BAKU, Azerbaijan, June 9
By Leman Zeynalova - Trend:
Some 8.5 mb/d of new refining capacity is still expected to come online over the period to 2026, resulting in 4.9 mb/d of net capacity additions, Trend reports citing the International Energy Agency (IEA).
“The refining industry had an extremely challenging year in 2020 with the collapse in oil demand. Estimated refining investment (greenfield and upgrades) fell by more than a quarter to just under USD 38 billion, a sharp reversal from the recordhigh investment in 2019. As the most lucrative products such as gasoline, diesel and jet fuel registered large declines, refinery runs fell to 74.4 mb/d, a level last seen in 2010, and margins plunged to their lowest in at least two decades. This triggered a wave of announcements of closures for 2020-26, mostly in advanced economies, amounting to 3.6 mb/d in total,” the IEA said in its latest report.
However, the agency notes that refining expansion plans are continuing in parallel in regions with access to cheap feedstock and growing markets, most notably in developing economies in Asia and the Middle East.
“These regions, which accounted for 80 percent of the investment in 2020, are expected to underpin a rebound in investment in 2021. Some 8.5 mb/d of new refining capacity is still expected to come online over the period to 2026, resulting in 4.9 mb/d of net capacity additions. The projected scale of net capacity additions is much larger than that of refined product demand growth, which is likely to force further capacity closures or repurposing. A number of refiners have started to retool for a new age characterised by structural demand shifts from transport fuels to non-combustion uses (such as petrochemical feedstock) and accelerating momentum for energy transitions. Some are betting on the most resilient part of demand – petrochemicals – by making investments in petrochemical integration. Others are expanding into lowcarbon businesses such as advanced biofuels, chemical recycling and low-carbon hydrogen in order to secure new sources of revenue. For example, some 345 thousand barrels per day (kb/d) of refining capacity has already been converted to biorefineries and there are plans for 840 kb/d more. These strategic shifts are set to grow against a backdrop of increasing electro-mobility.”
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