Newly-launched global refining capacity is going to reach between 2.6 million and 4.9 million barrels per day (bpd) in the period from 2023 to 2028, according to a forecast scenario by the U.S. Energy Information Administration (EIA). This increase will mainly be driven by the modernization of existing refineries and construction of new ones in China and India, where capacity additions will total between 1.3 million bpd and 3.5 million bpd. Some of the increase will come from Africa and the Middle East.
The largest project in China will be the new Yulong Refinery with a capacity of 400,000 bpd, which is slated to come on stream in the eastern province of Shandong in 2025. One-fourth of the output of petroleum products will be used for vehicle fuel, and three-fourths will be naphtha and liquefied petroleum gases (LPG), which are used as feedstock for petrochemicals, according to a Global Energy report.
This emphasis on petrochemicals is no accident: China is a world leader in polymer production, and it continues to ramp up its capacities. For instance, according to ChemOrbis, China’s newly-launched polyethylene capacities reached 3.4 million tons per year in 2023, compared to 3.6 million tons per year in the rest of the world.
In addition to Yulong, China plans to bring into operation another four new refineries between 2025 and 2027. These include the Ningbo Daxie refinery with a capacity of 120,000 bpd and the 250,000 bpd Sinopec Zhenhai refinery in the eastern province of Zhejiang, as well as the Huajin Aramco (300,000 bpd) and Sinopec Yueyang (40,000 bpd) refineries, which will be built in the provinces of Liaoning and Hunan in northeastern and southeastern China.
Thanks to the new capacities, oil consumption in China will rise from 15.1 million bpd in 2022 to 17.2 million bpd in 2028, with imports increasing from 11.3 million bpd to 13.0 million bpd, respectively. At the same time, the increase in imports will be provided not only by Russia and Middle Eastern countries, which plan to expand quotas under the OPEC+ deal, but also by fast-growing producers from North and South America, including the United States, Brazil and Guyana.
The EIA predicts that oil demand in India will go up from 5.0 million bpd to 6.6 million bpd over the same period. The Ratnagiri refinery complex, which is scheduled to come on stream in 2028, will become the country’s largest, with a capacity of 1.2 million bpd.
Most of the other planned projects envisage the expansion of existing refineries owned by Indian Oil and specializing in the production of motor fuels. Unlike China, a world leader in the rate of transport electrification, India’s vehicle fleet renewal continues to rely on internal combustion engines.
For instance, the year 2023 saw electric cars and plug-in hybrids account for 38% of new passenger car sales in China but for only 2% in India, according to the International Energy Agency (IEA).
New projects outside China and India are mostly based in oil-producing countries that are looking to either reduce their dependence on imported petroleum products or expand their export capacities. These include the upgrade of the Sitra refinery in Bahrain and the construction of the 650,000 bpd Lagos refinery in Nigeria and the 340,000 bpd Dos Bocas refinery in Mexico.
