Widespread Refinery Closures Not Needed To Cut Excess Capacity - BP
February 15, 2010
The permanent closure of large numbers of refineries won't be necessary to cut the global excess capacity that is to blame for poor profitability in the industry, said BP PLC's (BP) Chief Economist Christof Ruehl Monday.
Instead, much of the surplus refining capacity may be eliminated by reducing throughput or moth balling the least profitable refineries, he said. The pressure to reduce refinery utilization or shutdown facilities will be greatest at old, high-cost refineries with limited abilities to make the most refined products, he said.
Asian operators may be shielded from this to some extent by government subsidy, he added.
Ruehl wouldn't comment about the status of any BP refineries.
Ruehl added that he expects oil inventories to return to normal levels by summer, provided the Organization of Petroleum Exporting Countries maintains its quota discipline, although any growth in oil demand is likely to be modest.
Source: Dow Jones Newswires
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