The global refining capacity is set to expand from 98.2 million barrels per day (mb/d) in 2017 to 105.6 mb/d in 2023. This translates to an addition of 7.4 mb/d day capacity addition during the period 2017 to 2023. At that level, the refining capacity should be sufficient to meet the entire projected requirement of product demand for the next 15 to 20 years. Hence, it becomes important that new equipment and service providers take note of this 6 year window of opportunity. Maintenance, Repair, and Overhaul (MRO) service providers can look forward to a stable growing market.
Exhibit 1: Refining Capacity and Refined Product Demand, Global, 2013 – 2023 The Asia Pacific region is projected to add 3.3mb/d by 2023 with the Middle East region adding 1.6mb/d during the same period. Hence, these two geographies also become hotspots for the growing refinery MRO market.
The refined product demand is forecast to grow from 94.8mb/d in 2017 to 99.2mb/d in 2023.
REFINED PRODUCT DEMAND ANALYSIS
The design and complexity of a refinery would take into account the crude input and the desired products based on market demand. A good understanding of the product demand by region would be important to understand the upcoming opportunities.
The demand for middle distillates such as Diesel and Gasoline will be largest till 2023. Regulatory changes such as MARPOL are to drive diesel demand growth.
There is scope for a significant demand decline for Gasoline in the long term after 2023 due to the expected increase in market penetration of electric vehicles and increased efficiencies of the engines using this fuel. In the marine sector, diesel could face a threat from LNG bunkering. Since LNG bunkering will need significant investments to be set up the supply infrastructure, marine grade diesel oil will continue to be in high demand.