Refiners plan to expand as fuel demand grows
Release Date: 2011-06-08
Asian refineries, especially India, Malaysia and China are investing billions of dollars in a fresh wave of capacity expansion to feed rising regional demand, while counterparts in the US and Europe restructure or shut plants as fuel sales slow. Fast-growing Asian economies are driving global fuel demand growth, taking an increasing share of the oil market from developed economies.Bharat Petroleum Corp plans to invest US $4 billion to add 170,000 barrels per day (bpd) of refining capacity at its Kochi and Bina plants over the next three to four years, the company’s chief executive said ahead of the first day of an industry event in Malaysia’s capital Kuala Lumpur. Malaysia’s state-run Petronas said last month it planned to build a US $20 billion integrated refinery and petrochemicals complex that will raise the country’s total refining capacity by half to 935,300 barrels per day (bpd).
The plans are in contrast to Europe and the US where companies are looking to sell hundreds of thousands of barrels of refining capacity as demand falls and as natural gas and other fuels eat into the market. The refinery sales are giving Asian energy giants an opportunity to gain a foothold in mature markets such as the US, the world’s largest oil consumer.
“Will the independents take bigger positions? Or will new companies come into the market? You hear lots of discussions of Asian companies establishing positions in the market,” Chief Executive of Tesoro Corp Gregory Goff told Reuters in an interview during an industry event in Malaysia.
In the US, energy giants from ConocoPhillips to Murphy Oil have announced plans to sell assets, potentially reshaping the country’s refining industry. Chinese oil giant PetroChina agreed in January to buy into two refineries in France and Scotland of British firm INEOS, expanding its global refining foothold.
The framework deal between PetroChina, the world’s second most valuable energy firm and China’s second-largest refiner, and INEOS will allow the formation of refining ventures at the Lavera refinery in France and Grangemouth in Scotland.
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