UK refining investment is at risk

An estimated £3-4 billion of UK investment is at risk because oil companies are unhappy with profits from current refining operations and an apparent neglect of the refining industry in the current energy review.

Under the auspices of their trade body, the Petroleum Industry Association, the companies are lobbying energy minister Malcolm Wicks to establish a task force to look into the future of oil refining in the UK. The aim is to prevent further refinery closures (two have closed since 1990) and prevent investment from being diverted abroad.

The minister has been written to by the PIA and received a copy of its new report on the future of UK refining, launched on 23 May. He had yet to respond when PE went to press.

The report stresses that a favourable operating climate is essential for investment if decisions are to be taken in confidence. Actions required of government by the PIA and its members include:

- acknowledging the contribution of UK refining to diversity of energy supply;

- provision of a stable policy, regulatory and fiscal environment;

- having a clear, consistent, long-term energy policy that sets realistic, achievable targets;

- ensuring EU Directives are not implemented more strictly than in other member states;

- allowing competitive markets to operate freely and without favour.

The alternative to investing in UK refineries is the import of more products, such as jet fuel and diesel, and the export of surplus products like petrol and fuel oil.

Currently, the UK oil refining industry comprises nine crude refineries and three specialist refineries, providing Europe's fourth largest capacity and employment for