Refining glut could force closures
The world is heading for a glut of refined products as new Asian and Middle East refineries increase oil processing in a move likely to force less advanced competitors in developed countries to close, the West's energy agency said.
The report comes as some analysts predict that the Whitegate refinery in Co Cork may have to be closed after its US owner put the refinery up for sale earlier this week.
The International Energy Agency (IEA) said in its monthly report it expected 9.5 million barrels per day (bpd) of new crude distillation capacity, representing more than one-10th of global demand, to come on stream in 2013 to 2018, substantially more than the forecast increase in crude production capacity and global demand growth.
"While Europe's economic woes are taking a toll on demand, there are mounting signs that China's oil use, like its economy, may have shifted to a lower gear. Slower growth in demand than in runs could lead to product stock builds," the IEA said.
The agency said changes would be already felt from the third quarter of 2013 as global refinery runs may rise by more than two million bpd on the back of increased processing by China, Saudi Arabia and Venezuela.
This spike in crude runs would exceed forecast product demand growth of 1.7 million bpd, the IEA said.
It also added global crude supply could struggle to keep up with refining demand because of seasonal maintenance to North Sea production, Sudan's struggle to resume production, the annual hurricane season in the US Gulf and risks to Middle Eastern output due to the Syrian civil war.
Shorter-than-expected crude supply and large refining volumes would undermine refining margins.