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Refiners face challenging times ahead
Dec 08: The refining sector will face challenging times ahead
8With the growth rate of refining capacity in being more than 50 percent greater than the growth rate of oil demand, there could be excess supply of refining, which is expected to continue to increase.
8This is likely to put downward pressure on utilization and margins in the three hubs (North America, Europe and Asia) up to 2020.
8In 2021, the global implementation of Marine Pollution (MARPOL) Annex VI is expected to lead to tighter restrictions on quality specifications for bunker fuels.
8As a result, demand for distillates is expected to grow, and utilization and margins are projected to increase.
8To offset the effects of a decrease in utilization and margins, refiners can adopt several strategies.
8Asian refiners, in particular, can take advantage of the increased diversity in crude slates and focus on crude optimization to increase profitability.
8Other possible options include increasing operational efficiencies, creating flexibility in the refining network, continuing to enhance the inland distribution and retail network and exploring opportunities in downward integration into specialty-grade petrochemicals.
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