Future refinery closures in the UK could mean that the storage tanks in those refineries will be needed immediately to cope with increased imports, Andrew Owens, chief executive of Greenergy, told this year’s Platt’s European Oil Storage Conference in Amsterdam.
The mismatch – or distillate gap – between most UK refineries, which are geared towards producing gasoline, and market reality, which is demanding more diesel, means that the growing number of refinery closures is making Britain increasingly dependent on imports, and so storage terminals, to meet diesel supply needs.
However, most existing terminals in the areas with greatest demand are at full capacity and so should another UK refinery close its tanks would probably needed straight away.
“Refinery closures in the UK, while predictable, have been sudden and spontaneous,” he said. Ironically, he added, this has improved the resilience of the country’s fuel supply chain because it has reinforced the existing terminals. But with those terminals more or less full, the conundrum now is how to deal with future refinery closures and even greater import dependence.
During a panel debate Owens also said that a complicating factor is the value of the land on which a storage facility sits. Terminals tend not to make a lot of money per hectare of land, so a challenge will always be how raise earnings to a level that make using them for fuel storage worthwhile.