Impact of Covid-19 on global refinery maintenance

GlobalData Energy 5 November 2020 (Last Updated November 5th, 2020 09:46)

Impact of Covid-19 on global refinery maintenance

Global refiners were hit massively by the Covid-19 outbreak, which destroyed demand, reduced operations in several refineries, and even forced refineries to suspend operations. Several refiners have been obligated to cut CapEx to sustain the crisis. This led to postponement or rescheduling of planned maintenance activities in several refineries across the world. Lockdowns imposed in many countries also resulted in a supply shortage of spare parts and contract workers, preventing refinery operators to go ahead with their maintenance activities according to original schedules.

As companies cut costs to stay afloat amid falling revenues, they are unwilling to infuse additional capital expenditure into maintenance schedules and are also cutting down on other essential expenses. With maintenance schedules delayed, refiners are keeping refinery run rates at a minimum to keep their plants in operating condition. Some refiners have even suspended operations due to lack of timely maintenance. While several refiners have pushed maintenance activities to 2021, as they re-assess their business portfolios, considering the current market scenario, some have started their maintenance activities as demand slowly picks up in certain markets.

Several refiners deferred maintenance schedules to Q1, Q2, or late 2021. Workers safety has been one of the key concerns for refiners to delay maintenance. Refineries located in North America and Europe have been impacted the most since the pandemic was widely prevalent in these regions during the initial stage. However, many of these refineries have started maintenance, taking adequate precautionary measures – albeit with delays. While refineries across Asia have started their maintenance activities, refineries situated in Oceania or in the Middle East are yet to start.

The implications of delayed maintenance activities from reducing refinery throughputs to losing supply contracts have weighed down several refinery operators. Although maintenance activities are back on track across many regions after a hiatus, it is unlikely that refiners can catch up with their initial schedules. While operators are adjusting to the new norm of operating refineries, the gradual improvement in the global economy provides a ray of hope to run refineries at their maximum potential and cover the lost ground.