According to the US Energy Information Administration (EIA), last year was the third year in a row that North American refineries showed considerably higher profitability than European refineries, as measured by earnings per barrel processed.
Lower North American crude oil prices compared with world prices have been a key factor in driving this outcome. North American refiners’ earnings per barrel were more than US$ 7/bbl higher than European competitors in 2013, based on analysis of 26 energy companies with refinery operations that submit financial and operating information by segment in annual reports to the US Securities and Exchange Commission.
Financial data that has been broken down by segment allow comparisons of the refining business of global integrated companies with those that only refine crude oil into products. EIA compared 13 companies based in North America and 13 in Europe. Ten of these companies have nearly all their refinery throughput in North America, ten others have their entire throughput in Europe, and 6 have refineries throughout the world.
Total earnings in the refining segment for each grouping was divided by its total annual refinery runs to estimate earnings per barrel processed. The scale of refinery runs varied widely across the companies in the sample selected. Earnings in the refining segment ranged from a loss of almost US$ 2 billion for one company to a profit of US$ 4.3 billion for another. Total refinery throughput for these companies averaged 25.6 million bpd in 2013, approximately 56% of total OECD liquid fuels consumption.
For the duration of 2013, North American refineries have been able to run at relatively high rates due to the fact that their crude oil and natural gas costs were low and global product prices were high. Refinery runs rose 27% from 2010 to 2013, while European companies’ runs decreased by 11%.
As a result, product exports from North America have increased, particularly from the US Gulf Coast. As US refineries increased runs to produce distillate, they also produced more gasoline and have taken some market share from Europe in Latin American and West African markets.
US crude prices remain discounted to Brent. Meanwhile, relatively cheaper natural gas prices continue to provide US and Canadian refineries with further energy feedstock price advantage. Preliminary financial results from the first quarter of the year suggest that North American refiners are maintaining higher profitability than their European counterparts.
Adapted from a press release by Emma McAleavey.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/16052014/north_anerican_refinery_profitability_529/