Because the shift in oil demand from Covid-19 turned the tables of regional ranges of gasoline manufacturing and exports, China succeeded in overtaking the USA because the world’s largest oil refiner in 2020.
As China started to ramp up its refining capability all through the pandemic, the US Vitality Info Administration (EIA) revealed knowledge displaying that China processed more crude oil than the U.S. for a lot of 2020.
Whereas the USA suffered from a drop in demand all through 2020, resulting in a lower in all oil-related actions, China benefited from this worldwide shift. In distinction to the US, when oil costs fall, the Chinese language authorities pays refiners to extend manufacturing ranges.
China presently has at the very least four major new refineries below building, most of that are anticipated to supply plastic feedstocks, corresponding to ethylene and propylene.
Whereas the US is more likely to as soon as once more overtake China because the world’s largest oil refiner by the tip of 2021, long-term demand predictions imply it is possible that this development will likely be short-lived, as oil wants throughout Asia proceed to rise.
Oil refineries throughout the US have been shedding momentum in response to the Covid-19 pandemic. On the finish of final yr, Royal Dutch Shell Plc floor manufacturing at its Convent refinery in Louisiana to a halt. This identical facility had 35 occasions the refining capability of China when it opened in 1967, displaying how dramatically the tables have turned over the previous couple of many years.
Oil refineries have additionally been impeded this yr by the extreme storm that hit the state of Texas in February. In the course of the storm, oil refining fell to its lowest ranges since 2008. This was largely because of frozen pipelines which compelled producers to halt actions. Refinery crude runs fell by 2.6 million bpd all through the week to 12.2 million bpd.
Meanwhile, in November, China was processing around 1.2 million bpd of crude oil. Much of this new refining work was taking place in the new unit at Rongsheng Petrochemical’s giant Zhejiang facility in northeast China.
China is not the only Asian giant to invest in refining over the next decade. Just a few weeks ago, India announced plan to invest $4.5 billion in a Panipat refinery expansion by September 2024. This would increase Panipat’s capacity by two-thirds to 500,000 bpd.
Only slightly behind China, as the world’s third largest oil importer and consumer, India is striving to increase its oil refining capacity by 60% to meet the country’s increasing oil demand. This comes as Prime Minister Narendra Modi has pledged to improve India’s manufacturing sector.
The refinery expansion is expected to boost India’s production of petrochemicals and value-added specialty products, such as petrol, diesel, and ATF.
State-owned Indian Oil Corporation (IOC) has also announced plans to build a new refinery at Nagapattinam in the southern state of Tamil Nadu at a cost of $4.01 billion. The IOC subsidiary Chennai Petroleum Company Restricted is predicted to develop the refinery. The venture is aimed toward assembly the demand of petroleum merchandise throughout southern India.
Whereas US refining actions are anticipated to select up earlier than the tip of the yr, a dramatically elevated oil refining capability in China, in addition to new initiatives in India, recommend that the face of the business may change over the following decade. As oil demand wanes within the US and continues to extend throughout Asia, many Asian nations will likely be looking for out refined merchandise from nearer to house to satisfy their wants.