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Released April 19, 2021 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--ExxonMobil (NYSE:XOM) (Irving, Texas) has announced that it may shut down refining operations at its 116,000-barrel-per-day Slagen refinery in Norway, citing challenging conditions in the European fuels market.
The company's Norwegian subsidiary, Esso Norge AS, is evaluating a plan to convert the site into a fuel import terminal and has alerted its 280 employees. It would see a significant reduction in the workforce if it goes ahead. The announcement comes at a difficult time for the European refining sector, which is still suffering from the impact of COVID-19. This has resulted in weak fuel demand, bloated inventories and below-cost refining margins. Slagen is one of Norway's largest onshore export businesses, with 60% of its production of petroleum products exported. Located in a sheltered location by the Oslo Fjord, it has a 500-metre-long pier with loading/unloading berths on both sides that receive about 700 ships a year.
The company stated: "Esso Norge AS has today initiated an Information and Consultation process with employees and their representatives as part of an extensive review of the long-term economic viability of the facility. Refineries in Europe operate in an increasingly challenging market, characterized by falling demand and strong competition, leading to overcapacity in the market. In Norway, demand has decreased for road transportation fuels. If converted to a terminal, Slagen would import high quality fuel products for further distribution through existing infrastructure to ensure ongoing, reliable fuel supply for Esso customers."
Per-Erik Aasum, president of Esso Norge AS, added: "We thank our employees for their tremendous efforts during this challenging time. We understand the significant impacts a conversion would have on our employees, and we are committed to keeping an open dialogue throughout the process to ensure our employees are treated fairly and with respect."
Slagen has been in operation since 1961, and it's one of two Norwegian refineries, along with Mongstad. The refinery processes crude oil, mainly from the North Sea, into fuel products for consumption and industrial purposes. Slagen's processing capacity is 6 million tons of crude oil annually. The production of petroleum products represents more than half of Norway's total consumption. The lightest products are propane and butane, followed by petrol, kerosene, gasoline (benzin), diesel and light fuel oil. The heaviest product is heavy oil.
This is the latest in a series of decisions made by ExxonMobil to reduce its presence in the European market. The company was hammered financially last year by low oil prices and demand caused by the COVID-19 pandemic. In February, it reported its first loss in decades with a net loss of $22.4 billion for 2020, compared with a $14.3 billion profit in 2019. For additional information, see February 3, 2021, article - ExxonMobil Suffers $22.4 Billion Annual Loss, Sticks to Low Capex Plan.
Industrial Info reported last month on the sale of most of its U.K. upstream and northern North Sea assets to Norwegian private equity-backed NEO Energy for more than $1 billion. In 2019, it agreed to sell its Norwegian assets for up to $4 billion to Var Energi, Norway's second-largest independent oil and gas company after Equinor (NYSE:EQNR). For additional information, see March 8, 2021, article--ExxonMobil Sells Off U.K. North Sea Assets and September 24, 2019, article--ExxonMobil Agrees to Sale of North Sea Assets.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
The company's Norwegian subsidiary, Esso Norge AS, is evaluating a plan to convert the site into a fuel import terminal and has alerted its 280 employees. It would see a significant reduction in the workforce if it goes ahead. The announcement comes at a difficult time for the European refining sector, which is still suffering from the impact of COVID-19. This has resulted in weak fuel demand, bloated inventories and below-cost refining margins. Slagen is one of Norway's largest onshore export businesses, with 60% of its production of petroleum products exported. Located in a sheltered location by the Oslo Fjord, it has a 500-metre-long pier with loading/unloading berths on both sides that receive about 700 ships a year.
The company stated: "Esso Norge AS has today initiated an Information and Consultation process with employees and their representatives as part of an extensive review of the long-term economic viability of the facility. Refineries in Europe operate in an increasingly challenging market, characterized by falling demand and strong competition, leading to overcapacity in the market. In Norway, demand has decreased for road transportation fuels. If converted to a terminal, Slagen would import high quality fuel products for further distribution through existing infrastructure to ensure ongoing, reliable fuel supply for Esso customers."
Per-Erik Aasum, president of Esso Norge AS, added: "We thank our employees for their tremendous efforts during this challenging time. We understand the significant impacts a conversion would have on our employees, and we are committed to keeping an open dialogue throughout the process to ensure our employees are treated fairly and with respect."
Slagen has been in operation since 1961, and it's one of two Norwegian refineries, along with Mongstad. The refinery processes crude oil, mainly from the North Sea, into fuel products for consumption and industrial purposes. Slagen's processing capacity is 6 million tons of crude oil annually. The production of petroleum products represents more than half of Norway's total consumption. The lightest products are propane and butane, followed by petrol, kerosene, gasoline (benzin), diesel and light fuel oil. The heaviest product is heavy oil.
This is the latest in a series of decisions made by ExxonMobil to reduce its presence in the European market. The company was hammered financially last year by low oil prices and demand caused by the COVID-19 pandemic. In February, it reported its first loss in decades with a net loss of $22.4 billion for 2020, compared with a $14.3 billion profit in 2019. For additional information, see February 3, 2021, article - ExxonMobil Suffers $22.4 Billion Annual Loss, Sticks to Low Capex Plan.
Industrial Info reported last month on the sale of most of its U.K. upstream and northern North Sea assets to Norwegian private equity-backed NEO Energy for more than $1 billion. In 2019, it agreed to sell its Norwegian assets for up to $4 billion to Var Energi, Norway's second-largest independent oil and gas company after Equinor (NYSE:EQNR). For additional information, see March 8, 2021, article--ExxonMobil Sells Off U.K. North Sea Assets and September 24, 2019, article--ExxonMobil Agrees to Sale of North Sea Assets.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
