MOSCOW (MRC) -- McKinsey Energy Insights (MEI), the data and analytics specialist that provides distinctive insight and support to the global energy industry, forecasts that until 2020, global refining will move towards lower utilization and margins as capacity growth exceeds demand, said Hydrocarbonprocessing.
Post-2020 market conditions are expected to improve with higher demand for distillates due to marine pollution (MARPOL) regulations.
MEI’s latest Global Downstream Outlook states that the last two years have seen major shifts as a result of falling crude price, a subsequent rise in global product demand and the fuel/oil balance. This, combined with recent events such as the diesel vehicle emissions scandal and the International Maritime Organization’s cap on sulfur in bunker fuel by 2020, the report says, has led to an uncertain outlook for the global refining market.
MEI modeled a high and low growth demand case, with the high case in line with the latest industry consensus. In the high case, MEI sees light product demand growing at 1.2% annually through to 2020. Asia also will remain the leading consumer of light products and it is predicted that diesel will provide the biggest demand growth post-2020. However, this is dependent on vehicle improvements, fuel substitutions and diesel emission regulations.
The outlook also highlights that North American crude markets are likely to remain tight until 2020, when a resurgence of unconventional crude supply could push the market back to export net-back pricing conditions.
The research is based on results from McKinsey’s Global Downstream Model, a macro-based global supply and demand balances and flows tool and OilDesk, a scenarios-based price-forecasting tool.
MRC