World Oil Outlook - Opec

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needed from refineries, even allowing for the 4 mb/d of refinery closures that have occurred
to date. It is also apparent that continued closures in industrialized countries
will be needed; but whether they will be enacted in a timely manner – or resisted,
which continues to drag margins down – is open to question. The implication is for
difficult times to continue for the refining sector, with severe international competition
for product markets between refineries in the US (that are successfully raising
product exports), Europe (where refineries are desperate to find markets for gasoline
so that they can produce more co-product diesel) and new export refineries in the
Middle East, India and, potentially, Brazil. All these factors are underlined in this
Chapter, along with a consideration of the implications for future additions to both
distillation capacity and secondary units.
Distillation capacity requirements
Table 7.1 presents estimated refinery distillation capacity additions in the Reference
Case for the period 2011–2035. Known projects are assessed under the Reference
Case as those that will be constructed. New units represent the further additions (major
new units and de-bottlenecking) that are projected as needed in order to balance
the system. The review of known projects arrived at an assessment of 6 mb/d of new
capacity additions to come onstream by 2015 and 7.2 mb/d by 2016. In terms of the
6 mb/d of firm new capacity by 2015, the model added 0.7 mb/d of additional refinery
capacity (essentially de-bottlenecking) for an overall total of 6.7 mb/d. With
regards to the 7.2 mb/d of additional capacity assessed to be available by 2016, the
model indicated a further 0.7 mb/d as required by 2020 and an additional 2 mb/d
by 2025. Moving forward to 2030 and 2035, additional distillation capacity requirements
were assessed at 2.2 mb/d and 2.1 mb/d, respectively.
Cumulative total additions (firm projects plus total further model additions)
are thus projected to reach 14.9 mb/d by 2035. Significantly, 40% of these additions,
6 mb/d of firm projects, are projected to be onstream by 2015, and nearly 50%, the
7.2 mb/d of firm projects, by 2016. The annual rate of capacity addition to 2015 is
1.7 mb/d. In the subsequent five-year periods – 2015–2020, 2020–2025 and so on
– the required level of capacity addition averages a far lower 0.4 mb/d p.a. In short,
the industry is witnessing a surge of capacity additions in the short- to medium-term,
which results in a much slower rate of additions being needed thereafter, right through
to 2035. The medium-term surge is a combination of projects that were authorized
before the recession, notably in the US, along with others that have more recently
been given the go-ahead to either meet domestic demand growth, notably in non-
OECD regions led by China, to boost product export capacity in the Middle East
and, secondarily, the FSU, or to process growing regional supply, specifically of heavy
crudes, with a focus on the US & Canada, and Latin America. All told, some 70%