Total announces major investments at two refineries
French oil major Total SA said it will transform the La Mède refinery near Marseille into a biorefinery and upgrade its Donges refinery in western France.
While three of Total’s five refineries in France — Gonfreville in Normandy, Grandpuits in the Paris region and Feyzin near Lyon — are profitable, these two refineries are struggling and losing money.
Total investment in these two refineries will be EUR 600 million (USD 642 million). Total will invest EUR 400 million (USD 428 million) in a new desulfurization unit for intermediate feedstock in Donges, which is used to produce low-sulfur fuels that can meet the evolving Euro specifications.
A steam methane reformer (SMR) to produce hydrogen will be needed for the desulfurization unit as well.
The process design package and front end engineering design for Donges will be finalized in 2016. Depending on the progress of procedures concerning the re-routing of the existing rail line, the contracts to build the new units will be awarded in 2017, with a target commissioning date of 2019.
At Mède, Total will invest EUR 200 million (USD 214 million) to convert the site into a biorefinery using technology from Axens. It will create France’s first biorefinery, which will be one of the largest in Europe. Crude oil processing will be halted at Mède by 2016.
The move at Mède will reduce the refinery’s headcount to 250 from 430, which will be handled through early retirements and transfers, to avoid job losses.
The site’s flagship operation will be a world-class, 500,000-ton-per-year biorefinery that will manufacture biodiesel primarily from used oils, as well as renewable feedstock. The hydrotreated vegetable oil (HVO) process selected by Total is a French technology developed by Axens that produces high-quality biodiesel that is easily blended into regular diesel in any proportion, with no adverse impact on fuel quality or engines.
A European Union directive sets a target of 10% renewables in transportation in 2020. In France, the draft bill on the energy transition toward green growth calls for increasing the share of biofuels to 15% in 2030 from 7.7% today.
“There are three possible responses to the crisis in the European refining industry. The first is to throw in the towel. The second is to do nothing and perish. The third is to innovate and adapt,” Total Chief Executive Patrick Pouyanné said.
Total has long struggled with the overcapacity in European refining. European demand for petroleum products has dropped 15% since 2008. Weaker demand in the European Union stems in part from its drive to have a lower carbon footprint and greater fuel efficiency in new cars, Total said.
