Valero Q1 refining throughput down 15%, margins turn negative

London, (Quantum Commodity Intelligence) - US refining major and biofuel producer Valero's Q1 refining throughput was down 15% on the year at 2,41 million bpd while margins also turned negative after Winter Storm Uri added $525 million of additional costs to its energy bill.

Its adjusted refining margin was -$2.56/bbl, compared with plus $1.28/bbl in the first quarter last year, with a rise in operating costs of $2.91/bbl responsible for the largest part of the move.

However, the company was hopeful of improved refining demand and a turn to positive profits as the year progresses.

"Winter Storm Uri impacted operations and operating costs of many facilities in the U.S. Gulf Coast and U.S. Mid-Continent regions, including our facilities," said Joe Gorder, Valero Chairman and Chief Executive Officer.

"Continued improvement in product demand and refining margins supports a positive outlook for our refining business," added Gorder.

Margins on the company's renewables products were broadly similar compared with the same period last year, while production of ethanol took a small hit likely tracking depressed gasoline demand during the period.

Ethanol production was 13% lower at 3.562 million gallons per day and the adjusted margin on production remained negative at minus $0.17/gal - the basic margin was more than doubled however at $0.38/gal before higher operating costs ate into the increase.

Renewable diesel sales were uncannily exactly the same as the same period last year at 867 thousand gallons per day while adjusted margins were 10 cents higher at $2.61/gal.

Valero owns 15 refineries, with 13 in the US and one each in the UK and Chile, and is also the US's second-largest ethanol producer with 14 plants throughout the country.