BP to downsize capacity at German refinery
Due to challenging costs and declining demand, oil firm BP has announced plans to permanently close a third of the crude distillation capacity at its 257,000 b/d Gelsenkirchen refinery in western Germany from 2025 and start co-processing biofuels at the plant’s hydrocracker.
The capacity reduction is likely to involve one of the crude distillation units (CDUs) being taken out of service.
The refinery is “currently not competitive”, according to a statement by refinery head Arno Appel. Challenges include being “too complex” to operate with “structural costs that are too high”, he said, possibly alluding to how the refinery is spread over two separate sites.
BP plans to shift focus at Gelsenkirchen towards petrochemicals and low-emission fuels. The hydrocracker at the refinery will start co-processing biofuels, meaning that renewable components will be mixed into its feedstock. BP said this will enable output of sustainable aviation fuel (SAF) among other products.
BP said the refinery’s crude capacity will fall from around 12 million tonnes/year now to around 8 million tonnes/year. Five units in total will be closed across the Scholven and Horst sites, it said. The firm declined to specify which units.
BP may yet face opposition from trade unions. The Gelsenkirchen refinery employs around 2,000 people. The planned changes will mean fewer jobs, Appel said. “We want to start negotiations with the employee representatives as quickly as possible.”
Some traders who import products from the Amsterdam-Rotterdam-Antwerp (ARA) hub into Germany via the Rhine river said they expect trade volumes to rise when BP trims capacity at Gelsenkirchen. Refining capacity in western Germany was already poised to be cut next year. Shell plans to stop crude processing at its 147,000 b/d Wesseling refinery in 2025 and is also turning the hydrocracker there into a base oil plant. Wesseling is part of Shell’s Rhineland refinery complex in the Cologne region.
Refineries such as Gelsenkirchen and Wesseling have had to contend with a drop in domestic demand for oil products in recent years. German diesel demand was 5-10% lower in November and December 2023 than in the same months of 2019, according to Eurostat data. This amounts to a fall of roughly 40,000-50,000 b/d.
