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UK Government publishes review of refining sector

22 April 2014

On April 9 the UK’s Department of Energy and Climate Change (DECC) published its review on the state of the downstream oil & gas sectors entitled ‘Review of the Refining and Fuel Import Sectors in the UK’. This publication confirmed that, as the UK progresses toward a low carbon economy, oil products will continue to be crucial to the economy and consumers. 

Scotland's Grangemouth refinery
Scotland's Grangemouth refinery

Oil demand, it said, will reduce in the coming decades, but by 2030 the UK is still expected to consume some 50 million tonnes of oil products per year, compared with 61 million tonnes today.

The review concludes that resilience and security of supply is supported by retaining a mix of domestic refining and imported product. This is consistent with the government’s energy security of supply strategy, which recognises the benefits of supply diversity.

"Global commercial factors will continue to affect the refining market in the UK and the EU more broadly, and further closures across the continent are likely in future. Ultimately, while market forces will decide what supply configuration and balance prevails in the longer-term, a package of actions have been developed by government which taken together could help improve the operating environment for the refining and import sectors. These actions have been developed across three themes; a partnership approach with industry, removing market distortions and tackling regulatory burden," the report said.

In a response, the UK Petroleum Industry Association (UKPIA) said it welcomed the government’s focus on this sector and thanked the DECC team for their important work. However, it said, the UK refining sector faces challenges that threaten the sustainability of the industry, not least the cost of cumulative regulatory burden imposed upon the sector by legislators.

“It is therefore unfortunate that the review does not fully address many of the wider legislative issues affecting our sector in the UK and its ability to compete effectively in today’s global market,” UKPIA said in a statement.

“The review commissions a joint government and industry Midstream Oil Task Force to help address some of these challenges. It is critical that this Task Force targets fundamental policy reform. UKPIA looks forward to working with government via the Task Force and to lend its support in achieving urgent and measurable actions.”

Chris Hunt, Director General of UKPIA, commented: “We stand ready to support the Task Force in both addressing the concerns and challenges facing our downstream oil industry in the UK and in achieving urgent, identifiable and quantifiable initiatives for our sector.”

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