Recent global developments have driven interest in expanding refinery capacities to meet growing energy needs, with worldwide capacity projected to reach 103.5 million barrels per day (mbbl/d) in 2023, according to the U.S. Energy Information Administration (EIA).
The EIA’s report on global refining trends highlights significant shifts in the petroleum markets. The ongoing impacts of the COVID-19 pandemic, Russia’s invasion of Ukraine, and shipping disruptions in the Red Sea have underscored the need for increased refinery capacity in the coming years to keep pace with escalating demand.
The report also emphasizes the critical role of the Asia-Pacific region, particularly China, India, and the Middle East, in driving the anticipated growth in refined product output. The EIA estimates that these regions will add between 2.6 mbbl/d and 4.9 mbbl/d of refining capacity from 2024 to 2028, further strengthening their influence on global petroleum markets.
From 2011 to 2023, China’s refinery capacity expanded significantly, reaching 18.5 mbbl/d with the addition of 5.5 mbbl/d during that period. The EIA expects China to complete five additional refinery projects by 2028, aimed at maximizing the production of naphtha and liquefied petroleum gas, which are essential feedstocks for integrated petrochemical facilities.
India also saw a notable increase in refinery distillation capacity, growing by 1.3 mbbl/d between 2011 and 2023, bringing its total capacity to 5.1 mbbl/d by 2023. The country is expected to undertake up to 11 crude oil capacity expansion projects by 2028.
The EIA report notes that refiners are boosting capacity to meet the rising demand for consumer goods and transportation fuels. While liquid fuel consumption in Africa is projected to rise after 2030, the region’s potential refinery capacity expansions may face competition from imports.
Historically, the increase in liquid fuel consumption has been tied to economic growth. However, the EIA points out that this relationship may weaken due to greater efficiency in petroleum consumption and the growing adoption of electric vehicles globally, which could lead to a decline in motor gasoline use.
The report indicates that upcoming refining projects through 2028 will primarily target the rapidly growing demand centers in Asia and the Middle East, driven by their faster-growing economies and populations compared to regions like the U.S., Western Europe, and Japan.
In its 2023 International Energy Outlook, the EIA forecasts that the rise in consumption, coupled with the development of new refineries in emerging demand hubs, will significantly influence the trade of crude oil and refined products. The report also anticipates ongoing production restraint by OPEC+ until 2028.
Additionally, the EIA highlights that increasing domestic refinery capacity and demand for refined products may limit crude oil exports from Middle Eastern producers until 2028. As a result, non-OPEC+ countries such as the U.S., Canada, Brazil, and Guyana are expected to see growth in crude oil production, positioning them as key suppliers to new refineries in China and India.