French oil company Total has reduced its exposure to the European refining sector by a third, as declining gasoline consumption is undermining its competitiveness and rapidly increasing demand in developing countries is driving growth elsewhere.

“We are reducing our exposure to the European market, as it is slightly declining. This is our [goal and] we have achieved our target of 30 per cent reduction,” Jean Jacques Marconi, senior vice president for Strategy at Total, told delegates at a conference in Abu Dhabi.

Stringent energy efficiency measures and the introduction of biofuels into the energy mix is putting pressure on consumption in Europe, a market in which car use has almost reached saturation. European refiners will also be suffering from Phase 3 of the carbon dioxide emission trading system (ETS). By 2013, refineries will end up paying for on average 20 per cent of their emissions, estimates Mosconi.

Developing markets, such as the Middle East, Asia and Latin America, boast high growth rates, on the other hand. In 2010, China was the world’s biggest car market, with 20 million units sold, according to Mosconi. In the US, only 12 million cars were sold in that period.

Mosconi names five characteristics that are needed for refineries to be economically viable in Europe: a minimum capacity to reach economics of scale; a degree of complexity that allows for high-value light products; a high distillate yield that caters for growing demand for diesel; energy efficiency; and integration with petrochemicals production.

A lot of European refineries do not fulfil these criteria; about a third only have a capacity of 200,000 barrels a day (b/d) and a fifth of them are not complex.

“There are still many refineries that are small and, something that is linked to that, many refineries are of low complexity,” says Mosconi.

As part of Total’s strategic shift, the company has entered a joint venture with Saudi Aramco to construct the Jubail refinery in Saudi Arabia. Expected to become operational in the first quarter of 2013, the 400,000-b/d refinery will be able to produce a high yield of middle distillates and will be integrated with a 700,000-tonnes-a-year paraxylene unit.