Total's restructure in France will close La Mède refinery
The company's plan for refining in France will also see investments in biofuels and desulphurisation
Total’s long-awaited restructuring plan for its refining operations in France will see crude processing end at one of its five facilities, while there will be investments in biofuels and desulphurisation. The company says the plan, together with a cut in capacity at its UK refinery, will fulfil the firm’s 2012 target of reducing its European refining capacity by 20%.
Total is to cease processing crude at its 153,000 barrels a day (b/d) La Mède refinery, in the south, at the end of 2016, reducing its capacity in the country to 676,000 b/d. The firm says La Mède, together with its 219,000 b/d Donges refinery in western France, is “struggling and structurally loss-making”.
But its other three refineries — Gonfreville in Normandy (247,000 b/d), Grandpuits near Paris (101,000 b/d) and Feyzin near Lyon (109,000 b/d) — have “demonstrated their ability to withstand the deteriorating economic environment in 2013 and 2014”.
At Donges, the firm will invest €400m ($432m) in the construction of a desulphurisation unit and a steam methane reformer, the latter to produce the hydrogen needed by the desulphurisation unit. Because Donges has no desulphurisation capacity at present, much of its output does not meet EU specifications and has to be exported. Completion of the work is targeted for 2019, subject to the re-routing of a public railway line, which runs through the Donges site.
At La Mède, Total is to invest €200m to create a bio-refinery. The 500,000 tonnes a year (10,000 b/d) facility will convert used oils and renewable feedstocks into biodiesel, using Axens’ hydrotreated vegetable oil process. Some refinery units will continue in operation — including the naphtha reformer, which will produce the hydrogen needed for the bio-refining — and the company says it is committed to its Naphthachimie joint-venture with Ineos, with a facility nearby. Other investments at La Mède will include a logistics and storage hub, a solar farm, a plant to produce AdBlue diesel additive, and a training school.
Total notes that Europe’s demand for petroleum products has declined by 15% since 2008, reflecting the trend towards greater energy efficiency, improved vehicle fuel economy and a reduced carbon footprint. But while the European market is contracting, there is increasing competition from imports from the US — where shale oil production gives refiners a cost advantage — and from the new refineries of Asia and the Middle East. Total is Europe’s largest refiner, with a net capacity of 1.74m b/d.
Earlier this year Total said it would cut capacity at its 207,000 b/d Lindsey refinery, on Humberside, UK, by half. By shutting down one crude distillation unit and improving the facility’s conversion capacity, the firm says it can ensure a sustainable future for the refinery — which it had been trying to sell. Total will spend $50m on the plan, and there will be an additional $225m expenditure on maintenance and other work over the coming five years.
In 2010 Total closed its Dunkirk refinery, but had to give an undertaking to labour unions to make no further capacity cuts in France for five years. The company says its plan for La Mède will involve no layoffs or imposed transfers for so-called non-exempt employees — mainly directly-employed operators, office staff, technicians and supervisors — although overall jobs at the site will fall from the present 430 to 250.