Recently, consulting firm Wood McKinsey made a forecast of the global gasoline and diesel situation and predicted the development trend of Asian refineries in the future
Oil demand: peaked in 2036
According to Wood McKinsey's research and forecast, under the influence of transportation electrification and fuel efficiency improvement, global oil demand will peak in 2036, with a demand of 110 million barrels per day. At the end of 2017, the global oil demand was 98 million barrels per day.
The growth of oil demand is mainly concentrated in three sectors: transportation, other chemical raw materials and ethane. Chemical raw materials are the main source of demand growth, with ethane growth coming from the United States, Europe, India and China. Due to the increase in fuel efficiency and the increase in the share of electric vehicles, the oil demand of the transportation industry will peak in 2036.
At present, there are 3-4million electric vehicles in the world. According to the forecast, the number of electric vehicles worldwide will increase to 28 million by 2020 and 280 million by 2040. This means that nearly 5.5 million barrels per day of oil demand will be replaced by 2040, including city buses, light and medium trucks.
What markets are the main sources of the growth of electric vehicles? Europe is one of the major markets. Due to environmental protection requirements and restrictions of relevant laws and regulations, many European countries have announced that they will cancel fuel vehicles and switch to more electric vehicles. China is also a big market. In order to achieve the goal of protecting the ecological environment, China gives subsidies and preferential policies to purchase electric vehicles. In the United States, the use of electric vehicles is more of a lifestyle choice.
By 2040, the proportion of electric vehicles in the sales of light vehicles will greatly increase. In the process of increasing the sales proportion of electric vehicles, the sales volume in the United States and Europe together will account for 60％-70 % of the total sales volume of electric vehicles. By 2040, two out of every three cars sold in the United States and Europe will be electric cars.
The improvement of fuel efficiency will also have a huge impact on oil demand. Since 2000, China has been raising fuel consumption standards for passenger cars. The improvement in fuel efficiency will reduce China's demand for oil, which is expected to peak in 2030. After that, many cars in China will be green hybrid cars.
Oil supply:Heavy oil is in short supply
According to Wood McKinsey's forecast, global oil supply is tightening and heavy crude oil will become scarce. The U.S. will supply more and more oil to Asia, and more U.S. light crude oil and condensate oil will be exported to Asia.
North America is the main driver of global oil supply growth. Tighter U.S. oil supply will have an impact on global oil imports and exports. Judging from the oil supply in different regions of the world, most of the growth from 2018 to 2023 came from North America.Oil supply in the Asia—Pacific region is on a downward trend, such as China, Vietnam and Malaysia. The supply of oil in Latin America is also declining due to low international oil prices in the past few years and some projects have not been approved.
According to Wood McKinsey's forecast, light crude oil accounts for the largest proportion of global oil supply growth. In the future, more light crude oil will come from the North American market ( 90 % of the oil produced in the United States is light crude oil ) and ultra—light crude oil will also appear, but the supply of medium or heavy crude oil will hardly increase. Traditional heavy crude oil producers will reduce their medium—term production. According to statistics, the world's daily production of heavy crude oil was 15m barrels in 2016, and by 2023 this number will basically not increase, and the production in Canada, Europe, Norway, Iraq and Iran will all decrease. Refineries that plan to invest in medium or heavy crude oil should pay attention to this trend.
The Permian Basin in the United States is the main force for shale oil production growth, and more production means more crude oil exports. U.S. crude oil production is expected to increase to 12m barrels per day by 2025. However, U.S. refineries have not increased much investment. How to cope with such growth? The answer is: the United States needs to maintain its oil export volume of 3.5 million barrels per day for a long time, with some exported to North America and most exported to Asia, because Asian oil production is declining. In addition, more and more U.S. oil will be exported to Europe, which means it will replace some of Europe's existing imported oil, such as oil from Africa. In the next three or four years, U.S. oil exports will have a huge impact on global oil trade. Transportation is a challenge and bottleneck for U.S. oil exports, but some facilities will come online in 2019, which is expected to help the U.S. solve this problem.
Dilemma of Asia Pacific Refineries: New Construction or Import
Although the improvement of electric vehicles and fuel efficiency has reduced global oil demand, according to Wood McKinsey's forecast, Asia will still encounter a shortage of gasoline and more refineries will be needed to produce gasoline in the future. Asia, especially India and Southeast Asia, will face such a dilemma: whether to build a refinery or buy gasoline products.
From 2018 to 2025, there will be a shortage of liquefied petroleum gas ( LPG ) and naphtha in Asia. Although electrification in China is accelerating, many parts of Asia are still dominated by gasoline consumption. During the same period, there will be an excess of aviation coal and diesel in Asia.
India's refining capacity has been suppressed. In fact, India's demand for gasoline is very large and increasing. According to the number of motor vehicles per thousand people, there are 123 in China, 97 in the United States and very few in India. If the number of motor vehicles per thousand people in India increases, it will drive up the demand for petrol, and there will be a shortage of petrol. Although there will be a shortage of gasoline in Southeast Asia and India, the demand for gasoline in Europe and the United States will peak, and Southeast Asia can import gasoline from the United States and Europe to balance supply and demand and ensure energy supply. The refinery that India and Saudi Aramco will jointly build on the west coast of India will also help solve India's shortage of gasoline.
At present, the main problems facing Asian oil refining industry are: the oil demand pattern is changing, which is driven by different regions and different products at the same time; Future Asian refineries should focus on increasing gasoline production. National oil companies in India and Southeast Asia need to consider how much capacity to increase, whether by new construction or import. Asian refineries need suitable crude oil. ( Author: suresh Petty Swandam, head of the Asia—Pacific Oil Refining Department of Wood McKinsey; China Petroleum News Center )