BRUSSELS (Reuters) - Europe's oil refiners are adopting the wily and flexible ways of traders to ensure survival as the sector faces further shrinkage, delegates at an industry conference said.
Hard times have pushed them to pick and choose from a wider range of crudes, ferry feedstock between their own refineries to get the optimal mix of products and seek out deeper discounts from suppliers.
"Commercial operations need to be totally, fully integrated with the technical aspects," Dario Scaffardi, general manager of Italian refiner Saras (MI:SRS) told the Platts refining summit. "It's been the single most important thing that we've concentrated on. You have to look for the most challenging crudes."
Scaffardi said his refinery processed 30-35 different types of crude oil in 2015 – double the previous year.
The U.S. shale oil revolution changed flows of oil worldwide and pushed some crudes, such as Nigeria's light sweet oil, out of its traditional markets and forced sellers of heavier, harder-to-process oils to slash prices in order to secure buyers.
The strategy follows similar moves from Shell (L:RDSa) and Total (PA:TOTF), which are bringing refining and trading operations closer together to drive profits amid falling oil prices and as independent trading houses impinge on their business.
Refiners at the conference said that while their industry faces a punishing decade, with more closures to come, the new palette of crudes available can keep agile European plants alive while their less adaptable competitors face the axe.
While some 2 million barrels per day (bpd) of refining capacity have shut down since 2009, Goran Saravanja, strategy development director with Croatian refinery INA, said as much as 25 percent more of Europe's refining would still need to close over the next 15 years.
INA (BU:MOLB) itself, Saravanja said, plans to operate just one refining site in the long term, though the Croatian government, a company shareholder, has blocked permanent closure of its Sisak refinery.
Europe's refineries are ageing, and poorly configured, producing mostly gasoline, while its buyers want diesel.
A five-year high in gasoline demand in the United States, which helped support Europe's refinery margins, is now ebbing, the U.S. Energy Information Administration's Tim Hess told the conference, and will remain largely flat over the coming year.
Lars Thorstholm, asset optimization manager with Norway's Statoil (OL:STL), said his firm had also taken steps in the past year to experiment with different crudes, and leaves it to the team trading oil – those with a front-line view of which oil grades can bring the most value in any given market environment – to make the most of the company's refining.
"It is the trading arm who is responsible for optimising the refinery," Thorstholm said.
His company, a producer of North Sea crude oil, said it had even chartered a vessel this year to use as floating storage in order to increase operational flexibility.