KPMG: European refinery industry faces uncertain future

By Rob Starr, Content Manager, Big4.com

According to a report by KPMG, more European oil refineries could have to close, with only the leaner, more efficient plants having any chance of survival.‘The Future of the European Refining Industry’, considers the various challenges facing the sector and the need for action now. The report coincides with growing concerns about the future of the Coryton refinery in Essex.

According to KPMG, European refiners must act differently now to protect future profitability. To improve performance, refiners will continually need to challenge all aspects of their business.  Investment opportunities must be scrutinised and improvements pursued relentlessly in all commercial and operational areas.

“The current challenges facing the European refinery industry may well prove permanent and any significant recovery will take some time.  The drop in demand together with increasing competition from emerging markets is eating at margins and we see no let up in these downward pressures,” said   Jeremy Kay, partner within KPMG’s energy and natural resources team. “Ageing European refineries cost more to maintain and operate than the newer plants being built in Asia and the Far East, and when you add this to the higher cost base and increasing levels of legislation in European refineries, the future is looking increasingly challenging, with a number of refineries fighting for their survival.”

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff.  The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.  KPMG International provides no client services.