US refiners to ramp up diesel exports to Europe

Nov. 26, 2013

The recent boom in oil and gas production in the United States has caused a significant rise in production, prompting U.S. companies to look to international markets.

The recent boom in oil and gas production in the United States has caused a significant rise in production, prompting U.S. companies to look to international markets. They may not be able to export any of the abundant crude they are producing, but U.S. law allows export of refined products.

This is good news for U.S. refiners that can export their products to Europe and elsewhere at much higher margins compared to distributing them on the over-supplied domestic market. But why is Europe such an important market for U.S. refiners when over the past few months news of reduced capacity and even refinery closures in the Old World have made the news?

The answer is that European refineries are not able to provide what the market needs. Globally, demand for diesel is predicted to grow dramatically and Europe is no exception to that. Over the next decade, diesel is expected to become the preferred fuel but most European refineries are not prepared to produce it. They can only provide gasoline and refineries are finding it hard to meet the demand for diesel.

RELATED: Enbridge submits plans for new pipeline to Minnesota, Wisconsin

U.S. refiners are ready to take advantage of this fact. San Antonio-based Valero Energy, for example, is just one of the companies that have announced plans to expand their export capacity. Valero is set to increase exports from 193,000 barrels a day of diesel and 91,000 of gasoline in the third quarter of this year to a combined of 400,000 over the next couple of years, Daily Finance reported.

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