Conversion to product storage remains the obvious choice for Europe's redundant oil refineries, say traders, who are busy exploiting the structural arbitrages that have emerged as a result of Europe's growing product imbalance. They are having enough success that overseas suppliers are now trying to muscle in on the act. Indian refiner Essar is the latest to buy into Europe's giant import market following its purchase of Royal Dutch Shell's Stanlow refinery in the UK, after Petrochina acquired BP's Grangemouth refinery in the UK and Lavera plant in France last year (JFI Feb.14,p4). With lots more refinery assets still up for sale in Europe, there is much speculation as to who could be next: an overseas trader with global ambitions like China Aviation Oil, or an overseas producer like India's Reliance or Saudi Arabia's new Aramco Trading outfit, seeking to extract maximum value from their product sales by going straight to the end-user? Among the refineries currently being considered for conversion to storage are Shell's 107,000 barrels per day Harburg refinery in central Germany, which the major is planning to convert itself, and Conoco's 260,000 b/d Wilhelmshaven plant in the north of the country, which has been in mothballs for the last 18 months and is currently being considered by a private equity firm.
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