* Rare major
investment in struggling European sector
*
New unit to turn high sulphur fuels into diesel
(Reuters) - ExxonMobil Corp.
will invest $1 billion in its 320,000 barrel per day (bpd) Antwerp refinery,
the company said on Wednesday, even as many firms pull back from a European
industry hammered by low refining margins.
ExxonMobil
said it would install a new unit at the Antwerp plant to turn high sulphur oils
created as a byproduct of the refining process into various types of diesel,
including shipping fuels that will meet new environmental laws.
The
investment is significant as it shows major firms still see a future in oil
refining in Europe, despite a series of closures in recent years as they adjust
to lower demand and increased competition from overseas.
"Despite
extremely low margins and industry-wide losses in Europe, due primarily to
excess refining capacity, ExxonMobil is investing for the long term in its
strategic Antwerp refinery," the company said in a statement.
"The
investment addresses an industry shortfall in capability to convert fuel oil to
products such as diesel."
The company
said it was taking a long-term view of the European sector and was evaluating
other potential investments to strengthen "strategic" refineries in
the region.
Refining
margins in Europe have fallen close to multi-year lows as demand has been hit
by policies designed to reduce oil consumption, and as new mega-refineries in India and
the Middle East have started to compete for market share.
The United
States has also become a bigger exporter of oil products like diesel to Europe,
as its refineries have benefited from lower domestic crude oil costs created by the shale oil
revolution.
Industry
analysts estimate that at around five plants will need to close in Europe to
balance the market, but unprofitable plants often struggle on, sometimes with
support from governments fearful of becoming reliant on other countries for
their fuel needs.
(Reporting by David Sheppard; editing by Tom Pfeiffer)
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