The petrochemical industry faces many challenges, many refineries close down

In the third quarter of 2024, crude oil prices plummeted, and refining profit margins narrowed, posing significant challenges for the global refining industry. Many oil and gas companies, including major refineries worldwide, experienced sharp declines in profits, with some even facing the risk of bankruptcy due to operating costs exceeding profits. Oil and gas corporations faced immense pressure from the deep drop in oil prices . Amidst the oil market downturn, leading global oil and gas corporations are under considerable pressure. Statistics for the third quarter of 2024 show that almost all oil and gas corporations experienced a decline in revenue and profits. The US oil and gas company Phillips 66 reported a profit of only $859 million, a significant decrease from $2.1 billion in the same period last year. The company's refining segment alone incurred a loss of $108 million, compared to a profit of $1.7 billion in the same period last year. Also in the US, HF Sinclair reported a net profit of $96.5 million, a sharp decrease from $760.4 million in the same period last year. For its refining segment, the company incurred a loss of $212.2 million, compared to a profit of $916.1 million in the same period last year. Another US oil and gas company, PBF Energy, reported a net loss of $289.1 million, compared to a profit of $1.08 billion in the same period last year. Another major corporation, Chevron, also saw a 21% decrease in profit, reaching only $4.5 billion compared to $5.7 billion in the same period last year; although its global net oil equivalent production increased by 7% year-on-year. The sharpest decline in the refining segment was seen in Valero Energy, with profits falling to $565 million compared to $3.4 billion the previous year. In Europe, France's TotalEnergies saw its net profit fall by 37% year-on-year and 12.7% quarter-on-quarter. British conglomerate BP experienced a 31% year-on-year drop in profit, from $3.29 billion to $2.27 billion; its lowest level in nearly four years. Also in the UK, Shell saw a $600 million drop in profits from its chemicals and refining segment. In Asia, India's national oil and gas company, Indian Oil, saw its net profit plummet by 98.6% year-on-year to just $21.4 million. In China, Sinopec Chemical & Petroleum Corporation experienced a 52.1% year-on-year drop in net profit, reaching only $1.2 billion. A section of the Long Son Petrochemical Complex. In Vietnam, amidst the general difficulties facing the global oil refining industry, domestic refineries such as Nghi Son and Dung Quat are also encountering numerous challenges, with revenue and profits declining sharply in the third quarter of 2024. In fact, in mid-October, the Long Son Petrochemical Complex announced a temporary suspension of commercial operations. Representatives of the complex stated that the reason for the suspension was the global petrochemical industry's downturn, with supply exceeding demand and low demand for petrochemical products. A representative from Siam Cement Group – the investor of the Long Son Petrochemical Complex – said: “This is a strategic decision, demonstrating the project's ability to adapt flexibly to the changing and challenging market conditions, and also an opportunity for the Long Son Petrochemical Complex to prepare for opportunities when the market recovers.” Many refineries have been forced to close. The difficulties facing the global refining industry in Q3 2024 stemmed from three main factors: sharply declining crude oil prices, shrinking refining profit margins, and weak demand. In China's massive market, demand for gasoline and industrial products decreased due to slow economic growth. This declining fuel demand is making it difficult for many Chinese refineries to maintain stable profit levels. Competitive pressure also demands that businesses increase productivity and reduce costs to remain competitive. The crisis for Chinese refineries worsened in September 2024 when two refineries, Zhenghe and Shandong Huaxing in Shandong province, operated by Sinochem, declared bankruptcy. These two refineries had a combined processing capacity of approximately 300,000 barrels per day. The closures were attributed to sharply declining profit margins and weak market demand. Another Sinochem plant, Shandong Changyi, also had to hold meetings with banks and investors to discuss debt restructuring in order to avoid bankruptcy. The sharp drop in oil prices and shrinking refining margins have led to the bankruptcy of many refineries (Illustrative image). The global refining industry is experiencing a turbulent period as low oil prices, shrinking profit margins, and reduced demand create significant cost pressures. In this context, refining companies need long-term strategies to overcome these difficulties, including investing in technology, increasing productivity, and expanding their operations. Adaptation and innovation will be key factors in determining whether the refining industry can overcome these challenges and maintain its position in the future. Faced with these challenges, experts suggest that the global refining industry needs to restructure, shift towards alternative energy sources, or invest in new technologies to reduce costs. In addition, some companies have begun discussing the possibility of collaborating with or acquiring smaller businesses to consolidate market share and mitigate the impact of oil price volatility. Source: https://bsr.com.vn/?lang=vi#/bai-viet/nganh-loc-hoa-dau-gap-nhieu-thach-thuc-nhieu-nha-may-loc-dau-dong-cua