A golden age of profits for western oil refining companies has ended and many are likely to face cutbacks and even possible closures, analysts said on Friday.
Falling demand for gasoline globally has come just as more refinery capacity comes on stream, piling on the pressure.
The global economic crisis allied with record high oil prices earlier this year have slashed gasoline demand and curbed future growth projections, forcing refining margins for motor fuel deep into negative territory.
European refiners such as Total and Petroplus have already started planning to cut back runs on unprofitable products like gasoline and its blending component naphtha. Analysts said it could be the beginning of a longer-term trend and margins could collapse over the next 2 years.
"Perspectives for demand are much more limited, which will clearly put refining margins under pressure," said Cambridge Energy Research Associates (CERA) director of downstream oil for Europe, Olivier Abadie.
"CERA forecasts a decline of up to 40 percent of refining margins in 2009-2010 from 2007-2008."
http://www.reuters.com/article/reutersEdge/idUSTRE4A62XB20081107?sp=true