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Cutbacks at Total’s Lindsey refinery to help reduce gas oversupply

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Hydrocarbon Engineering,

Total's recently announced cutbacks at its Lindsey refinery in North Killingholme could help reduce gasoline oversupply in the UK, refocusing production towards diesel, according to BMI. The French oil giant is looking to reduce production capacity at the facility by up to 50%, following reports of major losses in fourth quarter net income. This move could put around 180 jobs at risk, reducing the plant’s workforce to 400 workers from 580, and halve production to approximately 110 000 bpd by late 2016/early 2017.

Despite slightly better downstream margins for several international oil companies this quarter due to lower crude oil prices, refining overcapacity and weak demand for petroleum products are ongoing issues for the European refining industry, BMI noted in its research. In the UK market, demand and supply of refined products is no longer matched on a product-by-product basis.

For these reasons, BMI expects Total to refocus output on diesel for the domestic market, for which demand has been stronger than gasoline. Refining capacity in the UK is estimated to fall to 1.23 million bpd by 2017, down from 1.55 million in 2013. This should help partially address the UK's gasoline production overcapacity; however, further capacity cuts are expected over the coming years.

Edited from various sources by Rosalie Starling

Sources: BMI, Telegraph, Financial Times

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