Image courtesy of Total SA

Losses in the French refining sector hit $945 million last year, a French oil lobby said last week.

The lobby group UFIP blamed cheap U.S. fuel imports and more competitive plants in Asia and the Middle East, Reuters said.

The refiners were also hit by declining European demand and a loss of market share in Africa for gasoline due to competition from U.S. refiners.

“The refining sector is now facing extremely intense competition, especially from the United States, because energy costs for American refineries are much lower than ours thanks to shale gas,” Jean-Louis Schilansky, the head of UFIP, said during an annual gathering of the group.

“New refineries in operation in Asia and the Middle East are highly productive too, so we’re caught in a competitive vice between America and Asia,” he said.

He said margins at France’s eight refineries, including oil major Total’s five plants, dropped by half to 18 euros (about 15 cents) per tonne in 2013.

Margins have to be 35 euros a tonne fro profitability.

Gross margins stood at 12 euros per tonne in January, according to Schilansky  data.

UFIP’s said energy costs for U.S. refiners is about 30 percent of operating costs. But in Europe energy amounts to 60 percent of refining costs, UFIP said.

“Total, Europe’s biggest refiner, said earlier this year it expected to lose about 500 million euros in its French refineries in 2013,” Reuters said.

Other French refineries are owned by Petroineos, Exxon Mobil and Lyondellbasell.


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