Revival for refining
It seems news of new refining investments
occur daily. At the end of January 2006,
approximately 500 refinery projects, including
66 new-build refineries, had been announced,
with many more likely being considered
in-house. Only a few years ago, refiners were
struggling to rationalize overcapacity.
Refiners then were lucky to make a $1/barrel
margin on sweet crude in Europe or Asia,
according to Aileen Jamieson, managing
consultant for Wood Mackenzie.
"Regional dynamics show that strong growth
in demand across the barrel in Asia-Pacific
will soak up the extra capacity coming
onstream. Indeed, significant additional crude
capacity may be required to keep pace with
demand." In the US, the changing shape of the
barrel is as important as the growth in total
demand, therefore investment will be required
in both upgrading and additional crude
capacity. "Fears that over-capacity build
as a result of the 66 announced
new-build refineries could result in a
crash period of low returns for the industry
are therefore unfounded," says Ms.
The next cycle in aromatics is
upon us, and that sector's center of gravity is
shifting to the East, according to an analysis from DeWitt
& Co. Inc. (www.dewittworld.com). China is rapidly building
new capacities for BTX and derivatives. The Middle East is
looking at Asia as its target market, while Japan and Korea aim
to maintain their dominant roles in the Asian markets. In the
past 18 months, nylon intermediates from benzene
to cyclohexane, phenol, caprolactam and adipic acid have
felt the impact of years of underinvestment. With the recent
cyclical peak, new investments are now being made and
production continues to shift from North America and Western Europe to Asia and the Middle East.
Despite record prices throughout the chain however, high raw
material costs primarily from hydrogen and benzene
have compressed margins, according to DeWitt.