The global refining industry faces a pivotal moment, influenced by evolving regional demand, increasing sustainability demands, and growing energy security issues.
Despite a reduction in the number of refineries, global refining capacity has increased to accommodate the growing volume of oil requiring processing, according to the latest Rystad Energy’s research.
Global primary refining capacity has grown by approximately 15% (13.5 million bpd) over the past two decades.
However, the total number of refineries has consistently declined since its 2011 peak. This decline is attributed to aging infrastructure, reduced profit margins, and decreasing fuel demand due to increasing electrification.
Global refining capacity growth is currently being driven by the Middle East, China, and India.
Specifically, China and India are major contributors to this growth in Asia. China’s refining capacity has almost doubled in two decades, rising from 10.6 million bpd in 2005 to 18.8 million bpd in 2025.
“The Middle East and Asia are driving global refining growth by focusing on large, integrated mega-refineries that secure energy supplies and meet rapidly rising demand,” Arne Skjaeveland, vice president, oil & gas research, Rystad Energy, said in the release.
Refining capacity
India’s refining capacity has steadily increased from 2.9 million barrels per day (bpd) in 2005 to approximately 5.2 million bpd this year.
This growth is driven by rising domestic demand, strategic investments in refining infrastructure, and efforts to enhance energy security.
The expansion not only addresses strong domestic consumption but also positions India as a significant exporter of refined products.
Over the past two decades, Middle Eastern refiners have significantly expanded their capacity, increasing from approximately 8 million bpd to about 13 million bpd, Rystad said.
This growth, primarily concentrated in Saudi Arabia and the UAE, signals a strategic pivot away from solely exporting crude oil.
The objective is to capture greater value through downstream integration, which involves developing sophisticated, large-scale refineries.
These facilities are designed to meet increasing domestic demand while also supplying refined products to major export markets worldwide.
Skjaeveland said:
Today, nearly all new projects are larger and more economically viable, so even though the total number of refineries worldwide has declined, overall refining capacity continues to grow significantly.
Emissions control
Today’s refineries are increasingly designed to gain greater control over the value chain and meet surging energy demand. However, the trends in emissions present a mixed picture.
While emissions intensity in the sector has remained relatively constant, a clearer regional divide emerges when looking at absolute emissions.
Asia, and subsequently the Middle East, have experienced a significant increase in total refinery emissions due to rapid growth in capacity and throughput, according to Rystad Energy.
Refineries in Asia and the Middle East, though newer and more complex, are designed to consume more energy. However, their modern technologies and tighter integration often lead to improved carbon efficiency per barrel.
Emissions in North America and Europe have remained stable or decreased.
This is primarily due to retrofits and refinery closures, rather than significant improvements in carbon efficiency, which have been observed in Asia and the Middle East, the Norway-based energy intelligence company said.
As climate policies tighten and low-carbon expectations rise, the gap between leading and lagging refineries is poised to widen, reshaping competitiveness and steering future investment decisions across the sector.
Differing approaches
Major global refinery operators employ distinct emission management strategies across different regions. A clear divergence exists between approaches in Europe and North America compared to those in Asia and the Middle East.
Focusing on consolidation and modernisation, Chevron and TotalEnergies have adapted to evolving fuel demand and stricter regulations, rather than increasing their capacity.
Chevron consistently invests around $1.5 billion each year to upgrade its established facilities, such as those in Pascagoula and Pasadena.
This commitment ensures a high utilisation rate of 86% for its assets, despite their age, Rystad said.
In contrast, TotalEnergies is actively preparing for a future with lower carbon emissions by spearheading the integration of advanced biofuel technologies into its refining operations.
Meanwhile, national oil companies are aggressively expanding to achieve better downstream integration, charting a distinct course.
Saudi Aramco expanded refining via multibillion-dollar annual investments, developing advanced complexes like Jazan and forming JVs such as YASREF and SATORP.
“While these projects boost capacity and complexity, they also carry higher emissions intensity, averaging around 41 kilograms of carbon dioxide equivalent (CO₂e) per barrel, reflecting the processing of heavier crudes and the energy demands of large, sophisticated systems,’ Rystad said.
The post Why is global refining capacity growing despite fewer refineries? appeared first on Invezz
