Although the global refining industry had started witnessing higher returns since 2004, the economic downturn since the mid-2008 has transformed it back to its traditional model of a high-investment, low-return business. As the demand for products like gasoline and naphtha are unlikely to recover in the coming years, global refining margins will remain low in the range of $5-$7/barrel and will be sustained mainly by middle distillates, which will have steady demand.
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Worldwide, growing environmental concerns have resulted in the enactment of strict regulatory frameworks and emission norms. The petroleum products demand across all major markets has also shifted towards lighter and cleaner products. Demand for cleaner products mandates reduction in sulfur content of products, apart from improving other quality parameters. Such quality requirements call for heavy investments in refineries to install adequate conversion and desulfurization facilities.
With low petroleum product demand and declining falling refinery margins forcing private, international oil companies to reduce or cancel investments in the refining business, national oil companies are going ahead with their refinery projects with long-term strategic objectives. Leveraging on their strong cash reserves and strong government support, most national oil companies are adding refining capacities, either to cater to domestic refined products need or to transform their countries into global refining hubs. For example, national oil companies in the Middle East are investing in refineries to process domestic heavy crude oil and reduce the import of light and middle distillates. Given the regulatory constraints to build Greenfield refineries in North America and Europe, the Middle East can become a major petroleum product supplier to these countries instead of being just a crude oil supplier.
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The top five high growth refinery markets – China, India, the Islamic Republic of Iran (Iran), Saudi Arabia and Brazil, account for 19.0% of global refining capacity. The average size of refineries in these countries - at 8.08 Million Metric Tonnes per Annum (MMTPA), is above the global average of 6.7 MMTPA. However, the complexity is lower than the global average. In 2009, the average complexity of the refineries in these countries was 4.6 while the global average was 5.7.
GBI Research’s report on “The Future of the Global Refining Industry to 2015 - Benefiting From National Oil Companies' Growth” is an essential source for top-level energy industry information and analyses. The report provides an in-depth analysis of the key trends, issues, challenges in the global refining industry to 2015. It also gives information on refinery product types and future refining trends. The research covers the global refining market with information on historical and forecast capacities of refineries by region and key countries during the period 2000-2015. Leading companies in the global refining industry and their investment opportunities and challenges have been examined in the report.
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