Insufficient product demand for the continuing rise in capacity will lead to refineries closures
OPEC has said it expects 2.1Mnbd (105Mnta) of refining capacity to be shuttered through 2025 due to overcapacity, with another 5Mnbd (250Mnta) of further closures anticipated by 2040.
The World Oil Outlook projects approx. 7.95Mnbd (397Mnta) of new crude distillation capacity to come online in the next five years, over 70% in Asia and the Middle East, which will outpace refined product demand by approx. 4Mnbd (200Mnta).
Increasing competition in the downstream market will lead to refinery closures, though plants in the Middle East, the US and Canada may be able to increase their product exports it is thought refineries in Europe are the most likely to feel the pressure.
The report added that new capacity additions after 2030 could come primarily from debottlenecking and upgrades, rather than the building of new refineries.
It is estimated that total refining capacity, including condensate splitters, is projected to increase by 16.5Mnbd (825Mnta) between 2019 and 2040, mostly in developing regions.