15 Percent Of European Refineries Are Unprofitable: Citi

European refining margins have fallen 60 percent since last year, and changing market conditions will put even more pressure on them in the next few years. The industry has opted to reduce throughput instead of closing facilities to account for weak profitability, but this is a temporary fix that won’t last for long, argues Citi analyst Mukhtar Garadaghi. “We see rationalization as the industry’s only viable long-term solution,” says Garadaghi. “15 percent of European refining capacity is unprofitable.”

European refineries facing issues

The first problem is that refining capacity has boomed, and Europe simply hasn’t been able to compete on price. Russian distillate exports to Europe have climbed 60 percent and are set to grow over the...