Global Top 10 Emerging Refining Markets - Analysis of Capacity, Demand, Supply to 2015

Refinery Capacity Additions by National Oil Companies in the Emerging Refining Markets Are Helping in the Revival of the Global Refining Industry

Online PR News – 08-June-2010 – – Some of the emerging, high growth refinery markets cover Brazil, China, India, Iran and Saudi Arabia. The cumulative refining capacity of these countries accounted for total 18.3% of global refining capacity in 2008 but the refining capacity expansion in these countries is around 44% of global refining capacity addition during 2009 to 2013. The refining industry in all these countries is dominated by state owned companies. Regions like Asia Pacific and Middle East and Africa are posied to emerge as new refining hubs globally.

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Rapid decline in petroleum product demand in the US and major developed nations has led to declining refinery margins, which has discouraged refinery expansions by major oil and gas companies globally. The global refining industry, hit by the economic crisis, has been supported in its revival by national oil companies from different regions. Prospective increase in demand of refined products post-recession in emerging geographies has prompted the national oil companies to invest in refineries by capitalizing on low refinery asset prices. Further, national oil companies in the Middle East, Asia Pacific and South and Central America are committed to increase their refinery infrastructure to transform these regions into oil and gas trading hubs. National Oil Companies in China and India have invested in complex refineries to cater to the developed export markets in the US and Europe.

The global financial slowdown, which led to decline in demand for petroleum product demand has forced major integrated oil and gas companies to either defer or stall planned refinery projects. Global refinery utilization has also experienced significant dip due to declining product demand and the utilization stood at 85% in 2008, a decrease of 1% over the previous year. In 2009, refinery utilization in all the emerging refining markets either declined or stabilized. Recently commissioned refineries in India, China, Vietnam, Algeria and Qatar have added to the global supply glut of refined petroleum products and this, in turn, has hit the refining companies globally by reducing refinery utilization even further. However, the top 10 emerging refining markets are likely to be insulated from this trend.

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In 2009, the top ten emerging refining markets accounted for 24.3% of the global refining capacity. The average size of refineries in these markets was 8.27 Million Metric Tons per Annum (MMTPA) against a global average of 6.85 MMTPA. However, refinery complexity in most of these markets is lower than average global refining complexity. Lower complexity of refineries in these markets hampers refinery processing flexibility, which is essential to meet the variable demand for different petroleum products.
Since 2008, demand for the light and middle distillates has shown varying trends. While light distillates have witnessed a decreasing trend, middle distillates have experienced an increase. Refineries that produce more of light distillates and don’t have the flexibility to switch to middle distillates production have been hit by the upsurge in demand for middle distillates in 2008. Simple refineries with high capacity of production of fuel oil have also been hit due to declining demand for fuel oil in power generation where it has been replaced by natural gas.

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