Asia
will post its biggest net refining capacity addition in three years in
2017, further boosting demand for crude in the world's biggest and
fastest growing oil consuming region.
New and expanded refineries from China to India will offset closures in
Japan, adding a net 450,000 barrels per day of crude processing capacity
in 2017, the highest since 2014, energy consultancy Wood Mackenzie
says, Reuters reported.
The increase amounts to about an additional 1.5% of refining capacity on
top of Asia's total installed capacity of nearly 29 million bpd,
Thomson Reuters Eikon data shows.
"Heavy crude demand in particular is expected to rise in 2017 as more
Asian facilities undergo upgrading and new ... refineries come online,"
said Sushant Gupta, WoodMac's Asia research director for refining.
The rise in capacity will tighten Asia's crude market as it coincides
with planned output cuts by oil producers like the Organization of
Petroleum Exporting Countries and Russia in a bid to end oversupply and
prop up prices. China National Offshore Oil Corp plans to start a new
200,000-bpd refinery in southern China, while PetroChina aims to start a
260,000-bpd refinery in Yunnan, pending talks with the Myanmar
government.
Chinese independent refiners are also expected to import an extra
200,000-400,000 bpd of crude, research consultancy Energy Aspects
estimates, and an upgrade by Taiwan's CPC at its Talin refinery will
raise crude and condensate demand by 100,000 bpd. These additions will
more than offset a 400,000 bpd decline in refining capacity in Japan by
early April due to shrinking local demand, according to Wood Mackenzie.
To meet Asian demand, Iraq has already inked new Basra Heavy deals,
while Iran expects to complete a pipeline and terminal to export a new
grade of heavy crude, known as West Karun, next year.
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