Refinery economics… Bloomberg

Alex Longley, Rachel Graham and Sherry Su have a nice piece on refinery economics, here…
“If you’re a European refinery you’re making hydrogen by steam reforming of methane, and the price of methane is unbelievable,” said Callum Macpherson, head of commodities at Investec Plc. “If you’re in Europe or Asia it’s very, very expensive so it’s bound to have an impact.”

The hike might, in theory, make some refinery operations unprofitable, the IEA, an adviser to oil-consuming nations said. Making hydrogen is a very energy-intensive process.

Long-Term Contracts

The extent of the problem is far from clear because an unknown proportion of refineries will have secured their gas through long-term contracts, meaning they aren’t exposed to spot prices, according to the IEA. That means it’s not easy to know exactly how overall margins — or the decisions that refineries take on crude selection — will be affected.