The Sines Refinery has been recognised as one of Europe’s most competitive and the most resilient among the nine refineries in the Iberian Peninsula, according to the 2025 annual Refining Industry Benchmarking Assessment1 conducted by independent consultancy Wood Mackenzie, a global reference in the analysis of the sector.
At a time when the global refining industry is undergoing one of the most significant restructurings in its history, Galp’s Sines Refinery ranks 9th among standalone European refineries and 11th when facilities integrated with petrochemical activities are included.
This ranking, which places Sines firmly within the top quartile of European refineries, reflects its high-conversion configuration, competitive operating costs and strategic geographic location. It also reflects sustained investments over recent years to enhance safety, reliability, energy efficiency and operational competitiveness at the Sines Refinery.
The assessment predates the blockade of the Strait of Hormuz, providing a structural snapshot of an industry undergoing rapid transformation, although the long-term impact of the most recent developments remains difficult to assess.
The analysis of 2025 confirms an increase in the weighted average net refining margin across European refineries, driven by geopolitical disruptions to Russian petroleum product exports and stronger middle-distillate spreads. Sines’ performance directly benefits from its deep-conversion configuration, geared towards diesel and aviation fuel.
The strategy of consolidating refining activities at Sines, followed by investments in transformation and decarbonization, has strengthened the resilience of Galp’s refining operations in an especially challenging environment for the sector.
Wood Mackenzie’s Global Refinery Closure Threat Update reveals that 21% of global refining capacity – equivalent to one in five refineries – faces a high risk of closure by 2035, driven by peak oil demand and rising carbon costs. Europe is the region most exposed, accounting for 60% of the assets at risk.
“The indicators in this study confirm the quality and operational resilience of Sines Refinery in the European and Iberian context. In a sector where regulatory pressure and carbon costs continue to rise, our investment in low-carbon transformation – including the HVO/SAF unit and the green hydrogen project – is our strategic response to maintaining and strengthening Sines’ competitiveness over the coming decades,” said Ronald Doesburg, Galp Executive Board member responsible for Industrial Operations.
Three factors underpinning Sines' competitiveness
Several structural and operational characteristics help explain this performance, including:
- Deep-conversion configuration. Sines benefits from high technological complexity and operational flexibility, including hydrocracking, catalytic cracking and visbreaking units. These capabilities enable it to process heavier, more competitive crude oils and convert them into higher-value products, with middle distillates accounting for more than 45% of its output.
- Atlantic logistics advantage. Located at a deep-water port, Sines benefits from full logistical flexibility and lower freight costs compared with inland European refineries or those operating in more constrained Mediterranean locations. This allows it to capture margin premiums during periods of global logistical disruption, such as those experienced in 2025
and 2026.
- Regional resilience and integrated infrastructure. Sines’ strategic location, combined with access to leading logistics and port infrastructure, gives the refinery a natural competitive advantage over imports of finished products, strengthening its position in supplying the Iberian Peninsula.
From oil to Green Hub: preparing for 2035
At a time when many European refineries face structural challenges associated with the energy transition, Galp is transforming Sines into a Green Energy Hub through an investment of €650 million.
The construction of a 100MW green hydrogen electrolyser – which will eliminate the consumption of 15,000 tons of grey hydrogen per year – and an advanced biofuels unit with an annual capacity of 270,000 tons of HVO and SAF (sustainable aviation fuel) are the cornerstones of this transformation.
The study highlights how investments in decarbonisation strengthen refinery competitiveness and confirms the important role of the refining industry in the energy transition. Meeting European targets will require a combination of complementary solutions, including co-processing and the production of low-carbon fuels.
With the first green hydrogen production and the HVO/SAF units scheduled to start commercial operations in 2027, Galp will strengthen Sines’ position as the first integrated low-carbon energy hub in the Iberian Peninsula.
1 The foregoing information was obtained from the Refinery Evaluation Model™, a product of Wood Mackenzie. The data and information provided by Wood Mackenzie should not be interpreted as advice and you should not rely on it for any purpose. You may not copy or use this data and information except as expressly permitted by Wood Mackenzie in writing. To the fullest extent permitted by law, Wood Mackenzie accepts no responsibility for your use of this data and information except as specified in a written agreement you have entered into with Wood Mackenzie for the provision of such data and information.