China and India are going to be the growth engines of the global refining industry as they are set to add the most refining capacity of all countries over the period 2018-2022, according to leading data and analytics company GlobalData.
The company’s report ‘Global Refining Industry Outlook to 2022’ forecasts global refining capacity to grow by 16.8% from 105.8 million barrels per day (mmbd) in 2018 123.6 mmbd in 2022, with new build refinery projects contributing around 15.9 mmbd.
Among regions, Asia has the most planned refinery capital expenditure (capex) up to 2022. Companies in 14 Asian countries will spend an aggregate amount of $261bn on new build refineries over the period 2018-2022. Particularly, refining operators in China and India are set to spend an estimated $54.6bn and $78.5bn respectively by 2022 and their refining capacities will increase by 3.4 mmbd and 3.1 mmbd respectively by 2022, should all projects be realized.
Sumit Kumar Chaudhuri, Oil & Gas Analyst at GlobalData, explains: “Driven by China and India, Asia’s economy is witnessing healthy growth and has been the driving force behind global oil demand. Asian refining sector continues to expand to satisfy the region’s incremental oil demand. By 2022, Asia alone will be contributing 35.5% of global refining capacity.”
GlobalData identifies Africa as the second highest region in terms of capex on new build refineries, with planned investment of $122.8bn to increase crude distillation unit (CDU) capacity by 3.3 mmbd by 2022.
In the Middle East, eight countries have a total of 3.5 mmbd new build capacity over the forecast period, with associated capital spend totaling $92.5bn, while in North America, $30.1bn is planned to be spent to add 681 thousand barrels per day (mbd) to the region’s refining capacity by 2022.
Chaudhuri adds: “Despite North America not witnessing many refinery capacity additions, refining capacity continues to increase in the matured US refining market. Although US domestic demand has stagnated since 2007-2008, growing petroleum product exports have fueled refinery expansions. The export growth in turn has been facilitated by growing production of light, low sulfur shale oil and low energy costs in refineries due to availability of shale gas.”
In terms of the announced capex, Ratnagiri in India, Nakhodka in Russia, and Pengerang and Yan in Malaysia are the top planned refineries in the world for the forecast period. In terms of capacity, Ratnagiri, Dayushan Island refinery in China and Lagos I will be the top three planned refineries to 2022.
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