Tue, 07/15/2014 - 00:00

LONDON (July 15, 2014)—An additional 11.7 million barrels per day (mmbd) of crude distillation capacity (CDU) will come online globally between 2014 and 2020, with an annual average of 1.6 mmbd, said research and consulting firm GlobalData. The company’s latest report* states that with an additional CDU of 3.1 mmbd planned between 2014 and 2020, the Middle East will be the largest contributor to the world’s total capacity increase, accounting for approximately 27 percent. Meanwhile, refining additions in Asia, which include China with 2.6 mmbd, represent 22 percent of the global total, India with 1.9 mmbd (17 percent) and all other Asia with 1.7 mmbd (15 percent), will amount to more than 50 percent of the overall growth in refining capacity. Carmine Rositano, GlobalData’s managing analyst covering downstream oil and gas, said, “As Asia will remain the world’s oil demand growth engine through 2020, this figure is unsurprising. Thanks mainly to the startup of large-scale projects in the Middle East and Asia, these regions will contribute a combined 80 percent of new capacity, with refining balances further tilting to East of the Suez areas. “Eight large-scale refining projects with at least 300 thousand barrels per day of capacity are expected to begin operations globally, with seven of these projects coming online between 2018 and 2020. This will push the annual increase in global refining capacity to its highest level by the end of the forecast period, with 2.8 mmbd forecast to be added in 2018.” GlobalData states that approximately half of the remaining 20 percent of incremental refining capacity will come from Latin America, as a result of new grass-root projects in Brazil and refinery expansions in Colombia, Ecuador and Peru. The U.S. and former Soviet Union will each account for 3 percent of the world’s capacity, thanks to small projects, including condensate splitters, in the U.S. and the construction of new refineries in Russia and Turkmenistan, along with an expansion project in Estonia. “Overall, the increases in predicted refining capacity from 2015 through to the end of 2019 are significantly higher than the forecasted long-term annual oil demand growth of 1.2 mmbd to 1.4 mmbd,” Rositano said. “This will impact negatively upon refining margins and likely cause additional refinery closures, or lower refining utilization levels, in other areas of the world, including Europe.” *Global Refining Capital Expenditures Forecast to 2020