Asia is seeing the emergence of a new breed of refineries, according to oil industry analysts. This facility typically has a massive processing capacity and ability to refine dirtier, cheaper crudes. The new type of refineries also focuses more on producing petrochemicals rather than transportation fuels. The analysts said that this would create a challenging market environment that would likely lead to the shutdown of smaller, older, and less sophisticated facilities.
Last year, Rongsheng Petrochemical Co started up a new 800,000-bpd plant on Zhoushan island, in China. The company also plans to expand the plant’s capacity to 1.2 million bpd. Other Chinese companies are also developing similar facilities on Shenghong, Yantai, and Caofeidian.
In India, IOCL is leading a group to develop a 1.2 million-bpd oil-to-chemicals complex in Maharashtra. Oil giants Aramco and ADNOC have committed to invest in the project to strengthen their footing in Asia’s downstream markets. In addition, private sector Reliance has spent $20 billion in recent years to double its petrochemicals output.
Industry analysts said Asia would account for more than half of the refining capacity expansion in 2019 to 2027, of which 70% to 80% will focus on producing building blocks for plastics. The International Energy Agency (IEA) estimated that Petrochemicals would account for nearly half of global oil demand growth in 2050, increasing from more than a third in 2030.
Besides, Asia’s massive and rapidly-growing economy will remain supportive of the transportation fuel market. The IEA said that the world’s oil consumption would peak around 2030. However, Asian demand is expected to reach its peak a decade later.
