Daily Telegraph: Oil refiners press for clarity: “Oil companies are warning the Government that the future of the refining industry is at risk without clearer energy policy guidelines.”: Monday 31 October 2005

By Roland Gribben (Filed: 31/10/2005)

Oil companies are warning the Government that the future of the refining industry is at risk without clearer energy policy guidelines.

BP, Shell and other refiners are considering investing more than £1billion to produce more diesel and jet fuel at the expense of petrol but ministers have been told that any attempts to "gold plate" energy and environmental policies could lead companies to abandon new projects and import products instead.

BP's decision to sell refineries in Scotland and France has prompted rumours the group may pull out of low margin downstream business.

The speculation has been reinforced by plans to cut another 2,500 jobs from its European downstream operations.

The company denies it is planning a withdrawal. One industry executive said: "It would be a major blow if BP or any of the other big operators closed capacity and imported products instead."

The UK Petroleum Industry Association, which represents oil companies, says the "future health and survival" of the refining business depends on "consistent, clear, long-term policy from Government" to provide confidence for future investment.

It wants the Government to avoid any "surprise change" in energy and environmental policies and resist pressure for excessive regulation

Companies have already spent £600m on cleaner fuel for vehicles to meet sulphur free petrol and diesel rules.

About 90pc of transport fuels and other products are produced by Britain's nine refineries but the changing demand mix, declining North Sea output and poor returns has added to the urgency for new investment and raised more question marks over the future of the refinery sector.  

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