December 2018

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Editorial Comment: HPI spending in 2019 forecast at $375 B

Regulations, feedstock advantages, supply/demand gaps, etc., are resulting in a surge of new capital investments around the world.

Nichols, Lee, Hydrocarbon Processing Staff

Regulations, feedstock advantages, supply/demand gaps, etc., are resulting in a surge of new capital investments around the world. A detailed look at capital spending was one of the areas covered at Hydrocarbon Processing’s 45th Annual Forecast Breakfast. The forecast presentations provided attendees with insights into major trends affecting the downstream hydrocarbon processing industry (HPI), including forecast capital, maintenance and operating expenditures for the petrochemical, refining and gas processing/LNG industries for 2019.

The event also included the launch of Hydrocarbon Processing’s HPI Market Data 2019. This market outlook spans 100 pages with more than 40 tables and 80 figures. HPI Market Data 2019 provides an exhaustive breakdown on individual regions and sectors, as well as comprehensive analyses on worldwide economic, social and political trends driving HPI activity across all sectors. In total, Hydrocarbon Processing forecasts that the HPI’s capital, maintenance and operating budgets will reach $375 B in 2019. The full report can be purchased at store.gulfenergyinfo.com. The following are some of the major trends within each sector that are discussed in depth in HPI Market Data 2019.

Refining

The global refining sector continues to build additional capacity to meet future demand for refined products. Most of this new capacity will be in Asia and the Middle East. According to data compiled by OPEC, the IEA and the Construction Boxscore Database, the Asia-Pacific region will increase refining capacity by more than 3.5 MMbpd by the mid-2020s. Within that same timeframe, the Middle East will boost regional refining capacity by approximately 2.5 MMbpd. Combined, these two regions account for approximately 75% of additional refining capacity by mid-2020.

To adhere to government regulations, refiners around the world will be required to continue investing heavily in low-sulfur transportation fuels. According to OPEC’s World Oil Outlook 2017, more than 11 MMbpd of secondary processing unit capacity will begin operation by 2022.

Petrochemicals

The global petrochemical sector continues to expand exponentially as developing nations’ demand for petrochemical/chemical products continues to increase. In its Oil 2018 report, the International Energy Agency (IEA) forecasts that approximately 25% of the increase in oil consumption to 2023—nearly 1.7 MMbpd—will be from demand for petrochemical feedstocks.

In the near term, demand for petrochemicals will continue to increase. In turn, many nations are investing heavily to satisfy domestic petrochemicals demand and/or export petrochemical products to increase revenues. The leaders in petrochemical capacity investments are the Asia-Pacific, Middle East and US regions.

Gas processing/LNG

Over the past several years, new gas processing/LNG capacity has surged in nearly every region. Growth on both the supply and demand sides has resulted in the announcement of billions of dollars of capital investment across the world.

According to the International Group of LNG Importers’ (GIIGNL’s) The LNG Industry: GIIGNL Annual Report 2018, global LNG imports reached nearly 290 MMtpy in 2017. Soaring natural gas demand for power generation will be instrumental in adding millions of tons of new LNG import capacity through the early 2020s.

The global LNG export market has been dominated by Qatar, Australia, Malaysia, Algeria and Indonesia for the past 15 yr. Over the past several years, Australia has led the growth in new LNG export capacity. However, in the next decade, the US will significantly expand its liquefaction capacity and become one of the world’s most prominent LNG exporters. HP

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