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
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
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
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
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
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
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
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
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
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
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.