BP puts Gelsenkirchen, Germany refinery, crackers up for sale

BARCELONA (ICIS)–BP plans to sell its to sell its Ruhr Oel refinery, crackers and downstream assets at Gelsenkirchen in Germany.

The company will start marketing the assets immediately, with the aim of completing the sale this year, according to a statement published on 6 February by the UK headquartered energy giant.

According to the ICIS Supply & Demand Database BP operates a refinery and two crackers with combined capacity of 1.065 million tonnes/year of ethylene, as well as units with 645,000 tonnes/year propylene, 430,000 tonnes/year benzene plus cumene, cyclohexane, methanol, toluene and ammonia facilities.

BP said the assets for sale include DHC Solvent Chemie in Mulheim an der Ruhr.

All refinery owners in Europe are under pressure to rationalise their portfolios thanks to the shift to vehicle electrification and high cost base. There is also intense competition from new refineries starting up in Asia and the Middle East.

BP said the move is in line with its strategic drive to deliver a simpler, more focused, higher value company.

The company said that it has implemented numerous projects to modernize the infrastructure of the refinery in Gelsenkirchen in recent years.  This includes renewing the power grid and establishing an independent steam supply.

The refinery can process crude oils from around the world, produce fuels and also has the potential to manufacture biofuels and process recycled plastics, said bp.

Michael Connolly, ICIS principal refining analyst pointed out that the refinery is configured to give a moderately high yield of gasoline, meaning it is not really suited to the future of the European market, where vehicle electrification is hurting demand.

He said BP already had plans to reduce the capacity of the refinery from 260,000 bbl/day to 155,000 bbl/day in 2025.

“Undoubtedly it would have used Russian crude, but despite having access to seaborne crude, the loss of Russian crude through sanctions would have impacted financials,” he said.

The economics of the facility will also be more challenging, as for all European refiners, because cracks or margins for gasoil production have declined to pre-Ukraine war levels, added Connolly.

ICIS expects German crude refining capacity to fall from 2.1 million bbl/day in 2020 to 1.8 million bbl/day by 2026 and well off their peak refining capacity of 2.4 bd in 2007.

Emma Delaney, BP executive vice president, customers & products said, “BP needs to continually manage its global portfolio as we position to grow as a simpler, more focused, higher-value company. After a thorough review, we have concluded that a new owner would be better suited for the site to take it forward. We are convinced that the refinery can unlock its full potential under new ownership.”

Focus article by Will Beacham

Graphics by Miguel Rodriguez-Fernandez

Thumbnail photo: bp’s refinery site in Gelsenkirchen, Germany (Source: BP)

Clarification: recasts to explain BP has two crackers at the site.