World Oil Outlook - Opec

Chapter 7
Long-term refining outlook
Last year saw another period of post-recession recovery, with global demand increasing
by some 0.8 mb/d over 2010. Under the Reference Case, a similar increase is
expected to be maintained through 2012 and 2013, which will then rise to 1.2 mb/d
by 2014, before gradually slowing to 0.6–0.7 mb/d after 2025. Such numbers could
imply a relatively static situation in the global downstream. The reality is, however,
that fundamental shifts are underway which are reshaping the industry as measured
across all its key parameters: utilizations, expansions, closures, investments, crude versus
non-crude supply, logistics, trade and economics.
The global numbers do not convey the underlying differences that exist today
between the world’s major regions. Demand in the industrialized regions has peaked
and is projected to continue to decline. Conversely, the non-OECD regions (led by
non-OECD Asia) are projected to be the focus of sustained growth. Thus, while demand
in the industrialized regions is expected to drop by around 0.1 mb/d annually
between 2012 and 2020, and then accelerate to a drop of around 0.3 mb/d annually
from 2025 onward, for other world regions it is projected to grow by an average of
1.2 mb/d through 2020 and 1 mb/d from 2025. Around 70% of the demand growth
in these non-industrialized regions will be in Asia. In short, the projection is for modest
growth overall, but with a substantial relocation of demand. It is these fundamental shifts
that will be the primary drivers in reshaping the future global downstream industry.
Another key factor impacting the long-term outlook for refining investments,
as well as for trade, is the make-up of crude supply, the resulting quality of the global
crude slate and the growth in non-crudes. Driven by certain policy measures and the
increasing production of natural gas, the expansion of non-crudes is projected to rise
at a faster rate than that of oil demand. Consequently, the proportion of non-crudes
in the total supply increases, while the crude required to be processed per barrel of
additional product demand declines. The surge of US ethanol supplies has already impacted
refining economics, as well as capacity requirements, both there and worldwide.
Biofuels supplies are projected to continue to grow over the period to 2035, as are the
supplies of NGLs, Gas-to-liquids (GTL)/Coal-to-liquids (CTL) and petrochemical return
streams.
Adding to this are developments in the refining sector within the medium-term.
What is evident is that the 7.2 mb/d of incremental refining capacity expected to
be onstream within five years (by 2016) is well in excess of the incremental demand
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