European refining margins are expected to improve slightly in the second half of the year from the weak levels seen in the first six months, although the war in Libya is likely to continue to have a negative impact, Italian refiner ERG said Friday.
ERG, which owns a 40% stake in the 320,000 b/d ISAB refinery in Sicily, said its own refining earnings were expected to remain "very weak" despite the expected partial improvement in margins.
Russia's Lukoil owns the other 60% of the Isab refinery.
"We expect that the results for the [refining] sector will continue to be hit by the effects of the crisis in Libya with margins being negatively affected; however, [we see] higher levels than the exceptionally low levels recorded in the [first] half-year," ERG said in a statement accompanying its results for the second quarter of the year.
The slowdown in the European economy, the completion of North Sea oil field maintenance work and widespread refinery maintenance at European refineries in September and October should ease the pressure on crude prices, ERG said.
The company reported a net loss of Eur8 million ($11.3 million) for the second quarter, compared with a net profit of Eur17 million in the same period of 2010.
Its share of crude processing at Isab fell to 1.3 million mt during the quarter from 1.8 million mt a year earlier, partly as a result of maintenance work at the plant as well as the reduction in ERG's share in the refinery from 51% to 40%, which took effect on April 1 this year.
