World Oil Outlook - Opec

came onstream during 2011, combined with a lack of new projects. The net effect
of these changes is a further shift of new refining capacity to developing countries
in the medium-term.
Distillation capacity requirements
Prospects for future utilization rates are often seen as a good indicator of margins –
and, thus, profitability – for the refining business. Utilization rates depend on the
set of factors that comprise developments in demand for refined products, including
their mix, the structure of available feedstock, existing refining capacity and changes
therein. Prospects for supply and demand shifts in the medium-term were described
in Section One. In the first section of Chapter 6, incremental distillation capacity resulting
from existing projects globally was assessed at 7.2 mb/d during the 2012–2016
period, with regional details provided in Table 6.1. In addition to the announced
projects, however, there are two other elements related to future distillation capacity
that need to be taken into consideration: additions achieved through minor ‘debottlenecking’
within existing facilities (often during maintenance turnarounds and
usually referred to as ‘capacity creep’) and refinery closures.
Capacity creep most often focuses on small expansions in crude distillation
and major upgrading units. The extent of these additions typically varies between
regions. For the purpose of this WOO, it is assumed that additions achieved annually
through capacity creep are around 0.2% of established capacity – or about
0.8 mb/d globally in respect to crude distillation capacity from 2011–2016. Some
sources refer to much higher levels of capacity creep (at times reaching more than
double this level), but these stem from a rather variable definition of ‘creep’, which
sometimes includes not only larger projects, but every expansion that is not a new
refinery. The conservative estimate of capacity creep applied here is tightly linked to
the very detailed list of projects that was used for the capacity assessment. In other
words, what other sources typically include within the category of ‘creep’ (expansions
in the range of 5,000 to 10,000 b/d, or larger) are often explicitly identified as
individual projects on the list used for the projects assessment. Consequently, only
a small level of creep was allowed in order to cover minor expansions that are ‘under
the radar’ and not on the detailed projects lists. By adding in the effect of capacity
creep, crude distillation capacity is seen as increasing by 8 mb/d by 2016, from the
2011 base level.
The issue of capacity closures is more complex. The past three years have seen
a very turbulent period for the downstream sector. Almost on a weekly basis, media
have reported on low utilization rates, negative margins, refineries up for sale (or idled
and restarted again) shut downs for maintenance, then extended maintenance, band
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