World Oil Outlook - Opec

Figure 6.7
Global secondary units as percentage Figure of crude 6.7 distillation capacity
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
%
US & Latin
Canada America
Desulphurization
Conversion
Africa Europe FSU Middle
East
2005 2012 2016
China Other
Asia
* Percentages for 2012 and 2016 estimated based on review of existing refining projects.
On the contrary, the increases in conversion, desulphurization and other secondary
capacity per barrel of distillation capacity seen since 2005, and which are projected
to continue to 2016 (and potentially beyond), signify that a high level of distillation
utilization would not lead to a level of tightness on secondary units, such as was the case
in 2005. In addition, there was appreciable ‘nameplate’ capacity in the FSU and Africa
around 2005 that was, in effect, unavailable. Since then, there have been notable improvements
in those two regions (utilizations and effective availability have risen). These
improvements in effective availability mean higher actual utilizations are needed today
and, in the future, to achieve the same level of actual tightness reached several years ago.
The data indicates that to restore margins to long-term viable levels, it is necessary
to eliminate much more than the 7 mb/d that would restore utilizations to 82%.
Closures in the order of 10 mb/d would be required, implying an associated global utilization
rate of at least 85% (and possibly higher). To fully eliminate 10 mb/d of spare
capacity and achieve an 85+% utilization rate, means capacity closures would have to
occur across both industrialized and developing regions, although the latter to a lesser
degree. This would restore refinery margins to the healthy levels that make the industry
sustainable in the long-run. It should be noted, however, that global utilization rates
have not reached 85% anytime since the 1980s and, as witnessed by recent events
across a range of countries, there has often been a reluctance to accept refinery closures.
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