Major European Refinery Malfunctions, Worsening Fuel Supply Situation

Shell oil refinery in Pernis, Netherlands, on Nov. 15, 2021. Robin Utrecht/ANP/AFP via Getty Images

Shell plc’s Pernis refinery in the Netherlands, the biggest refinery in Europe, has been shut down due to a malfunction, complicating an already tight fuel supply situation in the region.

On Oct. 12, the compressor of fluid catalytic cracker unit 2 tripped due to a loss of power supply, Bloomberg reported. The plant, located near Rotterdam, is a conversion facility that is usually used to produce refined products like gasoline, and is a key diesel supplier in Europe. The malfunction resulted in flaring of high amounts of gas, which led to 200 complaints being filed by residents of the region.

“The technical cause of the disruption has been found. Based on an investigation, it was decided to shut down the installation in question in a controlled and safe manner. This will put an end to the nuisance to the environment,” the company said in an Oct. 13 update, adding that they will carry out repairs on the installation in the coming days.

The refinery malfunction comes as Europe’s fuel supply situation is getting tight. In October, Europe is expected to see roughly 1.5 million barrels per day of crude oil refining capacity go offline for maintenance, according to an estimate by global energy research firm Energy Aspects.

This is up from 1.1 million barrels per day in September and is above the average recorded for October from 2015 to 2019. In November, Energy Aspects expects 600,000 barrels per day of refining capacity to be offline.

French Labor Strike

The labor strike in France by the General Confederation of Labour (CGT) is triggered by demands for higher wages by workers who are struggling amid high inflation. France’s annual rate of inflation in September was 5.6 percent, up from 2.9 percent in January.

Strikes and unplanned maintenance have put over 60 percent of France’s refining capacity—amounting to 740,000 barrels per day—out of service. This has forced the country to import more oil products. The CGT union is demanding a 10 percent raise for its refinery workers.

The French strikes and refinery maintenance have pushed up diesel refining margins across Europe to all-time highs. Over 29 percent of gas stations across France reported supply issues on Oct. 13. Six out of seven refineries in the country have come to a standstill.

The French government has announced that it will force essential workers to get back to work at ExxonMobil’s Gravenchon-Port-Jerome refinery in the northwest. The CGT union has vowed to take the matter to court, Euronews reported.

Reuters contributed to this report.