Opinion

In the light of the Purvin & Gertz report discussed in FON’s July issue, are you worried about the UK’s refining resilience?

Pete George, managing director, UK and Ireland marketing with Lindsay Grant, former manager, national sales, who will shortly be talking up a new role at Phillips 66’s Houston headquarters
Pete George, managing director, UK and Ireland marketing with Lindsay Grant, former manager, national sales, who will shortly be talking up a new role at Phillips 66’s Houston headquarters
Pete George, Phillips 66
“Phillips 66 plays a key role in providing a secure supply of petroleum products to the UK markets via its Humber Refinery. We are very pleased that the recent Energy and Climate Change Committee Inquiry: UK Oil Refining recognised the importance of oil products and UK refining to the UK’s economy. The report supported many of the recommendations that Phillips 66 made to ensure that UK oil refineries have a level playing field versus their international competition. In particular, the report recommended that:

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  • Regulations and taxes should not be more onerous in the UK than elsewhere
  • The elements of UK taxation that impact UK refineries adversely when compared to oil product importers should be addressed
  • The European Commission should urgently carry out a fitness check to ensure that the cumulative impact of EU legislation has not over-burdened its refining industry”

Ian Cotton, Essar Oil (UK)
“The Purvin & Gertz 2013 report demonstrated that some UK refineries are amongst the top ranking sites in Europe, having both high upgrading capability – as reflected in their Nelson complexity rating – and advantage of scale. In fact, European refining within a global context still ranks as competitive, providing it is not materially disadvantaged by one-sided EU legislation. The report also highlighted the International Energy Agency’s projections, showing oil is expected to account for over 80% of transport fuel even to 2030 and beyond. The topic of transport fuel resilience is thus not only important today but also for the foreseeable future.
“Whilst we support the UK government and the EU’s determination to continually drive further environmental performance improvements, such measures can only be effective if they are applied to imports from non-EU countries and ideally also to the industry globally (as is the case with bunker fuels). If such legislation is only applied one-sidedly in the UK or EU, it could result in a substantial number of competitive refineries closing. Besides negatively impacting local economies, closures can threaten transport resilience. The UK already imports over 40% of its diesel and nearly 60% of its jet demand, with practically only Russia and the Middle East able to meet any incremental shortages.
“So, absolutely key to our national refining resilience going forward is that UK refiners and importers are allowed to operate within a legislative compliance framework which provides them with a level playing field compared to competitors in other parts of the world.”
Paul Bray, Valero
“We believe that the UK needs a balance between the security of having domestically refined products and the practicality of importing fuel. The UK has a robust logistics infrastructure able to efficiently import and distribute product across the country, while the increasing need for middle distillate imports will require additional investment in domestic storage capacity. While further refinery closures cannot be ruled out, we believe that UK refining can remain competitive if it is given a level playing field with importers and EU/global refineries.”
Andrew Gardner, Petroineos
“Petroineos supports the Purvin & Gertz report and the subsequent findings.
In particular we believe that fossil fuels will continue to be the dominant energy source for transport and domestic applications in the short to medium term. We also believe that the refining sector will continue to play a key role in providing a reliable, resilient and secure source of this fuel in the future as well as providing feedstocks for other industries such as polymer manufacture and synthetic chemicals.
“The Purvin and Gertz report concluded that UK refineries can be competitive on a level playing field compared with other refineries around the world. We therefore believe it is essential that an even footing is achieved to enable our business to operate and grow. Future implementation of current and proposed UK and EU legislation should be carefully considered, including the planned EU “Fitness Checks” to ensure that this is the case.
“To this end, Petroineos continues to engage with government, both as an independent company and through UKPIA, to ensure that our views are represented. We seek to ensure that we are not disadvantaged in respect of meeting UK and EU-only legislation which may not apply to our offshore competitors. In 2013 Petroineos contributed with both written and oral submissions to an inquiry by the Energy and Climate Change Committee into UK Refining. The subsequent report UK Oil Refining(July 2013) concluded: “The UK needs to maintain the health of its refining industry.” and requested that DECC carry out a review into the sector by the end of 2013.
We welcome this forthcoming DECC review and are understandably participating in it. We also welcome the support received from the Rt Hon Michael Fallon MP in writing to the vice president of the European Commission regarding the planned “fitness checks” of the petroleum refining sector.”