Shell Halts Production at Europe’s Largest Oil Refinery due to Leak

Shell was forced to halt production in a unit within Europe’s largest oil refinery, which could limit supply in the tightly supply-stressed diesel market.

Part of the company’s Rotterdam plant suffered a gas leak this week, local authorities said. Although the rest of the refinery remains in operation, the shutdown of the unit known as Hycon will hamper the production of petroleum products, especially diesel. 

Europe’s diesel market has been facing the spectre of tighter supplies for some time now, having been deprived of major Russian imports following sanctions against Moscow. 

The hot summer also tightened production further, causing inventories in the region’s oil trading centre to lower than normal levels for this time of year. Cutting supplies of certain crudes exported by OPEC+ countries has also reduced diesel productivity.

According to Wood Mackenzie, which monitors refining operations using cameras, there were no noticeable changes on Wednesday in key fuel-making units known as “liquid catalytic and hydrogen cracking units.”

Diesel spreads over Brent crude contracts have skyrocketed in recent months. The margin between a barrel of Brent diesel and Brent counterpart, which is a key measure of refiners' profitability, was roughly $32 on Wednesday, well above its pre-war level. 

The Hecon unit has a capacity of 25,000 barrels per day, according to a previous statement from Wood Mackenzie that warned of the unit's suspension last year.