Worldwide refinery distillation capacity is expected to increase by 20mn b/d by 2035, according to the latest OPEC long-term outlook. OPEC’s 2013 World Oil Outlook (WOO) says the vast bulk of this expansion is needed in Asia-Pacific and the Middle East, which are expected to add 10.5mn b/d and 3mn b/d of crude distillation capacity, respectively.
But OPEC warns that “a growing surplus in refining capacity highlights an unavoidable need for continued rationalization… to return margins to long-term viable levels, closures in the order of 10mn b/d may be necessary, implying an associated global utilization rate of at least 85% and possibly even higher.” OPEC says that to achieve this utilization rate, capacity closures would have to occur in both industrialized and, to a lesser degree, developing regions. “However, past experience has shown...there is often a reluctance to accept refinery closures. Therefore, it remains to be seen how long the situation of relatively low global utilizations will persist,” the WOO notes. (CONTINUED - 582 WORDS)