The European Refining Sector: A Diversity of Markets?

CIEP, June 2017
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A Diversity of Markets?

Building on the 2016 ‘Long-term Prospects for Northwest European Refining' study, this latest CIEP refining study analyses the refining sector of the entire European Union, Norway, and Switzerland. On the back of increasing (international) competition with refining clusters outside of Europe and a declining future petroleum demand, some refineries show more ‘resilience to competition' due to their strategic integration with (local) economic value chains.

Simultaneously, the presence of significant barriers-to-exit in the European refining market create competition constraining factors, resulting in a variety of market developments among EU regional refining markets. Even though the implications of a larger share of imported oil products transcend the interests of individual Member States, issues such as security of supply, economic footprint, secondary integration, and in particular government ownership and regulatory enforcement are largely national Member State affairs. These factors can complicate further rationalisation of refining capacity through (international) competition and may create alternative market circumstances. These asymmetric developments across the EU refining sector, exhibiting a variety of survival strategies that depend on local conditions and (local) government influences, might become more pronounced in the future.

This study may serve as a starting point for a wider discussion on future developments in the refining sector of the European Union by including both market developments and barriers-to-exit.