- 75,000 bpd Rotterdam refinery ceased operations from 25 Nov 2024 due to lack of commercially viable feedstock.
- Operational costs increased by over 25% in the past four years, driven by inflation, higher energy and emissions expenses.
- New large-scale refining capacity in Africa and the Middle East has intensified competition in European refining margins.
- Gunvor and VARO Energy joint venture for a large-scale Sustainable Aviation Fuel (SAF) plant at Rotterdam: FEED expected to conclude before end of 2024.
Gunvor Group has announced the temporary cessation of operations at its 75,000 barrels per day (bpd) refinery in Rotterdam. The decision, effective as of November 25, 2024, stems from "a lack of commercially viable feedstock," a reflection of ongoing pressures in the global refining market.
The company stated that an extensive evaluation of the refinery's financial outlook was conducted, taking into account current market dynamics in Europe and worldwide. This led to the conclusion that continued operation under present circumstances is not economically sustainable. Gunvor has informed its works council of the decision to temporarily halt production units.
This move comes amidst a period of structural pressure on refining margins in Europe. Gunvor attributes this to several factors, including the introduction of new, large-scale refining capacity in regions such as Africa and the Middle East, which intensifies competition. Furthermore, the company highlights a significant increase in operational costs, which have risen by over 25% in the past four years due due to steep inflation. Rising expenses for energy and emissions have also contributed to the challenging economic environment.
Despite the temporary shutdown of refining units, Gunvor affirmed its commitment to its other activities at the Rotterdam site. The company intends to continue operating the location as a trading terminal. Crucially, all ongoing energy transition projects that Gunvor is developing, both independently and in collaboration with partners, will not be affected by this decision and are set to proceed as planned. This includes the recently announced joint venture with VARO Energy for the development of a large-scale Sustainable Aviation Fuel (SAF) production facility on the Gunvor Energy Rotterdam site, with the FEED phase expected to conclude before the end of the year.
Gunvor acquired the Rotterdam refinery from Kuwait Petroleum International in 2016 and had previously closed two crude distillation units in 2020. The company will continue to monitor the market situation and assess future feedstock resupply for the refinery in due course.
