Heavy sour crude slate to shape refining industry's future
Posted: 25 September 2006
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Refining industry's trajectory must start with a look at future oil demand, says a senior Saudi Aramco executive.
Demand is set to rise ´from about 85 million barrels per day at present to around 120 million bpd by 2030ˇ says Abdulaziz F. Al-Khayyal, Saudi Aramco's senior vice president of Refining, Marketing and International said during the Oil & Money Conference in London .
Al-Khayyal pointed out that most of that demand growth will come from non-OECD countries, China and India in particular.
 The lion's share of incremental growth will come from the transportation sector, he added, with Europe, the U.S. and Asia all exhibiting unique traits with regard to their diesel-gasoline mix requirements. The common factor among them all, however, is that their mixes are unlikely to change anytime soon, even with the advent of new technologies.
Al-Khayyal said that one of the most important factors that will shape the refining industry's future investments is the increasingly heavy, sour crude slate that will become prevalent over time. "There is no question that over time, the global supply mix will become heavier and more sour; what is at issue is the rate at which that shift will occur," Al-Khayyal contended, noting that the Middle East crudes tend toward heavier, sour grades, as do Venezuelan and Mexican crudes. "If supplies from outside [the Middle East ] hold steady or exhibit growth," he said, "the move toward heavier and sourer crude will be more gradual."
But, Al-Khayyal pointed out, demand for light products and an abundance of heavier, sour barrels highlights the lack of hardware needed to process the heavier crude, even as the global share of these grades grows. "The only way to bridge that gap is by building additional conversion capacity," Al-Khayyal said.
With these factors - the increasing abundance of heavy, sour crudes even as demand increases for lighter, cleaner fuels - as background, Al-Khayyal said that there are three views about what could unfold for the future of the refining business. The first is that refining margins - though healthy now - will continue their generally downward trend to their historically low levels, and that this will be exacerbated by the current push to increase capacity.
The second scenario is that product demand growth worldwide will remain strong, and that capacity will increase only enough to keep up with demand, while avoiding over-capacity that has characterised the industry in the past. |
