The significant increase in exploration of oil and gas resources elevated the oil refining market to a valuation of more than USD 6 trillion in 2017, with vast investments being done to match the refinery and oil extraction capacities. A stability in the prices of crude oil is being observed globally, renewing a sense of positivity in the marketplace post the 2013-14 slump, which had nearly devastated the oil refining companies. Continuous growth of the oil and gas sector owing to reinvigorated oil prices has attracted several industry giants to commission new oil processing plants, substantially boosting the oil refining industry. It is estimated that the total crude oil production throughout the world was 81.38 million barrels per day as of March 2018 and is an indication of the amount of input available for refineries, fueling the oil refining market expansion.
China Oil Refining Market Size By Fuel (MBPD), 2017 & 2024
Essentially, oil in its crude form is not much beneficial but needs to be separated and refined for use in fuels and lubricants, while the byproducts of the refining process are vital in manufacturing petrochemical products like plastics and foams. The oil refining industry has majorly been stimulated by the increasing production of marketable and high-performance fuels for automobiles, airplanes and marine vessels. Furthering the market scope is the exponential rise in number of vehicles being made across the world, from private cars and commercial trucks to heavy industrial handling machines. Referring to the data issued by the International Organization of Motor Vehicle Manufacturers, over 97 million vehicles were produced worldwide in 2017 and the figures are expected to jump up every year with a respective increase in fuel consumption. As such, the oil refining market will experience a remarkable evolution for improving performance of fuels to adhere to the emission control norms and regulations laid down by government bodies.
Growing concerns regarding environmental degradation and global warming has put major communities into high gears for implementing control on the release of greenhouse gases (GHGs) arising from the transportation sector. Oil and gas consumers are expressing the need for producing more refined products that have lower carbon emissions, driving the technological and chemical innovations in the oil refining industry. Since emissions are still amplifying despite better efficiency of new vehicles, a European Union legislation aimed at improving the fuel quality requires that the GHG emissions from on road vehicle fuels should be cut by 10% by 2020, demonstrating a prolific future for the oil refining market.
Speaking of efforts taken for improving the quality of fuel, a public consultation initiated by the U.K. government is underway for introducing a new fuel to cut down on CO2 emissions. The current generation of petrol in U.K., termed as E5, has five percent bioethanol and the government plans to launch new E10 petrol consisting of double the concentration of biofuel, the Department of Transport had revealed. While the E10 will not be able to fuel around one million petrol vehicles in U.K., the government has also proposed establishing a E5 protection grade that would ensure the availability of standard petrol at reasonable price. The initiative is a step towards developing a low-carbon emission fuel in the U.K. and the oil refining industry is likely to undergo notable advancements in processing techniques in order to deliver high quality fuel to the public.
In April this year, India started to witness a shift towards lower emissions with Delhi being the first city in the country to change from Euro-IV to Euro-VI grade diesel and petrol, said to be the cleanest fuel class in the world. The Euro-VI contains only 10 ppm of sulphur as compared to 50 ppm in the earlier Euro-IV grade petrol and diesel, which shows the progress that the global oil refining industry has achieved. Reportedly, the Euro-V grade was to be adopted from 2020 and Euro-VI from 2024, but the unprecedented impact of pollution combined with the growth rate of the transport industry forced the early introduction of Euro-VI.
As the upgraded fuel gets accepted in more and more cities, countries and the overall transportation industry, the oil refining market will evolve in accordance with the advancing quality of petroleum products being demanded. Reliance, Exxon Mobil, Chevron, Shell, India Oil, BP and PBF Energy are some major companies in the oil refining industry that provide extensive refinery services and produce a wide range of petroleum products. With remarkable discoveries being made in terms of natural oil deposits and joint efforts by companies to explore these resources, the oil refining market is anticipated to reach 100 million barrels per day consumption by 2024.