Research Asia: Strong Growth in Crude Refining
Global crude refining capacity is set to increase strongly from 2015 to 2020. This growth will be led by China and Southeast Asia.
Global crude distillation unit (CDU) refining capacity is set to increase strongly from 96.2 million barrels per day (mmbd) in 2015 to 118.1 mmbd by 2020, registering total growth of 18.5%, according to research and consulting firm GlobalData.
The company’s latest report states that this robust global growth will be led by China and Southeast Asia. A total of US$170 billion is expected to be spent in Asia to increase capacity by around 9 mmbd over the next four years.
Matthew Jurecky, GlobalData’s Head of Oil & Gas Research and Consulting, explains that “the global refining landscape continues its shift eastwards. 40% of global CDU capacity is projected to be in Asia by 2020, up from around 30% in 2010. China has led this growth, and is projected to have a 15% share of global CDU capacity by 2020. This activity is putting pressure on other regional refiners, especially now that China has become a net exporter, and will become a larger one.”
The Situation in Europe
In Europe, growth will occur at a substantially slower rate. Although demand is decreasing and less competitive older refineries in Western Europe are being closed, these factors are being countered by investment in geographically advantaged and resource-rich Russia, which sees Europe’s CDU capacity increasing marginally from 21.7 mmbd in 2015 to 22.5 mmbd by 2020.
Overall, refining capacity will be dominated by Asia, North America, and Europe by 2020, with totals of 42.5 mmbd, 23.2 mmbd, and 22.5 mmbd respectively.
In terms of specific upcoming refinery projects important to capacity growth, four new projects have been announced since November 2015. These are Algeciras in Spain, Mangistau in Kazakhstan, Sapugaskanda II in Sri Lanka and Yehgvard in Armenia.
Jurecky continues: “The lifting of sanctions on Iran has led to industry-wide project proposals, in particular new refineries in Spain and Kazakhstan where Iran is directly involved, with an eye on retaking market share lost over the last few years.”