China’s dominant position in global refinery activity growth is expected to ease in 2024, according to the International Energy Agency (IEA). The Middle East is anticipated to lead the surge in crude runs, projecting an increase of 650,000 b/d. This expectation relies on the ongoing enhancement in operations at Kuwait’s Al Zour refinery (615,000 b/d), Saudi Arabia’s Jizan plant (400,000 b/d), Oman’s Duqm refinery (230,000 b/d) operating at full capacity, and the commissioning of the 110,000 b/d expansion of Bahrain’s Sitra refinery.
In 2024, Chinese crude runs are forecasted to rise by 330,000 b/d year-on-year (y-o-y), with the commercial operations at the 400,000 b/d Yulong refinery expected in second-half 2024. Beyond the overall growth in Chinese demand, a significant downside risk to the country’s runs forecast arises from the government’s allocation of crude import and product export quotas, IEA noted. The Ministry of Commerce issued the first batch of export quotas for 2024 in December, totaling 154 million bbl (equivalent to 840,000 b/d for first-half 2024), which is broadly unchanged from last year’s initial quota. If further quota allocations are limited, this could restrict runs later in the year, as was evident in fourth-quarter 2023.
Africa is the third-largest source of growth for this year, contributing 220,000 b/d. This increase rests largely on reports that Nigeria’s Dangote refinery has started processing crude. Tanker tracking data suggests that 5.3 million bbl of Nigerian crude have been delivered to Dangote’s offshore single point mooring buoy since the beginning of December, presumably for commissioning purposes. While initial crude supplies are necessary for test-runs, the assumption is that steady-state commercial operations will commence in early second-quarter 2024.
Nigeria’s 210,000 b/d Port Harcourt refinery is also nearing the completion of its multi-year refurbishment project, according to some reports. This could further boost refinery demand for crude. For now, IEA views this as more likely in 2025, rather than this year. Elsewhere in Africa, IEA assumes a 60,000 b/d increase in Egyptian runs, towards 2022’s level, after the poor performance of last year.
