The shift in refining capacity from Europe to Asia and the Middle East will continue over the next five years, according to BMI Research. ''Growth in global refining capacity will outstrip global fuels demand growth to 2019, leading to consolidation and posing risk to less efficient refineries in Western Europe and emerging markets.''
Over the last five years there has been a pronounced shift in refining capacity away from Europe to Asia and the Middle East. ''We forecast this trend to continue over the next five years with Asia continuing to lead new distillation capacity additions,'' BMI opined.
Within the Asia region, it will be China and India leading the new capacity growth in volume terms. "We forecast China to add over 2mn barrels per day (b/d) of new refining capacity by 2020, and India to add just under 1mn b/d," it said.
''Our data shows global refining capacity in 2015 is at its highest point with regards to global refined fuels consumption in the last five years. This is largely a result of the Yasref refinery in Saudi Arabia and the Ruwais refinery in the UAE, which combined will add over 800,000b/d of new fuels production capacity in 2015. Soft refined fuels demand, despite weaker crude oil prices, and new refining capacity additions will sustain the refining overcapacity until 2019,'' it said.
BMI expects consolidation in the global refining sector over the next five years, as overcapacity drives down refining margins and impacts the least efficient facilities. ''Flexibility in accepting a variety of crude feedstocks to take advantage of changing crude differentials will be the key to profitability. At the same time being able to alter the product slate in reaction to product market demand will also be key,'' it opined.
