A reset for Europe's refineries

Europe’s refineries are under increasing pressure. Demand for petrol and diesel is falling, environmental regulations are tightening, and the region’s refineries, many of which were built in the 1970s or earlier, are operating well beyond their original design life. As a result, operators are having to make stark choices about whether to reinvest, repurpose, or plan a phased exit. This is where master planning can offer Europe’s refineries a strategic reset.

There are still around 73 operational refineries around Europe (excluding Russia), with a combined capacity of roughly 14 million bpd.¹ However, since 2009, around 30 refineries in the region have either closed or been converted with many more looking economically unviable.² This is due to a combination of falling margins, policy pressure, and ageing infrastructure.

At the same time, ownership is shifting. As oil majors divest from legacy assets, a new wave of operators have entered the market.³ These new owners are typically smaller, equity-focused businesses, who do not always have the same depth of in-house refining expertise or legacy system knowledge, and who are struggling to train and retain suitably experienced personnel. Instead, they typically rely on external support to manage complex assets.

This is where strategic master planning can help. The approach is designed to help operators assess their options using a structured, cross-disciplinary process that connects asset condition, market dynamics, operational risk, and workforce capability into a single roadmap. For refinery owners looking for their next steps it offers a strategic reset.

What master planning involves

Master planning is defined as a decision-making framework for complex assets. It is used to extend life, improve performance, or transition an asset to a new purpose or, in some cases, to exit in a managed way that preserves value. The process integrates technical assessments, commercial modelling, regulatory compliance, and capability planning.

At its core, master planning addresses five common ‘burning points’ that directly affect refinery profitability:

• Feedstock optimisation: where selecting and configuring feed can maximise margin.
• Fixed and operating cost control: which focuses on improving efficiency and reducing overheads.
• Better application of technology: to ensure investment is targeted where it delivers real value.
• Revenue improvement: whether through yield optimisation or changes to the product mix.
• Regulatory readiness: to make sure the asset remains compliant now and in the future.

The process begins by clarifying the strategic direction. Is the asset intended to operate for another 10 or 20 years? Is there a transition plan in place to convert it into a fuel import terminal, hydrogen hub, or biofuels site? Does the site need to prepare for decommissioning in the near-term? The answers to these questions will determine the focus of the master plan. At this stage, it is also important to identify the investment appetite, operational constraints, and stakeholder priorities that will determine what is possible.

The next step involves a deep dive into the asset itself. In KBR’s master planning process, the company carries out structured data collection and reviews the existing infrastructure, which involves on-site inspections and desktop analysis. This process aims to get a clear picture of the full, current state of the facility, including the process unit condition, equipment criticality, maintenance effectiveness, backlog and spares strategy, yield and loss performance, utility systems, and regulatory compliance. During the process, documentation and technical reviews are carried out, along with condition grading and risk-based evaluation of failure.

Once this information is collated, it is possible to compare this detailed assessment against the business goals, carrying out margin and market analysis to identify what can be optimised and where capital investment is justified. A configuration review assesses whether the asset’s current layout and process capability is aligned with future product needs and policy requirements. Technology screening is used to identify areas where reliability, emissions, or product flexibility can be improved. Finally, a regulatory compliance review is carried out to make sure the site’s permits, environmental obligations, and reporting frameworks meet its future needs.

From here, the master plan can be developed and would include a series of recommendations for short-term improvement actions and long-term transformation options, which are sequenced around the asset’s maintenance and turnaround cycles. KBR typically facilitates a series of interactive workshops at this point with client stakeholders to prioritise actions, evaluate trade-offs, and develop a realistic, risk-managed roadmap.

The cost of inaction

Many refinery decisions are tied to the turnaround cycle, which typically takes place every four to six years. This is the window where major upgrades, decommissioning, or reconfiguration can be carried out. If operators miss that window, the next opportunity might not come until the end of the decade.

More than 400 000 bpd of refining capacity is now confirmed to shut in 2025. This includes Petroineos’ Grangemouth refinery in Scotland, Shell’s Wesseling site in Germany, part of BP’s Gelsenkirchen complex, and the Prax Lindsey Oil Refinery in England, which is now in formal wind-down after entering administration in June 2025 and failing to secure a buyer.

This is why, when facing uncertainty about the long-term future of an asset, any delays can be costly. A full-site turnaround can result in significant direct and indirect costs. Lost production alone can equate to over US$3 million per day in foregone margin, regardless of whether the shutdown is for maintenance or unplanned.

Over time, the performance gap between average and top-performing refineries can reach US$20 - 50 million in margin annually. In environments that are sensitive to these margins, these figures can determine whether a site remains viable at all. However, making even small operational improvements – in areas such as scheduling, asset care, or spares strategy – can unlock marginal gains.

Master planning in practice

KBR engaged with a European refinery which was struggling to remain competitive and to carry out sustainable operations. It was suffering from the ‘perfect storm’: a changing crude slate, government-imposed carbon taxes, and rising energy costs with a rapidly evolving product demand profile. Added to this, its parent oil major company had divested the asset to a consortium of smaller traders, starving it of access to leading-edge standards/procedures and a dearth of technical support.

A market study found a mismatch between product slate and demand, identifying the opportunity to revise fuel specifications and to embrace bi-directional trading of intermediates with other refiners and petrochemical facilities in the region. Similarly, a new crude pipeline from a nearby marine terminal facilitated added flexibility to process alternative imported crude oils.

KBR simulated the existing refinery configuration in HYSYS and specified modifications including changes to crude distillation unit (CDU) cut-points with minor debottlenecking throughout the refinery. The changes were implemented with an accelerated schedule to take advantage of the next turnaround and ended up costing approximately US$86 million while achieving an increase in revenue of approximately US$72 million. Greater operational flexibility was achieved with new trading partners creating a more sustainable and long-term horizon.

Work is continuing to address the availability of suitably qualified technical staff and to review and update the internal management system with a view to achieving improved availability, lower maintenance, and general operating costs.

It is a similar case across Europe, where many refineries are evaluating their future role and whether they can pivot toward producing sustainable aviation fuel (SAF), integrate hydrogen infrastructure, or act as anchor sites for carbon capture. These changes require more than just technical upgrades: they require a phased approach to investment, permitting, off-take agreements, and workforce transition, all of which must be considered in the master plan.

Planning for more than equipment

It is important to remember that master planning is not just about the physical asset. It also looks at the wider systems, tools, and teams needed to operate reliably and competitively.

For example, digital tools play a key role, including computerised maintenance management system (CMMS) integration, predictive maintenance, and asset analytics. KBR’s use of Maximo and other platforms helps clients optimise maintenance scheduling, manage spares, and reduce downtime without major capital spend.

Just as important is capability development. As refineries adapt, whether into energy hubs, import terminals, or cleaner fuel producers, their organisational needs change too. KBR’s planning approach includes team structure design, role profiles, training pathways, and knowledge transfer.

This includes workforce capability mapping, organisational design, and succession planning for ageing subject matter experts. In many cases, master planning reveals not just what assets need to change, but what people, skills, and decision-making processes must evolve alongside them.

A new kind of readiness

Clarity is hard to come by in today’s refining market, but waiting for certainty is not an option. Strategic master planning does not eliminate uncertainty, but it does create the space to act, to prepare, and to respond with intent. For some sites, that might mean extending life through targeted reinvestment. For others, it could mean preparing for phased shutdown, conversion, or repurposing. What matters is that there is a strategic plan in place. For any operator looking to understand their options and take control of what comes next, that may be the most valuable investment they can make.

References

1. NIVARD, M., and KREIJKES, M., ‘The European refining sector: a diversity of markets?’, Clingendael International Energy Programme (CIEP), (2017), https://ciep.energy/media/pdf/uploads/CIEP_paper_2017-02_web.pdf
2. GHADDAR, A., and HARVEY, R., ‘Nigeria’s Dangote oil refinery could accelerate European sector’s decline’, Reuters, (27 March 2024), https://www.reuters.com/business/energy/nigerias-dangote-oil-refinery-could-accelerate-european-sectors-decline-2024-03-27/
3. ‘Viewpoint: European refineries suffer underinvestment ‘, Argus Media, (29 December 2023), https://www.argusmedia.com/en/news-and-insights/latest-market-news/2523309-viewpoint-european-refineries-suffer-underinvestment

Written by Rob Sumpter, KBR.