Refinery of the Future 2020

June 25, 2020

An online conference focusing on the latest developments and innovations enabling the Refinery of the Future

ABS Group

Refining set for a challenging 2020

2020 was projected by many to be a year of stellar margins for the refining sector, largely driven by the IMO regulations targeting changing quality of bunker fuel. The market landscape has proven to be very different to that forecast, with 4Q2019 margins proving weak as crude differentials lagged the collapse in high sulfur fuel oil prices.

The first section of Wood Mackenzie’s presentation will explore key aspects of this post-IMO world and establish whether it has disrupted the key drivers of a competitive refining sector.

The refining industry has returned to its old ways – capacity additions are outpacing demand growth, particularly with the coronavirus impacting China’s oil demand growth. The key projects associated with the capacity expansion will be identified, along with the impact on regional utilisation. Europe is likely to be challenged in this environment, as many of its assets are competitively weak and the Dangote refinery could challenge its capability to export its surplus gasoline to West Africa. These investments impact both refinery utilisation and refined product trade flow patterns. The competitive position of the European refineries at risk will be identified, which will highlight the importance of sustained cost reduction and improved operational performance through initiatives such as digitalisation.

The impact of the energy transition is that oil demand growth patterns will change. The demand for road transport fuels will decline in Europe and the US due to fuel efficiency and electrification. Demand growth is projected to continue in developing economies, so the investment focus in refining will shift post-2025.

Petrochemicals will become the focus area for growth, as Wood Mackenzie expect this sector’s growth to remain resilient in the face of consumer bans and strong recycling growth. Middle East NOCs are the likely key developers of highly competitive world scale integrated refining and petrochemical complexes in Asia.

Therefore, OECD refiners need to adapt to changing local market conditions. The aspiration for carbon neutrality is challenging the current operating envelope. Refiners will need to shift towards lower emissions, lower carbon fuels and play a larger role in the circular economy. It becomes imperative for OECD refiners to retain their social license to operate with their local communities and host governments. A strong competitive position is necessary, however may not be sufficient in such a regulatory environment.

Join Wood Mackenzie for their presentation, as they discuss the key opportunities for refiners to consider.

 

Speaker

Alan Gelder

Alan Gelder
Vice President of Refining, Chemicals & Oil Markets, Wood Mackenzie

In his role, Alan is responsible for formulating Wood Mackenzie’s research outlook and integrated cross-sector perspectives on the global downstream sector.

Alan joined Wood Mackenzie’s Downstream Consulting team in 2005 and became Global Head in 2009. He transitioned into research upon his return from Houston in 2011 and was appointed Global Head of Refining and Chemicals.

Prior to joining Wood Mackenzie, Alan enjoyed 10 years of industry consulting after working for ExxonMobil in a variety of project planning and technical process design roles.