ECONOMY

Turkey, N.Africa exports support Mediterranean refineries, IEA reports

Increasing demand for fuel from North Africa and Turkey is keeping Greek, Spanish and Italian refineries in business, the International Energy Agency said in its monthly oil report, even while their domestic economies slump.

The picture for Mediterranean refineries is bright by contrast with those in the north, where overcapacity and a lack of investment has led to a slide in margins and plant closures.

“In the last three years, major European refiners in the Mediterranean basin, particularly in Spain and Greece, have seen a surprising revival in refining throughputs, bucking the trend in domestic oil demand,” the IEA report said.

Turkey’s imports of gasoil have grown by around 16 percent from 2010 to the first quarter of 2013, or by 40,000 barrels per day to 200,000 bpd, most of that growth supplied by Greek refineries, the report said.

Significant investment in Spanish refineries has enabled them to become competitive compared with those in north-western Europe, which are often relatively simple and inefficient, the IEA said.

“Chief among Spain’s new export markets are France and Italy, where overcapacity and flagging competitiveness have led to some of the largest cuts in refining capacity in Europe,» the report said.

It said Spanish exports of gasoil had risen in the past two years by 10 percent or 20,000 bpd to France and by 71 percent or 40,000 bpd to Italy.

While Italy has been importing more gasoil from Spain, it has been exporting more gasoline to North Africa, the report said.

“Persistent refinery outages and insufficient capacity in North Africa have combined with growing consumption to increase import demand, especially for gasoline,” it said.

The IEA said that from 200810, Libyan refineries processed an average of about 350,000 bpd of crude oil, but that since the onset of the Libyan civil war, runs have averaged about 110,000 bpd.

Libya has ramped up gasoline imports from Italy by an average of more than 30,000 to help make up for the gap, it said.

Algeria also has been an important source of demand for Spanish and Italian oil products, the report said.

“The country’s demand for gasoline has grown by 50 percent between the first quarter of 2010 and the first quarter of 2013, while refining throughput has fallen by 35 percent over the same period.”

Mediterranean refineries, like their peers in the north of the continent, still face considerable headwinds, however.

In recent weeks and months, competition has increased as Russia has expanded diesel exports to Europe, while costs have risen for Urals crude and West African crudes. [Reuters]