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Asia’s refineries threaten Europe’s

Hydrocarbon Engineering,


GlobalData has said that major refineries planned to come online over the next four years, primarily new facilities in Asia, could lead to overcapacity pressures on the global refining industry and accelerate deterioration of the European refining sector. A new report from the company has said that the slate of planned refining capacity expansions globally would bring the total CDU capacity to 100 million bpd by 2016, hitting nearly 115 million bpd by 2019. Refinery construction is particularly booming in Asia, with the region boasting 35 of the 91 currently planned facilities.

China is underpinning this growth in the region, with almost US$30 billion in capital expenditure alone between Sinopec and PetroChina for three new refineries, adding over 1 million bpd of CDU capacity.

Matthew Jurecky, Head of Oil and Gas Research and Consulting, GlobalData said, “China is planning infrastructure to support anticipated product demand into the new decade. There is a repositioning of global refinery capacity around Asia, which will pull away as the global leader in refining.” If all planned projects are completed, Jurecky has said that Asia would represent 35% of the world’s CDU capacity by the end of the decade with 40.2 million bpd of capacity, up from 29.6 million bpd in 2010.

Refinery efficiency

The report has also commented that less efficient refineries will make way for newer facilities, while more speculative projects are likely to be scaled back in capacity, with delays or cancellations possible.

Jurecky said, “while projects will undoubtedly stall or be cancelled, the refining industry will still struggle, with new capacity mounting pressure on disadvantaged refineries, many of which are in Europe. Closures and capacity reductions at unprofitable refineries will ultimately occur to rebalance the market. European refiners, have been strategic in extending operations for as long as possible. However, many of the planned refineries are backed by large national oil companies interested in playing a bigger role in the downstream sector, and market share will ultimately have to be ceded by the least profitable operations.”


Edited from press release by Claira Lloyd

Read the article online at: https://www.hydrocarbonengineering.com/refining/06052015/asia-threat-to-europe/


 

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