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https://reddit.com/r/electricvehicles/comments/mng9aw/one_of_norways_fuel_refineries_may_shut_down_soon/
skyfex
https://www.reddit.com/r/electricvehicles/comments/mng9aw/one_of_norways_fuel_refineries_may_shut_down_soon/


… due to falling demand for fossil fuels.

[https://translate.google.com/translate?sl=no&tl=en&u=https://e24.no/olje-og-energi/i/x32nwl/vurderer-aa-legge-ned-ett-av-norges-to-oljeraffinerier](https://translate.google.com/translate?sl=no&tl=en&u=https://e24.no/olje-og-energi/i/x32nwl/vurderer-aa-legge-ned-ett-av-norges-to-oljeraffinerier)

>The company writes in the report that refineries in Europe operate in an increasingly challenging market that is characterized by declining demand, overcapacity and strong competition. The demand for liquid fuel for road traffic in Norway is declining.

Sale of both gasoline and diesel has been falling steadily since 2016

[https://www.drivkraftnorge.no/contentassets/61f5751ecf03479ca81818d5522620df/salg1.jpg](https://www.drivkraftnorge.no/contentassets/61f5751ecf03479ca81818d5522620df/salg1.jpg)

I think this could be a very interesting discussion: Will this make fuel more or less expensive? Will fuel production lose economy-of-scale benefits? Will governments be encourage to accelerate the transition to EVs when countries start losing their own refineries? Will it be more expensive to import fuel, and will it be a national security concern?

And will this affect the supply of other petrochemicals and fuels?



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8 thoughts on “One of Norways fuel refineries may shut down soon..”
  1. > Will this make fuel more or less expensive?

    I think it’s going to be a game of “whackadoodle”, boom/bust economics with shorter periods. A lot will depend on how flexible the refiners can be, I’d guess most refineries are optimized for gasoline and diesel production currently.

  2. It will simultaneously make all petrochemical products more expensive and shrink refining margins globally as petrochemicals are a fluid, global commodity. This will result in a wave of shut-downs for smaller, less complex refineries.

    ​

    Let’s say 1 barrel of crude oil can be divided into 5 parts (I’m being simple here, there are a dozen or more in reality):

    1. Jet fuel
    2. Diesel
    3. Gasoline
    4. Chemical feedstocks
    5. Lubricants

    ​

    In reality, a refinery needs to balance its product mix based on what each product is selling for. For example, when the COVID-19 pandemic started, refineries were producing way more jet fuel than was demanded, so prices fell – jet fuel was sold at a huge loss to traders to either ship or store (refineries can’t store an infinite amount of product). What happened afterwards was refineries changed their process to produce alot less gasoline, diesel, jet fuel fractions while also throttling total capacity.

    ​

    Currently, jet fuel is a high margin product, gasoline and diesel are a little less so, but they provide the bulk of revenue. The “new” craze in refineries is to supersize them, increase complexity, and make more custom petrochemical feedstocks such as ethane which are high growth products. Refineries rely on these higher margin sub-products to actually make refining that incremental barrel of oil profitable. Refineries are in the business of being as efficient as possible.

    ​

    Older less complex refineries, like those in Norway are in their sunset years. The world needs more plastic and advanced petrochems – not more gas, diesel, or perhaps even jet long term. These older refineries mainly produce transportation fuels and lubricants.

  3. Not surprising a 110k bpd refinery gets shut down. Since it’s so small it’s presumably older and would require significant capex to keep running (and even more to increase production). The 240k bpd refinery in Norway must have significantly higher margins. 300k bpd is a good-sized refinery, 150k is small in the current reality (500k+ is massive).

  4. Refineries will be the key to ev transition.

    They are already far too concentrated (ownership, and geographically) and are a dominant cause of gastric volatility.

    As the least profitable ones close, the price volatility will increase.

  5. Fuel will be made less expensive. As demand goes down, price will also go down.

  6. Screw the people heating their homes or cooling in the summer time. Higher power cost for all is saving the planet!

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