Vol 31 No 1 Q1 (Jan, Feb, Mar) 2026 ptq PETROLEUM TECHNOLOGY QUARTERLY
Challenges facing European refineries
T he European refining industry has faced significant challenges over the past decade, primarily due to geopolitical factors. While many members of the public may not realise that deep decarbonisation is capital-intensive, 46% of Europe’s population sees climate change as a pressing concern. Europe’s older refinery facilities cannot compete with new, world-scale export refineries, such as the 600,000 bpd Dangote facility in Nigeria. In addition, European refiners are facing higher refinery operating costs, including increased utility costs, at a time when they are expected to deliver higher shareholder value. Prescriptive regulations, such as Annex IX of the Renewable Energy Directive (RED), continue to transform and accelerate the production of biofuels. In contrast, some US refiners see value in going back to ‘traditional’ oil refining. RED’s Annex IX could facilitate the expansion of feedstocks that help the EU meet its climate targets. However, not all transition pathways are driven by policy, as seen in Central and Eastern Europe. Increasing refinery naphtha production for ethylene steam cracker feedstock or the naphtha-to-plastics route provides an opportunity to optimise a facility’s core business away from conventional fuels. Given that the industry’s investment and production timelines are measured in decades, Annex IX gives long-term clarity on renewable feedstock classification and eligibility. This broadens the range of eligible raw materials for producing sustainable aviation fuels (SAF), as defined in ReFuelEU Aviation (Regulation (EU) 2023/2405), and provides positive market prospects for a significant ramp-up of biofuels. Aside from distillate (diesel) and SAF production, European refinery margins opportunities have moved further down the value chain into petrochemicals like polymers. By the end of 2026, the industry may reach a consensus on the viability of pyrolysis oil upgrading to transform end-of-life plastics into circular feedstocks. Discussions at this year’s European Refining Technology Conference (ERTC 2025) focused on achieving commercial-scale production of waste plastics to polymers by the early 2030s, including integrating new units with older facilities. It was noted that although Europe accounts for ‘only’ 6.5% of the world’s total CO 2 emissions, there is an upside when increasing fuels production from biomass- derived feedstocks. However, increasing biomass co-processing above 5% in petro- leum refineries presents complex technical, operational, and economic challenges, as biogenic feeds require metallurgical upgrades and resistance to severe corrosion. Biomass-derived oils have inconsistent composition, oxygen content, and stability compared to fossil feedstocks. Increased co-processing magnifies these variations, causing unstable product quality and unit upsets. Bio-oils can contain 10-40% oxy- gen vs less than 1% in fossil feeds. In addition, alkali metals such as sodium and potassium, as well as nitrogen and phosphorus, are all catalyst poisons. However, if achievable, increasing biomass co-processing from 5-20% funda- mentally shifts refinery operation from ‘tolerant’ to bio-integrated mode, following investment in pre-upgrading units (like hydrotreaters for pyrolysis oil or glyceride pretreatment). Robust catalyst systems can achieve stable 20% co-processing while gaining renewable credit benefits, according to some proponents at the conference. AI-based tools are expected to help European refiners stay competitive, even though some experts have noted productivity losses from their use. Heather Gilligan, Senior Advisor at Pyxis Group, stated at ERTC 2025: “The value of AI will be unlocked by people generating creative ideas and augmenting their work with the help of AI embedded in day-to-day tasks.” Given the unique circumstances of European refin - ers, while immediate profitability is not expected, significant gain is achievable. Rene Gonzalez
Editor Rene Gonzalez editor@petroleumtechnology.com tel: +1 713 449 5817
Managing Editor Rachel Storry rachel.storry@emap.com Editorial Assistant Lisa Harrison lisa.harrison@emap.com
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