Sueda.qxp 3/7/09 9:37 am Page 14
The Asian Refining Industry – Adjusting to Challenging Times
Figure 2: Investment in Asia-Pacific Catalytic Cracking Figure 4: Investment in Asia-Pacific Hydrocracking
1.1%
63.7%
1.1%
3%
2%
6%
National oil companies (NOCs) 75%
National oil companies (NOCs)
Local companies
Local companies
Majors
14% Foreign NOCs
34.1%
Foreign NOCs
International investors
Majors
January 2009 – 2015 = 860KBD.
January 2009 – 2015 = 722KBD.
Figure 3: Investment in Asia-Pacific Catalytic Cracking Figure 5: Investment in Asia-Pacific Hydrocracking
6%
3%
7%
12%
31%
China
8%
India
13%
Taiwan
44% China
11%
India
Vietnam
South Korea
Indonesia
34%
South Korea
31% Others
Japan
January 2009 – 2015 = 860KBD. January 2009 – 2015 = 722KBD.
Conclusion – A Few Key Questions for the In general, Asia is investing heavily in hydrocracking, but there are
Refining Industry still significant investments in catalytic cracking (see Figures 2–5).
The most pressing question is how to manage so much new capacity Reliance, Indonesia, Taiwan and Vietnam are all investing in catalytic
coming online precisely when Asian demand is suffering and cracking rather than hydrocracking. Indonesia in particular could end
demand in key mature markets west of Suez is in decline. Figure 1 up with two new catalytic crackers, one at Cilacap and one at
compares incremental supply and demand in Asia-Pacific over Balikpapan, if the Balikpapan upgrade goes ahead. In any case, the
2009–2015, highlighting the mismatch during 2009–2010 in industry is adding conversion capacity in a relative sense far more
particular. Furthermore, the industry needs to consider the longer quickly than it is adding primary distillation capacity. This has clear
term, when demand will recover but increasing Asian transport fuel implications for refining margins, light–heavy product spreads and
surpluses will remain. light–heavy crude spreads.
Less well configured export-orientated refineries in the region face an
Indonesia and Vietnam are both uncertain future. Singapore, Japan, South Korea, Taiwan and Thailand
dependent on imports and need
all need to quickly develop means of staying competitive. Asian
gasoline surpluses will increase by 400KBD over 2008–2010, while
to decide how to further
Asian diesel surpluses will increase by 500KBD over 2008–2010.
develop their refining sectors.
To summarise, the old order is ending, and challenging and
interesting times lie ahead. The first round of pressure will be felt as
Another serious issue facing refiners is whether to make catalytic the new Reliance refinery places a significant quantity of refined
cracking investments or hydrocracking investments. It is increasingly products in the international market in H2 2009. The second round
accepted that the industry is heading towards a large global surplus of pressure will be felt after the completion of 2.5MMBD of mostly
of gasoline and a slight deficit in diesel. On the face of it, export-orientated Middle East capacity arrives in 2013–2015.
hydrocracking investments make better economic sense. The extent
of the Asian gasoline surplus should be a concern for refiners India will have a significant advantage due to its strategic location
planning to install catalytic cracking capacity when seen in the (ability to go both east and west) and low-cost operations. The Middle
context of unsustainable gasoline build-up around the world. East will have a competitive advantage due to its low feedstock costs
Compared with the small global diesel deficit, the Asian diesel and secure supply of crude. The Middle East and Indian regions
surplus is much less disturbing. There are indeed several refiners combined will then be the largest export force in the world. Product
planning to install catalytic cracking, including Pertamina at its exports from the Middle East, plus India as a whole, are projected to
Cilacap refinery, Hyundai Oilbank at its Daesan refinery, CPC at its rise by nearly 2.0MMBD over 2008–2015, and players will have to
Talin refinery and the 200KBD Reliance facility. actively position themselves relative to these forces. ■
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HYDROCARBON WORLD VOLUME 4 ISSUE 1
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