Portuguese energy company Galp said yesterday that it will close the smaller of its two refineries – a facility in Matosinhos, Portugal, that includes one of Western Europe’s smallest base oil plants, along with a finished lubricant blending plant.
Galp attributed the decision to consolidate its refining operations to its larger facility in Sines to regulations and impacts of the coronavirus pandemic. The Matosinhos operations will cease operating next year.
“The structural changes in oil products demand patterns, driven by the regulatory context in Europe and the effects caused by the COVID-19 pandemic, have led to a significant impact on Galp’s downstream industrial activities,” the company stated in a press release.
The base oil plant at Matosinhos – a municipality just north of the city of Porto – has capacity to make 150,000 metric tons of API Group base stocks, making it the second-smallest virgin base oil plant in the region following Repsol’s 130,000 t/y Group I plant at its refinery in Cartagena. A Repsol joint venture with SK Lubricants operates a 636,000 Group II and III plant at that same location.
Demand patterns for oil products have been affected by a number of regulations in recent years. Regulations meant to combat air pollution have mandated a tightening of limits on contents of road transport fuels such as diesel. At the start of this year the United Nation’s IMO 2020 regulation reduced a global cap on sulfur content in marine fuels. The pandemic has reduced demand for petroleum products such as fuels.
Galp did not say if it plans to replace any of the facilities being closed at Matosinhos. The company said it will continue export, storage and distribution activities at the site and that it is exploring other potential uses for the site. It said the closing will save the company €90 million annually in capital expenditures and reduce its carbon footprint.