Rystad Energy analysis: As global oil demand outlook weakens, planned refining capacity boom set to keep utilisation low

  • Date: 29-Nov-2020
  • Source: Arabian Industry
  • Sector:Oil & Gas
  • Country:GCC
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Rystad Energy analysis: As global oil demand outlook weakens, planned refining capacity boom set to keep utilisation low

The ongoing energy transition combined with the effects of Covid-19 will drive future oil demand to lower levels than what was expected just months ago. As a result, a plethora of planned refinery additions will far exceed closures towards 2025, and utilisation rates will likely never recover to pre-pandemic levels unless some capacity closes early, a Rystad Energy market analysis reveals.New and expanding projects from the beginning of 2020 and up until the end of 2025 are estimated to add about 13 million bpd of global capacity as Asian and Middle Eastern refiners complete scheduled expansions and new builds. Meanwhile, a surge of capacity closures will reach only about 3 million bpd, a relatively small number compared to additions.This means that net refining capacity additions will reach 10 million barrels per day (bpd) between the beginning of 2020 and the end of 2025 – an increase that oil demand will never be able to cover, even when the effect of Covid-19 becomes a thing of the past.In 2020, Rystad Energy projects a net growth of approximately 400,000 barrels per day (bpd). As a result, global refining capacity will be driven to 103