Portugal's Last Oil Refinery at Risk: Foreign Takeover Could Raise Fuel Prices and Cost 6,500 Jobs

Portugal's sole oil refinery faces an uncertain future after labor representatives condemned a proposed deal that would cede majority control of the Sines facility to foreign investment funds, a move they warn could jeopardize the country's energy independence and threaten 6,500 jobs tied directly and indirectly to the strategic asset.

Why This Matters

• Sines refinery produces 90% of Portugal's fuel supply and is the nation's largest exporter; losing control could expose Portugal to fuel price volatility and supply disruptions.

• State owns only 8.2% of Galp through Parpública, limiting government leverage to block the transaction despite legal provisions.

• Binding agreement expected by mid-2026, with the new structure potentially operational before year-end, leaving a narrow window for intervention.

• Workers fear a repeat of the 2021 Matosinhos refinery closure, which eliminated 400 direct jobs and 1,000 indirect positions.

Anatomy of the Proposed Deal

The Portugal Energy Central Workers' Committee (CCT) of Petrogal—Galp's refining subsidiary—issued a blistering assessment of the non-binding agreement signed in early January between Galp and the shareholders of Moeve (formerly Cepsa). The deal brings together the Mubadala Investment Company, the sovereign wealth fund of the United Arab Emirates, and U.S.-based Carlyle Group, two heavyweight institutional investors with no operational ties to Portugal.

Under the proposed framework, Galp and Moeve would carve their Iberian downstream operations into two separate platforms. RetailCo would merge both companies' fuel station networks—roughly 3,500 locations across Portugal and Spain—into a jointly controlled entity split evenly between Galp and Moeve. On paper, this arrangement preserves Portugal's stake in the retail layer of the energy supply chain.

The more contentious piece is IndustrialCo, which would absorb the refining, petrochemical, trading, and low-carbon molecule businesses of both companies. Here, Galp would retain a minority stake exceeding 20%, while Moeve's backers would command majority ownership. Critically, the Sines refinery—Portugal's last standing crude processing plant—would fall into this industrial platform, where strategic decisions would rest primarily with foreign capital.

Workers' Calculus: From Integrated Model to Fragmented Risk

Galp currently operates as an integrated energy company, controlling the full value chain from upstream exploration in Angola and Brazil to downstream retail at the pump. This vertical structure provides a natural hedge: when crude oil prices spike, upstream profits cushion refining margins; when refining margins expand, they offset weaker exploration returns. The model has historically insulated Portugal from the full brunt of global commodity swings.

The CCT argues that splitting the business dismantles this buffer. "The cessation of this integrated model eliminates the shock-absorbing effects between crude valuation cycles and refining margins," the committee stated. In normal conditions, these cycles operate out of sync, creating a financial safety net that funds national production and Sines decarbonization projects. Without it, the Sines refinery becomes a standalone bet on refining economics—a sector facing structural headwinds across the European Union.

Europe's industrial sector must slash emissions by more than 60% by 2030 relative to 2005 levels. Refineries are among the heaviest emitters, and Sines itself ranks as Portugal's largest greenhouse gas source. From 2027 onward, free carbon allowances will vanish, forcing refiners to purchase permits at full market rates. That cost will either compress margins or flow through to consumers at the pump.

The Moeve Playbook: Export Hub Over Domestic Security

Statements from Moeve's chief executive have outlined a vision centered on green hydrogen production—"probably at the refineries or simply to access the port of Sines as a strategic element for export," according to remarks cited by the CCT. The phrasing reveals a business model oriented toward Central European export markets rather than domestic fuel security.

The CCT describes this approach as "uncertain and economically unviable in the near term." Even if Galp executes its planned expansion of Sines' hydrogen capacity to 200 megawatts, that figure pales next to Moeve's projected two gigawatts at its Andalusian refineries in Huelva and Algeciras. Within IndustrialCo, Sines would be the smallest refining node in an Iberian cluster, limiting its bargaining power and investment priority.

"The economies of scale from integrating assets will hardly be sufficient to make refining margins attractive to private investors over the medium term," the CCT warned. With risk indexed to the cost of capital, the new entity would face pressure to rationalize capacity—potentially sacrificing Sines to preserve returns at larger, more modern Spanish facilities.

What This Means for Residents

Fuel Price Exposure

Today, Portugal produces roughly 90% of its domestic fuel needs at Sines. If the refinery scales back or shuts down incrementally, the country would join the ranks of European nations fully dependent on imported refined products. That exposes households and businesses to international spot prices, freight costs, and supply chain bottlenecks during geopolitical crises. The 2022 energy shock following Russia's invasion of Ukraine demonstrated how quickly prices can surge when supply routes tighten.

Job Losses and Regional Impact

The CCT estimates 6,500 direct and indirect jobs depend on the Sines complex. Beyond refinery operators, this includes logistics workers, maintenance contractors, port staff, and service providers in the surrounding Alentejo region. The 2021 closure of the Matosinhos refinery near Porto eliminated 400 direct positions and 1,000 indirect roles, depressing the local economy and erasing specialized technical expertise. Workers fear Sines could follow the same trajectory if foreign fund managers prioritize short-term returns over long-term industrial strategy.

Sovereignty vs. Shareholder Returns

The Portuguese government holds 8.2% of Galp via Parpública, a minority position that limits its ability to block corporate restructuring. While legislation exists allowing the state to veto sales of strategic assets, it has never been invoked. The Ministry of Environment and Energy has acknowledged it is monitoring the negotiations closely, citing concerns over energy sovereignty, environmental sustainability, competition, and consumer protection. Minister statements have tentatively endorsed the idea of creating a "European champion" in refining—but emphasized the need for "careful oversight."

Yet oversight differs from control. Once the Sines refinery sits inside a foreign-majority joint venture, Portugal's leverage shrinks to contractual terms negotiated by Galp's minority stake. If IndustrialCo's board—dominated by Mubadala and Carlyle representatives—decides to consolidate refining at Spanish plants or pivot entirely to hydrogen exports, Portuguese interests become one voice among several.

The Matosinhos Precedent

The CCT repeatedly invokes the Matosinhos closure as a cautionary tale. In April 2021, Galp announced it would concentrate all refining operations at Sines, shuttering the smaller Porto-area plant to improve efficiency and reduce carbon exposure. At the time, management framed the decision as necessary to remain competitive in a shrinking European refining landscape.

Today, the Matosinhos site is undergoing demolition and decontamination, with early-stage interest from investors—including parties from Saudi Arabia—to redevelop the land for health, tourism, and real estate projects. The industrial base has been dismantled and the jobs lost. Workers fear Sines, too, will be "progressively shut down to safeguard profit margins for international funds," particularly if refining margins remain under pressure through the 2030s.

Galp's Defense: Minority Rights and Decarbonization Guarantees

Galp's executive team has countered that the 20%-plus minority stake in IndustrialCo will come with protective governance rights, including veto power over strategic decisions affecting Sines. The company insists the deal unlocks scale and capital needed to finance the refinery's €650 M biofuels project (sustainable aviation fuel and hydrotreated vegetable oil) and a €100 M green hydrogen plant, both already underway with backing from the European Investment Bank.

Between 2020 and 2026, Galp has committed €1.1 billion in Sines modernization and decarbonization, aiming to future-proof the facility as Europe phases out traditional refining. Management argues that without Moeve's capital and operational footprint, Galp cannot compete against larger integrated players in Spain, France, and Italy.

Portugal's Energy Paradox

Portugal generates 97.8% of its electricity from renewable sources, leading the European Union in clean power production. Yet national energy dependence remains stubbornly high—64.5% in 2024—because the country still imports nearly all its petroleum, natural gas, and coal. Refining crude at Sines mitigates some of this dependency by transforming imported oil into finished fuels domestically, avoiding reliance on foreign refiners.

The updated National Energy and Climate Plan 2030 (PNEC 2030) sets targets for a 55% reduction in greenhouse gas emissions versus 2005 levels and a 51% renewable share in final energy consumption. Electrification of transport and industry is accelerating. Yet liquid fuels will remain essential for aviation, shipping, heavy trucking, and agricultural machinery through at least the next decade.

In February, the government launched the Portugal Transformation, Recovery, and Resilience (PTRR) program in response to recent climate catastrophes, earmarking investments in energy resilience, renewable community projects, and grid infrastructure. A new Agency for Geology and Energy (AGE) was created the same month to streamline resource management and enhance administrative efficiency—part of a broader push to reassert control over strategic sectors.

Timeline and Regulatory Hurdles

A binding agreement is expected by mid-2026, pending due diligence, corporate approvals, and regulatory clearances from competition authorities in Portugal, Spain, and the European Union. The Portuguese Competition Authority will scrutinize the retail consolidation for market dominance, while sectoral regulators will assess whether the industrial split threatens supply security.

Labor unions plan to escalate pressure through consultations with parliamentary committees, public petitions, and potential strike actions if the government does not exercise veto powers. The CCT has called for an exact accounting of all Galp Energia and Galp Gest employees whose roles fall within Petrogal, warning that job cuts could exceed initial estimates once back-office and logistics functions are rationalized across the merged entity.

Political Crossroads

The government faces a delicate balancing act. Blocking the deal risks alienating private investors and undermining Galp's ability to raise capital for decarbonization. Allowing it to proceed risks surrendering control of a critical infrastructure asset to foreign funds with no long-term commitment to Portuguese energy security.

Opposition parties have begun to question whether the 8.2% state holding is sufficient to safeguard national interests, with some voices calling for the government to increase its stake in Galp or mandate golden share provisions that grant veto rights over asset disposals. Others argue that Portugal should accelerate electrification and reduce dependence on liquid fuels altogether, rendering the refinery debate moot within a decade.

What Happens Next

The coming months will determine whether Sines becomes the anchor of an Iberian refining champion or a footnote in Portugal's industrial history. For residents, the stakes are tangible: fuel prices, job security, and the country's ability to weather energy shocks all hinge on decisions made in boardrooms in Lisbon, Madrid, Abu Dhabi, and Washington.

Workers have framed the issue in stark terms, labeling the transaction an "economic and social crime" against Portugal. Whether that rhetoric resonates with policymakers—or translates into concrete action—will shape the nation's energy landscape for decades to come.