unit and rela ted treatment units. The coker 
plant, which will cost a total Euro 780 million,  will convert heavy fuel oils into diesel, 
gasoline, propane and butane; 
Royal Dutch Shell 
• Shell is planning on continuing to  invest in larger integrated  refining and chemical sites, 
including a $500 million investment in a ne w hydrodesulphurisation unit at the firm's 
406,000 bbl/day Pernis plant.  
Total 
• Earlier in the year, Total announ ced its intention to restructur e its refining output to reduce 
its production of gasoline and increase its production of diesel. This would include 
investing 800 million of Euros in adaptin g its French Gonfreville (338,000 bbl/day) 
refinery to change its output in favour of diesel. 
 
EN 56   EN 5. ANNEX 5: NON-EU  REFINING CAPACITY DEVELOPMENTS & DIVESTMENTS  
The IEA reported in May 200972 that the impact of the financial and economic crisis on the 
global refining sector amounted to 1.6 million barre ls/day of postponement or cancellation of 
new refining capacity (by April 2009). In  addition, according to the IEA some 800,000 
bbl/day of refining projects have be en delayed for 18 months or more. 
The crisis has certainly hit all parts of the gl obe, with falling refining margins and utilisation 
rates recorded in many regions (more details in annex 2).  
Future prospects in terms of additional refi nery capacity are however for some 9 million 
bbl/day between 2008 and 2015, according to Wood M ackenzie, equivalent to a 10% increase 
in total world refinery capacity. 
Expected additional refinery capacity by region, 2008-2015 
01,0002,0003,0004,0005,0006,000
Asia
Pac if icMiddle
Eas tNorth
Am ericaLatin
Am ericaGreater
Eur opeFSU Sub-
Saharan
AfricaAdditional CDU Capacity, kbd  .    
New Expansion
 
Source: Wood Mackenzie 
According to the above data, 59% of worl d new refinery capacity between 2008 and 2015 
(amounting to 3 million bbl/day) will be in th e Asia Pacific region, while 50% of world 
capacity expansion will come from that regi on (2 million bbl/day). The Middle East will 
contribute 26% of world new refinery capacity during that period, and 10% of world capacity 
expansion. In comparison, Europe is expected  to contribute 2% of world new refinery 
capacity during that period, and 5.6% of worl d capacity expansion, amounting in total to 
322,000 bbl/day of additional capacity. 
North-America 
North-America, which includes the US, Canada and Mexico, has total refinery capacity of 21 
million bbl/day, equivalent to 24% of total world refining capacity. 
In spite of the challenging climate and its impact  on the industry in that  region, it is expected 
that close to 800,000 bbl/day of additional capa city will come on stream between now and 
2015 in North-America. 
                                                 
72 Impact of the Financial and Economic Crisis on Global Energy investment, IEA, May 2009. 
 
EN 57   EN Middle East 
The Middle East consisting of Iran, Iraq, Jo rdan, Kuwait, Oman, Qatar, Saudi Arabia, UAE 
and Yemen has 7.6 million bbl/day of refining capacity, equivalent  to 9% of world refining 
capacity.  
By 2015, the region is expected to  add 1.7 million bbl/day of refi nery capacity, amounting to 
almost a quarter of current  capacity in the region. 
Asia-Pacific 
The Asia Pacific region consists of China, Asia, South Korea, Indonesia and Japan along 
with many other smaller refi ning countries. The region has capacity of 25 million bbl/day, 
amounting to 28% of world refining capacity.  
As highlighted above, the biggest expectations for additional refi nery capacity in  the world in 
the next five years are in the Asia Pacific region. It is expected to add five million bbl/day of additional capacity by that date, amounting to 56% of total additional world capacity and 
amounting to increasing existing cap acity in that region by 20%. 
A number of EU oil majors are attempting to establish a refining presence in China, such as 
BP, which is in talks with state company Sinope c on a new refining joint venture there, while 
Total is known to be in talks with Sinoc hem and China Petroleum & Chemical about a 
number of refining proj ects also in China. 
Other regions 
• South and Central America which includes Br azil, Argentina and Venezuela as well as 
other small refining countries has 6.6 million bb l/day of refining capacity, equivalent to 
7% of total world refining capacity. Around 500,000 bbl/day of new refining capacity is 
expected in that region between 2008 and 2015, and some  200,000 bbl/day of capacity 
upgrades of mainly coking and hydrocrack ing, mainly in Brazil and Venezuela. 
• The former Soviet Union region, which include s Russia, Ukraine, Belarus, Georgia among 
others, has 8 million tonnes of refining capacity, equivalent to 9% of total world refining 
capacity. An additional 500,000 bbl/d ay of new and expanded capac ity is expected to come 
on stream in that region by 2015.  
• Africa has 3 million bbl/day of refining cap acity, amounting to 3.6% of world refining 
capacity. Only very small capacity additions are expected in the next ten years, amounting 
to less than 100,000 bbl/day.