Who will survive oil refinery competition from the Middle East?

Thursday, March 1, 2012

Indian Oil refinery Essar has put forth the notion that the UK may well see refinery closures in the near future, due to stiff competition. While bigger establishments in Cheshire may be able to handle the tough economic market, rivals may find the profitability balance too difficult to achieve.

Following a collapse of a refinery in Coryton, which supplied 20% of the south-east's fuel, competition presented by the middle-east and India has gained more momentum. The Petroplus owned site went into administration in January, putting over 900 jobs on the line.

Chief executive at Essar stated: 'There is some sort of structural change in the refining industry globally. Refineries that were small-sized or low-complexity are being replaced by large, complex refineries mostly built in the Asia-Pacific region … Those refineries that are not economically sustainable or of low complexity will find it much harder to survive in this market…We believe that there has to be some shake-up in the European refining industry and that uneconomic capacity will move out."

So if this 'shake-up' never materialises, what will this mean for oil and gas contract jobs? Many of those working in smaller refineries may be questioning their current vacancies. While larger companies are seemingly taking over, oil and gas contractors may have to look further afield for future job prospects.

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This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More

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