PwC Argues that European Refining Industry Needs to be Reformed

By Kalen Smith, Big4 Blogger

European refineries are struggling to attract the capital they need to expand their operations. PwC director Robert Turner said the industry will need to undergo a major reform in order to draw new investors.

Turner said that process of restructuring the refinery industry would take a considerable amount of time. Refineries would probably need to cut revenue expectations and wages for the foreseeable future. Turner said that restructuring would be extremely difficult for many refineries. However, the process would be necessary for them to operate a sustainable manner and continue to deliver services to their customers for the years to come.

Several refineries have already been forced into bankruptcy. One of their biggest challenges is the outdated infrastructure. The equipment most of these refineries have been using isn’t capable of processing diesel that is needed throughout the continent. They will need a substantial amount of capital to modernize their equipment.

Most refineries have focused on maximizing the production capabilities of their existing infrastructure. However, that is unlikely to be a feasible long-term solution. Alan Gelder, a leading petroleum and oils scientist, said that these firms will need to come to terms with the fact that they are going to need to modernize their equipment if they wish to avoid insolvency. However, they are going to need to convince capitalists that these improvements will realize a strong return on the initial investment.