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What’s Really Wrong with Thames Water?

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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Global Refining Industry Braces for Tough 2024

  • Despite predictions of a peak in fuel demand, global demand for fuel has been rising, particularly in China and Europe.
  • Significant new refining capacities are coming online in Mexico, Kuwait, and Nigeria, adding to the global supply.
  • The energy transition's impact on fuel demand has been less than anticipated, with stable or growing gasoline demand and subdued diesel demand due to weaker industrial activity.

The global refining industry will face a challenging 2024 as more new capacity comes on stream, according to a Vitol executive, who also said that future investments in new refineries are unlikely because of the energy transition. 

Fewer new refineries should paint a picture of lower future capacity and, hence, higher margins to come. But there’s a catch: 

“The pace of the energy transition in oil and in transportation has fallen short of expectations, and at the same time, the lack of investment in the industry has not translated into a shortage of supply as expected,” Giovanni Serio, head of research at the commodity group, said, as quoted by Bloomberg.

Indeed, three years ago Bloomberg suggested that China’s new refining capacity would end up as stranded assets because fuel demand was about to peak by 2025. At the time, China was building a total of 1.4 million bpd in new refining capacity.

Fast forward to today, and China has become a major fuel exporter--not just in Asia but in Europe as well, as the latter lacks the local refining capacity to process crude oil and it embargoed Russian fuels and crude. This forced Europe to look for alternative suppliers, which it found in the U.S., China, and India.

There has been no sign of peaking in global fuel demand. If anything, it has been on the rise following the 2020 slump caused by the pandemic lockdowns. 

But China is not the only one building refineries. New capacity next year will be coming in Mexico, Kuwait’s Al Zour facility, which began operations this year, and the biggest refinery in Africa--Dangote in Nigeria--will start operating in several months, if not sooner. 

Mexico’s Dos Bocas refinery, one of the most ambitious projects of the Lopez Obrador government, will have a capacity of 340,000 bpd. Kuwait’s Al Zour facility will be able to process 615,000 bpd of heavy crude. The Dangote refinery will have a capacity of 650,000 bpd, the three together adding more than 1.5 million bpd to global capacity. Meanwhile, Angola’s Sonangol is building a new refinery in partnership with Gemcorp. While small, at 60,000 bpd, the refinery will double the country’s capacity.

Some critics of the transition have argued that it is essentially a rich kids’ game, and the rest of the world is prioritizing the supply of energy, regardless of its source. Given these developments in the downstream sector, there may be something to this argument.

China is, after all, the biggest EV market in the world and yet China is also building coal power plants and refineries. But China has made it clear that its attitude to energy is “all of the above” rather than the “low-carbon at all costs” that has become a sort of motto for the European Union.

In other big car markets, EV sales are stalling, adding weight to the argument that the transition may be too expensive for most people, even with all the subsidies being channeled into low-carbon energy by Western governments.

If EV sales are stalling, then the upbeat EV revolution outlook may not materialize, and fuel demand will remain if not growing, then at least stable. However, judging by the latest figures on car sales in the U.S., for instance, it may well be that fuel demand will continue to grow, with all major automakers seeing higher sales for the third quarter of the year from a year ago. The EU also saw higher car sales for the first nine months of the year.


Higher car sales mean higher—or at least stable—gasoline demand. Diesel demand, on the other hand, has been subdued because of weaker industrial activity in key markets such as the U.S. And that weaker industrial activity has helped avoid a diesel shortage—because there are not enough refineries to make it. It seems that despite the transition and predictions of peak oil demand in three years, the world still needs more refining capacity.

By Irina Slav for Oilprice.com

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