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Pembroke oil refinery plunges to loss as pandemic hits demand

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Pembroke refinery
Pembroke refinery

The company behind the Pembroke oil refinery in south-west Wales slumped to a £282.4m loss last year as the pandemic hammered the market for crude.

Valero Energy, a UK-based subsidiary of Fortune 500 behemoth Valero, tumbled into the red from a 2019 profit of £247.7m as oil demand and prices fell.

The loss was primarily due to the effects of Covid on global economic activity, directors said.

Sales fell by 45pc to £5bn while refinery utilisation dropped more than 20 percentage points in the year ending December 2020, they said in accounts filed at Companies House.

Valero employs more than 500 permanent staff at the Pembroke refinery, owns pipelines and fuel terminals and sells petrol under the Texaco brand.

The figures lay bare the financial hit of the pandemic across the international refining industry, with at least two plants in Europe closing and two units mothballed at Petroineos’s Grangemouth refinery in Scotland.

Refiners are grappling with their long-term future as the Government looks beyond fossil fuels to tackle climate change, with new petrol and diesel cars to be banned from 2030.

Ministers have brought forward new laws allowing them to intervene in the refinery market to secure fuel supplies.

Under the Downstream Oil Resilience Bill, the Government will have fresh powers to demand information from refinery owners, insist that they keep key infrastructure operating, and provide them with financial assistance.

The UK has six major oil refineries which together supply about 85pc of UK fuel demand, including Exxon’s Fawley site in Hampshire and Essar’s Stanlow oil refinery in Cheshire.

In the accounts, Valero Energy said it completed planned maintenance of Pembroke in the first half of 2021 and has invested £130m in a new heat and power plant at the site.

Directors added that stress tests modelling further lockdowns show the company will remain in a strong cash position in all scenarios.

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