SURVEY: Global refining industry competes to supply growing Asian market
| DOI | http://doi.org/10.1111/oet.12458 |
| Published date | 01 February 2017 |
| Date | 01 February 2017 |
SURVEY
A survey of the growth in oil demand in Asia and what reners across the world are planning to do in order to meet it,
by Oil and Energy Trends’ Consulting Editor, Dr Paul McDonald
Global rening industry competes to supply growing Asian market
Asia is the world reg ion with by far the strongest rate of
growth.Inrecentyears,Asiahasprovidedapproximately
half the world’s growth in oil dem and: and in some years
a much higher proportion. In 2015, the proportion was
about 70%. Of the estimated global demand growth of
1.5 mn bpd in 2016, Asia accounted for 0.9 mn bpd, or
60%.
e rening industry in Asia has struggled to keep
pace with these rates of growth.In 2016, Asia’s consump-
tion of rened produc ts was about 33 mn bpd, which is
roughly similar to its crude distillation capacity. Actual
renery production appears to have been somewhere in
the region of 29 mn bpd, giving Asia a decit in rened
products of about 4 mn bpd.
Several Asian ren ers are trying to address this imb al-
ance by adding capacity. is year there could be addi-
tions of about 700,000bpd, about equal to the expected
increase in demand, but somecapacity is also likely to be
removed,therebyensuringagrowingmarketforreners
outside the region.
Asia’s rened products market is attracting imports
from across the globe. Sever al reneries have been
opened with the prime aim of supplying Asian markets.
e Middle East is emerging as a major export ren-
ing region, but exports are also coming from Europe,
where stagnant or falling demand is forcing reners to
seek out new markets, and increasingly, from the US,
where cheap domestic crude has encouraged reners to
increase production, an increasing portion of which is
exported each year.
Reners outside Asia are adding both distillation and
upgrading capacity in anticipation of being able to sup-
ply markets across Asia; but they soon may nd them-
selves in a race with reners in Asia to cover the region’s
requirements.
Growing demand
Asia’s oil consumption grew by 8.1 mn bpd, or about a
third, between 2006 and 2016 (see Figure A), while the
rest of the world recorde d a rise of only 1.7 mn bpd, or
3%. e fastest growing market was that of China, where
demandincreasedbyabout4.8mnbpd,orapproxi-
mately two-thirds.
While the increase in China was by far the largest in
Asia, other countries recorded substantial gains, espe-
cially in percentage terms, including India, South Korea,
and ailand. Singapore’s oil consumption rose by about
0.5 mn bpd, or nearly 60%, although this increase mainly
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
(mn bpd)
Figure A: Asia: Oil Consumption, 2006-2016
Source: (2006-2015)
BP Statistical Review of World Energy
,2016
(2016) Author’s estimate
came from the growth of Singapore’s highly success-
ful marine bunkers business, which is the largest in the
world (see below).
While many Asian countries recorded large or even
spectacular increases, some grew by rather less than the
average and in two of the re gion’s main economies, t here
was little or no growth. Taiwan’s consumption of oil
hardly grew at all between 2006 and 2016: Japan’s con-
sumption actually fell by about 1 mn bpd. More than two
decades of low or e ven zero economic growth , allied with
substitutionof natural gas for oil and, from time totime,
coal and nuclear power, haveresulted in a steady decline
in the consumption of oil s ince its peak of 5.8 mn bpd in
1996. Last year’s total was 4.0 mn bpd.
Chinese rise
Asia’slargestconsumerofrenedproductsisChina.Last
year, internaldemand reached 11.9 mn bpd: a rise of just
over 0.3 mn bpd, or 3% over 2015. is year’s increase
lookslikebeingofasimilarsize.Increasesofthislevel
are smaller than in most recent years, marking a slow-
ingdownineconomicgrowthandgrowingsubstitu-
tion of oil by natural gas , coal, nuclear, and hydroelectric
power. e growth in oil consumption has nevertheless
been large over the last decade or so, having risen by
two-thirds since 2006 (see Figure B).
Allthemainproductgroupshaverecordedincreases
in demand in recent years with the exception of heavy
fuel oil, which has been substituted by other fuels in
many cases (see above). e principal product group in
termsofitsshareofdemandismiddledistillate.Gasoil
© 2017 John Wiley& Sons Ltd
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