German refineries face unprecedented crisis as ministry calls sector “indispensable”

The German government is concerned about the country’s oil refineries, which are facing the most serious crisis in decades caused by the rising cost of emissions, cheap fuel imports, weak demand and underinvestment, reported business daily Handelsblatt. Some companies want to get rid of their refineries or stakes in them, but a lack of potential buyers means the closure of individual sites can no longer be ruled out, according to the article.

Unnamed officials told Handelsblatt that the government is following the developments with growing concern, adding “all options are on the table” to solve the crisis. Germany remains Europe’s largest refining hub, processing over 106 million tonnes of crude oil annually, according to the article. The twelve refineries in the country are largely owned by oil majors such as Shell, BP, Total Energies and Eni.

The economy ministry said that refineries are an “indispensable component” of maintaining industrial value chains, both for resilience reasons and because the transport capacities for importing refinery products by ship or rail are limited. The ministry added that this was particularly true for “existing integrated chemical industry sites,” such as the BASF plant in Ludwigshafen, according to the article. Experts have warned that if multiple refineries close, Germany could face supply disruptions for diesel, petrol, kerosene and chemical feedstocks.

As the EU's emissions trading system has become stricter, refineries — among the most energy-intensive sectors — must pay increasingly high prices for CO₂ emissions. With emissions certificates set to expire in 2038 or 2039, uncertainty about the future is high, the article said. Yet industry leaders remain cautious about direct state intervention, instead calling for a policy environment that attracts private investment into making refinery operations more climate-friendly, for example, by using green hydrogen, biomass or CCS. Sector insiders told Handelsblatt that other countries such as Spain are better placed for this transition because it is years ahead in transforming the sector and has cheaper renewable power.