European refiners face new wave of closures -trading heads

LONDON, Oct (KOSDAQ: 039200.KQ - news) 1 (Reuters) - Europe faces a new wave of refinery closures due to rising competitiveness of U.S. plants which can run on cheap gas and a continued fall in European demand, the heads of major trading houses said on Tuesday.

Torbjorn Tornqvist, chief executive of traders Gunvor said overcapacity in Europe and increasing flows from the United States would further pressure an already vulnerable industry.

"Last year you saw a wave of closures. Gasoline demand has lost more than anticipated which is worrying for refiners," he told the Oil & Money conference in London.

"In the next two years we will see probably five, six plants, 500,000-700,000 barrels per day being closed," he said speaking on a panel with representatives from his two major rivals, Vitol and Glencore.

He said increased production and lower costs from other regions, in part the shale revolution in the United States, made the closures inevitable.

"I think it's necessary to bring balance because in the rest of the world it will increase by about 2 million bpd a day this year or one and a half ... clearly, refiners are going to be under pressure."

Alex Beard, director of the oil commodity department at Glencore highlighted the importance of the growing strength of U.S. refiners relative to their European peers in coming years.

"It's important to say the U.S. refining sector is doing fantastically well compared to five years ago," Beard (Other OTC: BRCOQ - news) said.

"The trend of U.S. exporting products is going to continue, you're going to see diesel coming from the United States to Europe for the foreseeable future," he said.

Ian Taylor, chief executive of Vitol, also stressed the importance of the U.S. refiners' resurgence.

"We saw a ship for the first time ever ballasting empty to go to the Gulf coast to pick up a cargo," he said. "It was not taking gasoline across to the United States. The best place to find a cargo for distillate was the United States."

Tornqvist said U.S. refiners benefited from being able to run refiners exclusively on gas.

"If you generalise, (the cost base is) an average of $2 per barrel less in Europe than in the United States," he said.