EDINBURGH, Scotland, Aug. 24 (Daniel J. Graeber) — Though refineries are struggling to keep up with demand growth, analysis from consultant group Wood Mackenzie finds a surplus of gasoline emerging by 2017.
“In 2020 we start to see a glut of gasoline supply developing, in excess of 30 million tons, which doesn’t go away for a decade,” Jonathan Leitch, a director for oil product markets research at Wood Mackenzie, said in a statement.
Wood Mackenzie, which has headquarters in Scotland, finds those companies operating in the downstream energy sector are struggling to meet global demand for fuel products. Compared with the exploration and production side of the industry, which is depressed because of weakened economics, the analysis finds refiners are benefiting from lower crude oil prices, unplanned outages and the slow start to new facilities.
In its survey of 745 refineries, Wood Mackenzie finds if the downstream sector remains at the status quo, those markets dynamics will heavily favor the supply side and continue to do so for “several years.”
The analysis finds some demand returning globally, but it will be uneven. Latin America, Africa and some Asian economies see growth emerging at the same time as it fades from developed Asia, Europe and North America.
“Refiners will continue to invest in refining operations to meet global demand and increasing stringent product specifications to comply with environmental legislation, which could see an additional 5.5 mb/d in net refining capacity by 2020,” Leitch said. “This would put significant pressure on Europe and Asia for further capacity consolidation and the U.S. refining sector could also start to suffer, particularly in areas without access to export markets.”