Shell is preparing a major overhaul of its largest German oil refinery, Rheinland, with plans to transition the Wesseling facility from crude oil processing to a hub for base-oil production. The transformation, scheduled to start next quarter, marks a pivotal step as Shell shifts from traditional refining practices toward producing high-quality lubricants. By 2025, crude processing at Wesseling will be phased out, with the site instead dedicated to manufacturing Group III base oils, essential for top-grade engine and transmission lubricants.

The motivation behind this shift is clear: adapting to changing markets. With Europe’s growing emphasis on cleaner technologies and a decrease in demand for some petroleum products, Shell is making a strategic move. This decision is pragmatic, capitalizing on the growth in niche products as traditional fuel markets in Europe contract.

Meanwhile, Shell’s Rheinland site in Godorf will continue crude oil operations, though with a few adjustments. A temporary shutdown is planned for the fall to fine-tune the crude unit, ensuring that Germany’s energy supply remains stable despite reduced capacity. This staggered approach is designed to prevent any significant disruption.

At the same time, BP is scaling back at its Gelsenkirchen refinery, leaving Miro in southwestern Germany as the largest oil processor in the country. As Rheinland shifts focus, Germany’s refining landscape is consolidating, with Shell positioning itself to navigate these changes rather than resist them.

Shell’s investment in high-grade lubricants could lead the way for European refineries: specialize, diversify, or step aside. It’s a bold shift in an industry traditionally focused on sheer capacity, with the Rheinland complex aiming to produce 300,000 tons of base oil annually to meet EU demand.

In recent years, Shell has divested from several refineries worldwide, including selling the Martinez Refinery in California to PBF Holding Company and its 50% stake in Texas’s Deer Park Refinery to joint venture partner Pemex.