BP Plc (BP) shares were down 4.3% when the final bell sounded on the London Stock Exchange (LSE) on Tuesday 9 July 2024. This slide followed statements of lower-than-expected refining margins and a $2bn write-down of the Germany-based Gelsenkirchen refinery.
BP Shares Stumble After Forecasts Of Weaker Refining Margins And Write-Down
The company’s statement detailed how low fuel revenues coupled with increased maintenance costs will negatively affect its Q2 2024 financial performance. According to a Bloomberg report, BP is planning to downscale its refinery operations in Germany because of high expenses and a drop in demand for conventional fuel.
The Telegraph reported that BP’s reduction of oil production in Germany contributed to the $2bn write-down. It seems that this downscaling is directly linked to an increase in electric vehicles (EVs). The Gelsenkirchen site can process approximately 265,000 barrels of crude oil daily.
Escalating imports from the Middle East and Asia put European refiners on the back foot. The Gelsenkirchen plant is reportedly the second one in Germany that will curb operations from 2025. Grangemouth in the UK is to be closed down, while other facilities such as TotalEnergies’ Grandpuits are migrating to biofuels and recycling operations.
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BP stated that its Q2 upstream production “is now expected to be broadly flat compared to the prior quarter”. The firm said that gas and low-carbon energy production might be “slightly lower”.
Based on Yahoo Finance information, ExxonMobil (XOM) also warned of lower refinery profits and predicted a drop of up to $1.5bn. The FTSE 100 reacted to these uncertainties and closed lower on Tuesday.
