Total and other oil majors will shut down more refineries in Europe over the next few years due to the broad consensus for lower carbon dioxide emissions and fuel consumption, the French company’s chief executive said on Sunday.
Total chief executive officer Christophe de Margerie declined to say which refineries Western Europe’s third-largest oil company could close.
However, he did tell the interview with RTL radio and LCI television that he believed there was too much refinery capacity in France, comments which could worry labor unions and government officials.
Europe’s refining industry is struggling with declining margins for its aging plants, which require heavy spending on maintenance, while demand is weak as the region’s economies slump.
The pressures have led to four plant closures last year and another three announced so far this year.
Asked if more closures would follow in Europe in the next few years, Margerie said: “Of course more refineries will shut down because consumption will shrink. Everybody wants consumption to shrink, public authorities, Europe and ourselves. If we all decide to cut consumption, we have to cut production.”
Asked if Total itself would close down refineries in Europe or France, he said: “Of course that will happen because in France as everywhere else we will continue to reduce consumption ... that will lead to a cleaner environment.”
France’s largest oil producer, Total pledged in 2010, when it shut a refinery in Dunkirk, not to close any other refinery in France before 2016.
Margerie said the company would need to discuss the question of refining capacity with its social partners before making any decisions.
“The first debate, which is an important one, is whether there is too much refining capacity in France,” the 61-year-old said in the interview. “I say yes. They [the unions] say no. Or rather some say no and others say yes.”
Total’s strategy is to focus on investing in its larger, integrated petrochemical and refining plants to make them more efficient, while keeping a lid on investments at its other European refineries.
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