French multinational integrated oil and gas company Total presented its French refining roadmap to employee representatives in April this year. The plan is designed to provide each Total refining site in France with the means to resist the volatile business environment and perform profitably. Total will invest in upgrading the Donges refinery, in western France, and transforming the La Mède refinery, in southern France, to ensure they thrive going forward.
Three of Total’s five refineries in France – Gonfreville, in Normandy; Grandpuits, in the Paris region; and Feyzin, near Lyon – demonstrated their ability to withstand the deteriorating economic environment in 2013 and 2014 and generate ongoing income streams.
However, Donges and La Mède are struggling. Therefore, Total has presented a comprehensive plan to improve their performances and secure their long-term future. The company has invested €200-million to transform the La Mède refinery and, in particular, create France’s first biorefinery, which will be one of the biggest in Europe, to meet growing demand for biofuels. Crude oil processing will be discontinued at the end of 2016. An investment of €400-million has been made to upgrade the Donges refinery to capture profitable new markets using low-sulphur fuels that meet European Union (EU) specifications.
“There are three possible responses to the crisis in the European refining industry. The first is to throw in the towel. The second is to do nothing and perish. The third is to innovate and adapt to meet shifting demand trends. The central focus of Total’s plan for our French refining business is to realign our operations and products to changing markets, “ says Total CEO Patrick Pouyanné.
The plan offers sustainable solutions for the Donges and La Mède refineries, ensures a future for them and strengthens Total’s refining base in France, he adds.
Total will implement this industrial transformation without layoffs or imposed geographical transfers for nonexempt employees.
Responding to Industry and Market Trends
European demand for petroleum products has declined 15% since 2008. This underlying trend stems from pursuing energy efficiency and improved vehicle fuel economy as part of the EU's commitment to reducing its carbon footprint.
The European market is steadily contracting, a situation aggravated by the shale oil and gas revolution in the US, which gives the US refining industry an advantage, and presents competition for the European market from refineries in Asia and the Middle East. These two trends exclude European refineries from some of their domestic and export markets and have exacerbated excess refining capacity in Europe.
As Europe’s leading refiner, Total is, therefore, continuing to adjust its production base in France, following the shutdown of the Flandres refinery in 2010, the upgrade of the Normandy refining and petrochemicals platform in 2012 through an investment of almost €1-billion, and the implementation of the Total project to secure the future of its petrochemicals platform in Carling in 2015.Apart from
the adaptation plan for the Lindsey oil refinery, in the UK, announced earlier this year, Total will have successfully adapted its European refining base to the market by 2017 and reduced its refining and petrochemicals capacity by 20% in Europe in 2017, as announced in 2012.
Meeting Growing Demand for Biofuels
The site’s flagship operation will be a world-class, 500 000 t/y biorefinery that will manufacture biodiesel primarily from used oils, as well as renewable feedstock. The hydrotreated vegetable oil process selected by Total is a French technology developed by international provider of advanced technologies, catalysts, adsorbents and services Axens. This technology produces high-quality biodiesel that is easily blended into regular diesel in any proportion, with no adverse impact on fuel quality or engines.
An EU directive sets a target of 10% renewables for transportation by 2020. In France, the draft Bill on the energy transition towards green growth calls for increasing the share of biofuels to 15% in 2030, which is currently 7.7%.
La Mède’s forward-looking transformation reflects Total’s determination to play an active role in the development of renewable energies, especially biomass, which will be needed to partner fossil fuels to ensure that energy demand is met while carbon dioxide emissions are mitigated.