The global refining capacity is expected to grow at a CAGR of more than 1.25% during 2021-2026. The COVID-19 pandemic has negatively affected the market due to a reduction in consumption of refined petroleum products and declining economic development across the major nations of the world. The COVID-19 pandemic coupled with the high volatility of crude oil prices has delayed many refinery projects across the globe. The growth in refining capacity is expected to be driven by the increasing demand for petroleum products in the coming years. However, the refining market is restrained by factors, such as lack of funds, delay in commissioning projects, acquiring lands, and increasing adoption of electric vehicles in developed and developing nations across the globe.
Key Market Trends
Expansion in the Downstream Infrastructure
- The expansion of downstream infrastructure across the globe in order to meet to increasing demand for refined petroleum products is expected to drive the market during the forecast period.
- African countries such as Nigeria, Algeria, and others are planning to make their countries the regional hub for refineries in the coming years. This, in turn, is expected to create a huge opportunities for the international and domestic refiners to tap into the African market in the near future.
- Asia-Pacific is expected to remain the major player in the oil refining market. As of 2019, the region covered around 34% of the global refining capacity and is expected to remain the major region during the forecast period owing to the upcoming major refinery projects in China and India.
Asia-Pacific to Dominate the Market
- The demand for oil as fuel in the transportation sector is likely to maintain its momentum in the short term. The recovery in oil consumption trends, driven by lower oil prices, is expected to support the momentum. Many countries across the globe are trying to invest in refining capacity to reduce their dependence on imported refined petroleum products.
- As of 2018, there were above 470 planned and announced petrochemical plants, out of which, China is estimated to have 240 plants. The capital expenditure for the projects in China is expected to reach around USD 52 billion by 2026.
- In addition to this, in Nigeria, Dangote Oil Refinery Company (Dangote) is constructing an integrated refinery and petrochemical complex in the Lekki Free Zone near Lagos, Nigeria. The refinery is expected to be the worldâ€™s biggest single-train facility, upon commissioning in 2021. The project is estimated to cost USD 18 billion, the refinery will produce Euro-V quality gasoline and diesel, as well as jet fuel and polypropylene.
- In the United States, there are above 95 planned and announced projects, which are expected to have a total capacity of up to 63 MTPA by 2026. The CAPEX for these projects stands at around USD 53 billion. Major capacity additions in the country are likely to be initiated by IGP Methanol LLC and NW Innovation Works.
- Therefore, the expansion of the global refining sector in the form of upcoming petrochemical and refinery complexes is expected to drive the market studied during the forecast period.
- As of 2019, Asia-Pacific is the region with the highest refining capacity. In 2019, the region had a refining capacity of around 35.5 million barrels per day. China and India were the key players in the region, sharing nearly 20% of the global refining capacity, in 2019.
- China is expected to account for the significant growth in crude oil refining between 2019 and 2026 in the Asia-Pacific region. The country is expected to account for 26.8%, an increase of 1.77% from 2018, of the total refining expansion capacity in APAC by 2025.
- Additionally, Indiaâ€™s refining capacity had also witnessed a CAGR of 3.2% between 2010 and 2019. As of August 2018, India Oil Corp., Indiaâ€™s largest refining company, announced its plans to increase its refining capacity from 80.7 million metric ton per annum to 150 million metric ton per annum by 2030. Projects worth INR 320 billion are in various stages of execution in the country.
- Other regions in Asia-Pacific, such as Southeast Asia are witnessing the commissioning of a new refinery projects, including the expansion of existing ones and developing new ones to reduce the dependency on imports, which is expected to create an opportunity for the market during the upcoming years.
The global refining market is moderately consolidated. Some of the major players operating in the market include Exxon Mobil Corporation, Royal Dutch Shell Plc, Sinopec Corp., BP PLC, and Saudi Arabian Oil Co.
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