Fight for survival returns to Europe’s battle-hardened refineries

(Reuters) by Libby George – Energy companies’ lifeline during the rout in oil prices – refining and downstream – has withered but the fall in margins is hardly a surprise for European refiners, which are turning again to survival strategies honed during the tough years. Results this week from integrated oil majors including Shell, Total, BP and ENI show refinery margins crashing by as much as half from last year. BP’s margins were the weakest for a second quarter in six years, while Shell’s second-quarter refining and trading earnings plunged more than 60 percent. Total said its margins dipped 35 percent in the second quarter, and were falling already in the third due to high inventories. “Last year was the best year on record for European refiners,” said Jonathan Leitch, research director for oil products with WoodMackenzie. “Whatever came next was going to be disappointing.” The dizzying drop in downstream profits reminds investors what most in the industry never forgot: more refineries will have to close before the dust settles. The companies are, in a sense, victims of their own success. Crashing oil prices spurred record demand growth for motor fuels, which refineries worldwide scrambled to produce. But the high

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