Study: Chinese, Indian refining to grow; region looks to Mideast for crude

By OGJ editors
HOUSTON, Dec. 16
-- Refineries for national oil companies (NOCs) in China and India continue to expand capacities as 2010 closes. Japanese refiners, on the other hand, are heading into a second round of capacity reductions. These are among the conclusions in a study of Asian refining released today by FGE-FACTS Global Energy, Honolulu.

The study also said up to 5 years will pass before any new major capacity will be commissioned by Asian refiners, securing crude from the Middle East is becoming more important for Asian refiners, and conversion capacity is added far more quickly than primary distillation capacity in the Asia Pacific.

FGE-FACTS said China will add about 6 million b/d of new refining capacity from the start of 2010 to yearend 2020. Chinese NOCs’ investment in refining is not entirely driven by refining economics, and they have the financial resources and strategic intentions to make their planned refineries become reality.

Indian state refiners also have firm plans to expand refining capacities to meet domestic demand growth, said the study, while Essar Oil, a key Indian private company, will carry out its Vadinar Phase II expansion for export.

On the other hand, Japanese refiners JX Group, Idemitsu, and Showa Shell have announced plans to close 600,000 b/d of refining capacity to meet an ordinance from Japan’s Ministry of Economy, Trade, and Industry promulgated under the July 2009 law. The ordnance requires refiners to meet a cracking/crude-distillation-unit capacity ratio of 13% or higher by March 2014.

TonenGeneral Group (ExxonMobil) and Cosmo Oil’s strategies to meet the ordinance are key to the country’s industry reorganization, says the FGE-FACTS study. If all refiners follow the METI ordinance, 1.1-1.3 million b/d of refining closures in Japan are likely by 2014.

The study also says that 4-5 years’ breathing space is in store for Asian refiners, since no new major capacity is scheduled for commissioning before 2015. As a result, the refining surplus in Asia will shrink. Refining margins, however, will drop sharply again as new large complex Middle Eastern export refineries start to come online after 2015.

Supply source
Indeed, says the study, securing crude supplies from the Middle East is becoming increasingly important for Asian refiners’ profitability and survival. A large mismatch between Asian refiners’ designed crude slates and additional availability of Middle Eastern crudes, especially after 2015, is likely, as Middle East export refineries start to come online.

Asian refiners may need to compete with each other for Middle Eastern crudes; some will be forced to use sub-optimum crudes. Also, the light, heavy, and sweet-sour crude differentials will narrow.

At the same time, conversion capacity is being added far more quickly than primary distillation capacity among Asia-Pacific refiners. As a result, light-heavy product and light-heavy crude differentials will be lower.

A larger surplus in transportation fuels and larger deficit in fuel oil will create opportunities for trading companies based in Singapore.

Related Articles

PBF Energy, PBF Logistics make management changes

12/12/2014 Matthew Lucey, currently executive vice-president of PBF Energy Inc., will succeed Michael Gayda as the company’s president. Todd O’Malley, current...

Repairs under way at ORPIC’s Muscat refinery

12/11/2014 Oman Oil Refineries & Petroleum Industries Co. (ORPIC) said it plans to resume operations at its 106,000-b/d Mina Al Fahal refinery near Muscat...

Phillips 66 advances plans for splitter at Sweeny refinery

12/11/2014 Phillips 66 has filed an application with state regulators for a permit to build a condensate splitter at its 247,000-b/d Sweeny refinery in Old Oc...

Samref wraps Yanbu refinery revamp

12/11/2014 Saudi Aramco-Mobil Refinery Co. Ltd. (Samref), a 50-50 joint venture of Saudi Aramco and ExxonMobil Corp. subsidiary Mobil Yanbu Refining Co. Inc.,...

BPCL adds petrochemicals to Kochi refinery expansion

12/09/2014 Bharat Petroleum Corp. Ltd. (BPCL), Mumbai, plans to diversify into petrochemicals production as part of the ongoing integrated expansion and upgra...

Moody's: E&P spending to dip as crude oil prices slide

12/08/2014 Weakening crude oil prices will cut exploration and production spending by independent producers in the US next year and make integrated oil and ga...

Firms' third-quarter earnings climbed amid lower crude oil prices

12/08/2014 A sample of 58 oil and gas producers and refiners based in the US recorded a combined 38% jump in profits for this year's third quarter compared wi...

Reliance expands desalination plant at Jamnagar refinery

12/05/2014 Reliance Industries Ltd. (RIL), Mumbai, is scheduled to receive proprietary PX technology from Energy Recovery Inc., San Leandro, Calif., as part o...

Start-up continues at Abreu e Lima refinery

12/05/2014 Petroleo Brasileiro SA (Petrobras) has initiated the start-up of furnaces in the atmospheric distillation unit at its Abreu e Lima refinery (Rnest)...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected