The International Monetary Fund (IMF) announced in its January 2012 World Economic Outlook that the global GDP growth rate was 3.8% in 2011. However, Asian-Pacific nations bucked this trend. In 2011, Chinas GDP was 9.2% and Indias GDP reached 7.4%. The IMF estimates that global 2012 GDP will grow by 3.3%; Chinas GDP will grow by 8.2%, and Indias GDP will increase by 7%. The global economy is threatened by intensifying strains in the euro area. Financial conditions have deteriorated, and growth prospects are dimming. Lower demand for Asian exports is dragging growth. However, Asian economies continue to remain buoyed by continuing strong domestic demand.
In 2012, worldwide refining capacity is estimated to reach 88.05 million bpd (MMbpd). The Asian-Pacific region has 24.92 MMbpd of refining capacity, accounting for approximately 28.3% of global refining capacity. Members of the top 10 refining nations include four Asian countries:
- China, with 10.8 MMbpd in refining capacity, is ranked second in the world
- Japan, with 4.73 MMbpd, is ranked fourth
- India, with 4.04 MMbpd, is ranked fifth
- South Korea, with 2.7 6MMbpd, is ranked sixth.
Asia has 164 operating refineries; North America has 148 refineries; and Western Europe has 99 refineries. The refining capacity share by region is 28.3%, 24.1% and 16.4%, respectively. A new reconfiguration of the global refining industry has formed. At present, Asia is now the major refining sector; North America is second, and Western Europe is third.
Worldwide ethylene capacity reached 138 MMtpy in 2010. Ethylene capacity in Asia increased to 42.63 MMtpy, exceeding North America. China has 15.22 MMtpy of ethylene capacity; Japan has 7.26 MMtpy; South Korea has 5.63 MMtpy; and India is operating 3.31 MMtpy of ethylene capacity. The Asian-Pacific region accounts for 30.8% of total worldwide ethylene capacity and has the highest operating capacity.
In 2011, Chinas refining industry had 150 refineries, of which 21 refineries have a site operating capacity exceeding 0.2 MMbpd.
In China, three large, government-owned refining enterprises dominate the domestic refining industry. Sinopec is the largest state-owned hydrocarbon processing company, with a refining capacity of 4.44 MMbpd. The second-largest government-owned refiner is China National Petroleum Corp. (CNPC)the parent company of PetroChina. CNPC operates 3.44 MMbpd of refining capacity. China National Offshore Oil Corp. (CNOOC) is the third-largest state-owned refining company, with 0.6 MMbpd of production capacity. In addition, small local refineries (referred to as teapot refineries) are in operation, with a combined refining capacity exceeding 2 MMbpd.
China has 15.7 MMtpy of total ethylene operating capacity and is ranked second in the world after the US. Six ethylene plants have a production capacity exceeding 1 MMtpy. Sinopec and CNPC are the main ethylene producers.
According to Chinas 20112015 petrochemical plan, by 2015, three to four refining bases (with 0.4 MMbpd of capacity) and three ethylene bases (with 2 MMtpy of capacity) will be in operation. The average capacity for Chinese refineries will exceed 0.12 MMbpd, and ethylene production capacity will exceed 0.7 MMtpy. Total crude oil processing capacity will reach 12 MMbpd. Ethylene capacity is expected to reach 2.7 MMtpy.
Fig. 1. Chinas refining and ethylene production facilities.
India is becoming a major refining power
In 2011, Indias total crude processing capacity reached 4.04 MMbpd; nearly 64% of the countrys refining capacity is controlled by public-sector refineries. Aggregate demand of refined products for the domestic market will reach 4 MMbpd in 2015. New refineries and expansion plans will continue, thus increasing Indias refining capacity to 5.04 MMbpd by 2015. As a major petrochemical producer and consumer, India has seven ethylene complexes with a total capacity of 2.51 MMtpy, and is ranked 15th in the world. In 2006, the Indian government established the Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs) to promote petrochemical industry investment. The PCPIRs will help boost Indias ethylene capacity to nearly 8 MMtpy by 2014.
While the Asian refining industry is booming, it also faces new challenges:
Tight oil supply and growing dependence on imports. Asias proven crude oil reserves are smaller than those in the Middle East and the Americas. Consequently, Asia is not self-sufficient. China is the second-largest oil-importing country after the US. In 2011, Chinese crude oil imports increased to 254 MMt, with imports supplying 55.1% of crude oil demand. India is the fourth-largest oil-importing country; over 80% of its daily crude demand is met through imports. India imported 163.51 MMt of crude oil in 2011.
Rising refinery over-capacity. The global recessions stifling impact on demand is manifesting itself at a time when Asia-Pacifics refining capacity is surging. This scenario is driving down refining margins and utilization rates. Oil demand in the US and Europe continues to decline. In contrast, Asian-Pacific refiners continue to rely on exports to manage excess supplies. Japan and South Korea are greatly impacted by the global recession and demand downturn. Both nations economic growth is centered on external demand. In addition, India, Singapore, Indonesia, Malaysia and the Philippines have reduced loading rates to adapt to the new market. At present, Chinas crude oil processing capacity is 10.8 MMbpd, and the total crude oil volume processed was 8.96 MMbpd in 2011, with an 83% utilization rate. It is forecast that refinery over-capacity will increase and utilization rates will further decline.
Emerging CO2 emissions-reduction requirements. High energy consumption is accompanied by higher carbon dioxide (CO2) emissions by the refining industry. Energy conservation is occurring in response to climate change and sustainable development issues, but it is a long-term task. Emerging Asian economies, especially China, will be under greater pressure to limit CO2 emissions. As Chinas carbon emissions are ranked first in the world, saving energy and reducing greenhouse gas emissions are closely related to economic and social development. The Chinese government has incorporated climate change and CO2 emissions into national economic and social development plans by comprehensive legal, economic, scientific and technological measures. Under the Copenhagen Accord, China promised to reduce CO2 emissions per unit of GDP by 40% to 45% in 2020. In the future, Chinese and Indian petrochemical companies will bear more pressure to reduce CO2 emissions.
Strategies for sustainable development
Since 2008, the Asian-Pacific refining and petrochemical industries have suffered from the international financial crisis. At present, the Asian-Pacific refining and petrochemical industries are showing signs of recovery. Refining profits are low; the threat of excessive production is still a problem. Accordingly, some measures are being taken to achieve sustainable development.
Expanding energy sources and diversification. Despite steady domestic petroleum output, Asia is expanding its energy resources from the Middle East, Russia, Africa, South America and other countries. Diversity is needed to ensure security of energy supplies and safety. The rapid development of alternative fuels including coal, natural gas, biomass and others is being explored. Biofuels, gas-to-liquids and coal-to-liquids are supplementing the oil-based fuel market. Refineries are striving to process more diverse materials.
Optimizing crude processes and increasing fuel yields. Since Asia-Pacific is poor in oil reserves, it is very important to fully utilize all resources. Such efforts include optimizing refining processes and maximizing yields of transportation fuels. For example, light oil yields are less than 75% in Chinamuch less than the 82.7% at North American refineries. Some solutions are needed to increase the economic benefits and competitiveness of refining companies in Asia-Pacific. Such actions include increasing complexity, upgrading heavy-oil processing, increasing light oil yields and optimizing refining operations.
For example, PetroChina is researching technologies to handle Venezuelan extra-heavy oil. Its proprietary hydrogen-donated thermal cracking (HDTC) process can produce marine oil and bitumen from Venezuelan extra-heavy oil. Three commercial units using the HDTC technology are in operation. The HDTC process provides good performance for viscosity reduction of extra-heavy oils. Commercial-scale experiments on delayed coking technology to process 100% Venezuelan extra-heavy-oil vacuum residue were successfully completed by PetroChina.
CO2 emission reductions are actively initiated in response to climate change. Energy conservation and minimizing fossil fuels usage are the most important and direct measures. Possible detailed measures are phasing out older, less-efficient refineries; installing energy-saving equipment and sophisticated technologies; improving energy utilization efficiency; and reducing fossil fuel consumption in production processes. Other options include adjusting the energy structure and developing biofuels to reduce CO2 source emissions.
Enhancing technology innovation
Asia-Pacific countries, especially China and India with their enormous market potential, are attracting many foreign investors for the refining and petrochemical industries. However, Asian-Pacific refining and petrochemical technology development remains low. Asian-Pacific countries need to change economic growth modes; strengthen their technology absorption and re-innovation; improve their integrated innovation abilities; and focus on clean-fuel production, deep processing of heavy oils, and energy-saving and CO2 emissions-reduction technologies. HP
Aiguo Lin is the chief engineer of PetroChina. Mr. Lin is a senior engineer and holds a college degree. He has over 30 years of experience in Chinas petroleum and petrochemical industries. Mr. Lin has held numerous positions of responsibility with Dalian West Pacific Petrochemical Co., Ltd. In 2007, Mr. Lin was appointed chief engineer of the company. He has also served as the president of the PetroChina Petrochemical Research Institute since March 2011.
Dr. Xingguo Fu is a professor and the deputy chief engineer of PetroChina Petrochemical Research Institute. He holds a BS degree from Wuhan Technology University and an MS degree from Xian Modern Chemistry Research Institute. Dr. Fu received his PhD from the Lanzhou Chemistry and Physics Research Institute, Chinese Academy of Sciences. He has worked on R&D in the fields of refining and petrochemicals for over 25 years with CNPC and Sinopec. Dr. Fu holds 52 Chinese patents and one US patent; he has also published 63 papers.
Xuejing Li is a professor and the deputy director of the strategic research and information division of the PetroChina Petrochemical Research Institute. She graduated from East China University of Science and Technology and Lanzhou University. She holds a BS degree in engineering and an MBA. Ms. Li has been engaged in refining and petrochemical strategy research for more than 20 years with Sinopec and PetroChina.
Luyao Zhang is an engineer at the heavy-oil upgrading division of PetroChinas Petrochemical Research Institute. She graduated from China University of Petroleum, in Beijing, and obtained an MS degree in management. Ms. Zhang is engaged in research project management and strategic energy research.