European refinery shutdowns open doors for Indian diesel exports
By JENNY GROSS
Indian refiners are likely to increase their presence in the European diesel market as smaller, less complex European refineries come offline because of weak refining margins, analysts said Thursday.
Petroplus, one of Europe's largest refiners, said it would shut three of its refineries after banks withdrew credit lines from the company.
Late Wednesday, the company said it had reached a temporary agreement with creditors to allow the company to continue operating its remaining two refineries.
The shutdown, along with the shutdown of Repsol’s Petronor refinery in Spain, due to what Repsol called a "drastic" decline in refining margins, is creating a gap in the European market for diesel products.
Diesel cracks, a measure of profit by refiners, were at $19.40/metric ton Thursday, up from lows of around $7/ton in May.
"I think generally Asia will step up, and within that India, because it has added a huge amount of refining capacity," said Amrita Sen, an analyst at Barclays Capital.
"They have the capacity to fill the gap whatever it may be. Europe is getting more and more reliant on imports of diesel," she added.
Some Indian refineries, such as those owned by Reliance Industries, are larger and more complex than European refineries, meaning they can produce a wider range of products from cheaper crudes.
Indian refiner Essar Energy expects to export 40% to 45% of its oil products, such as diesel, over the next two to three years up from 35%, given new Indian refining capacity coming on stream, said Andrew Turpin, company spokesman.
US Gulf refiners are also major exporters of diesel to Europe.
Diesel is used for heating and transport fuel for trucks and cars.
Dow Jones Newswires
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