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Annual World Refining Outlook 2018 - The Golden Age of Refining Continues to Shine


A detailed  assessment of the mid/long-term operating environment for global refining and the implications for products trade.

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Overview

A detailed assessment of the mid/long-term operating environment for global refining and the implications for products trade. We forecast product demand and review refinery investment to identify the likely pressures on the refining sector and what this could mean for refining margins in the next 5-10 years.

Despite the recent OPEC and non-OPEC production agreements, we continue to forecast a low price oil environment for the foreseeable future. Consequently, we expect products demand to be robust, especially for light distillates (naphtha and gasoline) but also for middle distillates too. At the same time CAPEX for investment in any part of the oil business will be limited, with refining investment continuing to be under pressure. While there are many projects announced in the press, only a small percentage are actually built! Consequently, the pressure on existing capacity and what is actually built is increasing. There is plenty of potential for the strong cracks and margins seen over the last 2 years or more to continue. In this study we look at this potential, what the main drivers are and how long it could last for.

Refiners are continuing to invest in sophisticated upgrading capacity, essentially converting fuel oil into gasoline and distillate. Recent and imminent new capacity has focused on distillate production in particular. But has the low crude price environment resulted in a shift towards gasoline and if so, how long will this last for?

2020 will see the biggest ever change to the demand barrel with the introduction of new specifications for bunker fuel oil (to 0.5%S max without flue gas mitigation) for the world’s marine fleet. We look at how refiners and the fleet will react to this, the implications for distillate and fuel oil demand and balances, product cracks and refinery margins. Will there be enough refining capacity? Is there enough distillate available? What will happen to product prices, especially for fuel oil?

Key Areas Addressed

  • How will products demand evolve in a long-lasting low crude oil price environment?
  • How are refiners responding to the IMO 2020 bunker fuel spec changes?
  • What will happen to refinery margins over the next 5-10 years?
  • How might refinery investments develop over the next 5-10 years?
  • How does refinery capacity match up to products demand? Has the need for refinery capacity closure passed? Indeed, do we need to build more capacity?
  • How will product trade flows develop?

Structure

  • A review of the global oil market outlook.
  • An assessment of refinery capacity additions.
  • A review of the implications and possible outcomes of the IMO bunker fuel specification changes in 2020.
  • Changes from our last Annual World Refining Outlook.
  • How a global product supply/demand balance is likely to be achieved.

Scope of Coverage

  • Deliverables
    • PDF copy of the report (PowerPoint layout) - 111 slides.
    • FGE will be available for a conference call, WebEx meeting, or general meeting to present and discuss the key findings of this report.
    • All associated tables available in Excel.
    • A PowerPoint Executive Presentation pack, providing clients with a visual summary of the key coverage and conclusions, accompanied by bullet point explanations.
  • Products
    • Crude Oil
    • LPG
    • Jet/Kerosene
    • Fuel Oil
    • Naphtha
    • Gasoil
    • Gasoline
  • Table of Contents
    • Executive Summary
    • Product Demand
    • Iran Sanctions
    • Update on IMO2020
    • Refinery Complexity Increasing
    • The Pressure on Refinery Capacity
    • Product Prices and Refinery Margins
    • Crude Price Forecast
    • Changes From Our Last Annual World Refining Outlook
    • The US Refining Sector
    • Refinery Capacity Additions
    • Balancing the World
    • Product Supply: Globally by Product
  • Data
    • Prices and Margins (Crude and Products)
    • Refining Capacity by Sub-Region
    • Refinery Crude Runs by Region
    • CDU Capacity by Region
    • Regional Net Trade Blances by Product
    • Firm/Likely Refinery Projects by Region
    • Refining Capacity by Region
    • Assumed Refining Capacity Additions/Closures
    • Refinery Utilisation Rates by Region
    • Product Balances by Region
    • Regional Demand by Product (up to 2030)

This Service Will Add Value To

  • Downstream Operators Needing a perspective on the extent to which the emerging pressures on their business emanate from local or international sources.
  • Investors
  • Looking for input in assessing their portfolio strategies.
  • Crude Oil Producers Looking for changing trends in crude oil demand, prices, and quality considerations.
  • Integrated Companies Seeking an outside perspective on the likely future economic operating environment of the sector.
  • Products Traders Trying to identify emerging underlying shifts in trade flows.
  • Shipping Operators Conducting analysis of potential tanker demand, also reviewing the overall implications of the new IMO bunker regulations.

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