International Energy Agency Report: Asia to be King of Refining Sector by 2040
A report released by the International Energy Agency today discussed the details of long-term energy outlook, announcing that the traditional order of the global refining industry will undergo multiple changes by 2040, making Asia and the Middle East overtake Europe.
According to the IEA forecast – World Energy Outlook 2019, the economies of Asia and the Middle East will see 15 million b/d new capacities emerging online between 2018 and 2040. Highlighting the dominance of Asia in the global oil demand, the report reveals, China and the Middle East will witness an increase of 3.5 million b/d and 3.4 million b/d respectively.
The report highlighted a surge from current 37 percent to 48 percent in 2040 in the combined shares of developing Asia and the Middle East in global refinery runs. Europe on the other hand, says the Energy agency, will witness a fall in 2040 to 14.5 million b/d going down from 16.2 million b/d in 2018.
Further, it was highlighted that, “Saudi Arabia is trying to extract more value from its oil by pursuing refining and petrochemical investment opportunities in Asia. Other countries are integrating petrochemical facilities with refining capacities to adapt to changing demand patterns.”
In a news that came out today, a state-owned firm Saudi Aramco is going to strike a deal in 2020 with India, to provide crude to its Strategic Petroleum Reserves. The Saudi firm will invest in the storage facilities of India.
The World Energy Outlook report reveals that the future holds many long-term challenges for refiners as the refining industry will see a fall in the market share of liquids from 86 percent to 83 percent in 2040. Since the amount of new refining capacity in 2019 has been the largest after 2010, the refiners will witness great competition “as demand growth slows after 2025” with NGLs and biofuels making larger contribution to liquids demand.
Despite the many hurdles, the Energy Agency affirms that global refineries will be able to adapt to the additional supply of light crudes in order to meet the shift in global oil demand to lighter products.
The heightened awareness about restricted usage of sulphur and the surging demand for petrochemicals has increased the pressure on refining industry to adhere to the climate emergency.
Another report that came out today shows that the International Energy Agency is dependent on using large-scale negative emissions technology in the last part of the century to restrict warming to 1.5C.
Sources reveal that the Energy Agency will extend its Sustainable Development Scenario to accomplish the Paris Agreement goal of 1.5C. However, it is yet to be seen whether IEA will be able to work on the announced goals.
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