Why are refineries planning maintenance shutdowns when fuel demand increases? Richardson's warning about summer shortages is now beginning to make sense. He must be aware of serious problems at refineries, more than what he's telling us. Shades of Y2k?

Euro refinery shutdowns restrict gasoline supply

By Keyvan Hedvat

LONDON, March 13 (Reuters) - A major round of spring maintenance shutdowns at European refineries is tightening availability of oil products amid fears of impending gasoline shortages in the United States.

``Certainly there is a pretty heavy programme coming up, and it is the schedule of refinery turnarounds which has a part to play in the quite high (price) differentials we're looking at,'' said Damien Kennedy of Paris-based Cambridge Energy Research Associates.

TotalFina will see its three-week rolling shutdown at Vlissingen, the Netherlands, paralleled by a phased series of turnarounds at its Antwerp complex over the next few months.

Royal Dutch/Shell will shut down several units of its Pernis refinery in Rotterdam during April. One of the gasoline producing reformers at the Nerefco refinery in Rotterdam, owned jointly by BP Amoco and Texaco, will be brought down in March.

The BP Amoco refinery at Vohburg in Germany will shut for three weeks in April.

And ENI's Agip Petroli, Repsol and Petrogal will shut down important refining units in Italy, Spain and Portugal during the March/second quarter period.

The planned shutdowns come amid dire warnings of impending products shortages in the United States, where stocks of gasoline already stand near record lows.

``We're still some months away from the U.S. driving season, but there are general concerns over stocks and whether there will be enough material, and the fact that we're having these turnarounds is adding to the general concerns,'' Kennedy said.

The prompt tightness on oil products has contributed to a steady rise in Rotterdam refining margins to about $1.80 per barrel so far in March for upgraded units with high gasoline throughput.

That is still mediocre, analysts say, even though current levels compare with about 90 cents per barrel in February and a similar average over the past year, according to Reuters calculations.

``This (margins perfromance) is because the strong backwardation in crude oil is feeding through into a strong backwardation in oil products,'' said Kennedy.

``There is no incentive to produce oil products for storage, but just for prompt deliveries,'' he added.

Analysts and refiners also point out that the physical market strength of recent weeks has been concentrated on gasoline.

``The outlook for gasoline is very positive, but for the rest of the products it's very much business as usual,'' he said.

13:23 03-13-00

Posted on America Online, no url available. Couldn't find the article in Excite News.

-- Lee Maloney (leemaloney@hotmail.com), March 14, 2000

Answers

Lee,

Good post. Remarkable how so many refineries are experiencing unplanned shutdowns. This is looking to get ugly this summer. The economic effect will hammer the tourism industry hard if the prices hit 2.00/gallon by summer. FWIW, our planned vacation taking the big Suburban will cost $170.00 more in gas at $2.00/gallon than our Honda Accord. We've decided to pack ultra light and take the Honda instead. Will sure miss the space though.

-- trafficjam (road@construction.ahead), March 14, 2000.

trafficjam -

I also think the article is an interesting heads up. Technically, the shutdowns are planned, but the skeptic in me can't help but wonder if the U.S. Energy Department and global oil industries are covering their Y2k "seats" by giving us these advance maintenance notices.

The reason for my attitude is because U.S. fuel consumption increased due to "unusually cold temp's" during the warmest winter in 100+ years.... at the onset of the 23-year solar maximum peak!

Hmm... you wouldn't want to trade that Honda for a Jeep, would you? It comes complete with a 5 gallon gas can for those long waits in line. ;-)

-- Lee Maloney (leemaloney@hotmail.com), March 14, 2000.