This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Exxon Mobil Goes Where Few Oil Giants Tread

NEW YORK (TheStreet) -- The U.S. oil behemoth Exxon Mobil (XOM - Get Report) revealed Wednesday that it has decided to invest more than $1 billion in its refinery in Antwerp, Belgium, even as others flee the continent's ailing refining sector.

That is because America's biggest oil company is eyeing a European revival several years down the road.

Exxon Mobil, whose shares closed Wednesday at $101.57, flat for the year to date,  has said that it will install a new coker unit to its 320,000 barrels a day refinery that will convert residual oils into transportation fuels.

>>Dicker/Cramer: End of the Export Ban Means the End of the Game for Refiners

In less than 10 years, Exxon Mobil has invested more than $2 billion at Antwerp and is still willing to significantly ramp up its facility despite a challenging business environment in Europe's refining sector, which is struggling due to overcapacity and weak demand.

By making investments in Europe's ailing refining industry, Exxon Mobil is following in the footsteps of Russian oil and gas companies.

The shale gas boom in the U.S. and growing competition from the Middle East and Asia are making things difficult for Europe's refiners.

Over the last five years, 15 refineries have closed in Europe. France, home of the continent's leading refiner Total (TOT), bore the brunt of the closures. Since 2008, the country's refining capacity has dropped by 30%.

Europe's current refining capacity stands at around 15 million barrels of oil per day. By mid-2014, the refining margins in the continent were $20.50 per metric ton, down from $24.60 per metric ton last year and $49.19 per metric ton the year before. For this to change, analysts have said that Europe will have to slash around 10% of its refining capacity. Eventually, amid deteriorating margins, nearly dozen refineries could shut down in the next couple of years.

According to the European Commission, the shale gas boom in the U.S is the primary factor responsible for the depressed refining margins in Europe.

Meanwhile, new refineries currently under construction in the Middle East, Russia and India are targeting greater share of the market. According to the International Energy Agency's estimates, non-OECD nations will install 1.7 million barrels per day of additional capacity in the current year, which is higher than the agency's previous estimate of 1.5 million barrels per day.

The shale gas boom in the U.S. and the new refining capacity in non-OECD countries will continue to exert downward pressure on Europe's refining margins.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
MUR $47.67 1.73%
XOM $85.00 1.70%
AAPL $126.00 2.20%
FB $82.85 -0.54%
GOOG $549.83 0.27%

Markets

DOW 17,976.31 +263.65 1.49%
S&P 500 2,086.24 +25.22 1.22%
NASDAQ 4,947.4410 +56.2220 1.15%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs