Global refining throughput levels for 2014 will be one million barrels per day above 2013 levels, largely due to increased capacity in China and the Middle East, according to research and consulting firm GlobalData.
The company’s latest report states that just over 500,000 barrels per day (mbd) of new refining capacity will commence operation in China in early 2014, including the new 200 mbd Pengzhou and 240 mbd Quanzhou refineries and a 90 mbd expansion at Yangzi. However, these higher refining throughput levels in China from additional capacity will be somewhat offset by an increase in maintenance activities during the second and third quarters of 2014.
The start-up of new refining capacity in the Middle East will also result in higher runs in 2014, with refining throughput levels approximately 500 mbd greater than 2013. This increase in Middle Eastern refining capacity will have a profound impact on global product trade flows.
Carmine Rositano, GlobalData’s Managing Analyst covering Downstream Oil & Gas, says: “The higher refining throughput levels in the Middle East are a consequence of new large and efficient refineries in the region. Saudi Arabia’s 400 mbd Jubail refinery is ramping up to full capacity and its 400 mbd Yanbu refinery will become operational in September 2014, while the UAE’s 420 mbd Ruwais refinery is set to open later in Q4 2014.”
“The increase in gasoline volumes will reduce 2014 gasoline imports into the Middle East by approximately 100 mbd from both Europe and India. Gasoline volumes from India will alternatively be sold intra-Asia, but European gasoline will have a tough time finding a home and likely result in lower refining runs. This will exacerbate the pressure on refining activities in Europe.”
GlobalData’s report also says that additional aviation fuel from the Middle East will be moving primarily into Europe, displacing long-haul products from refineries in Asian countries, such as Singapore, Japan and South Korea, that will alternatively be sold within the Asian market.
Furthermore, the increase in the Middle East’s diesel volumes will be used both to meet growing local demand and for exports into Europe.
“The first Ultra Low Sulphur Diesel (ULSD) was sent from the Jubail refinery into Europe in February. The Middle East will flex its muscles by increasing ULSD exports to compete with the US and Russia for market share in Europe.”
Meanwhile, the Canadian Association of Petroleum Producers is projecting that oil sands production will more than double to 4.1 million barrels a day in the next decade, underscoring the industry’s desire for more transport capacity to get the bitumen to new markets, such as those in Asia.
CAPP, which serves as the industry’s lobby group, says it and the Alberta government have made progress in satisfying a demand by B.C. Premier Christy Clark that any bitumen pipelines meet a series of environmental, aboriginal and economic conditions.
Greg Stringham, vice-president of CAPP, said the industry has managed to avoid backlogs over the past year as approvals for new pipelines are slow to come.
