Global oil refining capacity to grow over 3 percent

Updated 04 September 2014

Global oil refining capacity to grow over 3 percent

LONDON: Global oil refining capacity will grow by more than three percent over the next two years, the fastest in 15 years, due mostly to new plants in China and the Middle East, the Bank of America said in a report on Thursday.
Global crude distillation units (CDU), which process crude oil into fuels and chemicals, will increase by 2 million barrels per day (bpd) in 2015 and 1.1 million bpd in 2016, the report said.
Global oil refining capacity reached around 95 million bpd in 2013, according to a 2014 benchmark statistical review by oil major BP.
"With the strongest CDU growth since 1999, global refinery capacity will easily outgrow demand growth," BofA said.
The refining expansion is driven mainly by China, which is expected to add 600,000 bpd of refining capacity in 2014, 700,000 bpd in 2015, and 200,000 bpd the following year.
"Chinese CDU expansions amount to almost a million bpd over the next two years, most of which comes on in 2015. This is much more capacity growth than the 400,000 bpd of Chinese demand growth we expect each year," the report said.
In the Middle East, 400,000 bpd of capacity are expected to be added in 2014 and 600,000 bpd in 2015 with the launch of the 400,000 bpd Yanbu refinery in Saudi Arabia and the expansion of the 417,000 bpd Ruwais refinery in Abu Dhabi.
Global refining capacity will also be boosted by the upgrading of Russia's sector in the coming years, BofA said.
Global refining capacity is set to easily outpace demand and pressure refining margins in 2015 as more product is available around the world, heaping pressure on European refiners that have undergone in recent years a painful series of shutdowns.

Saudi Arabia looks to cut spending in bid to shrink deficit

Updated 01 October 2020

Saudi Arabia looks to cut spending in bid to shrink deficit

  • Saudi Arabia has issued about SR84 billion in sukuk in the year to date

LONDON: Saudi Arabia plans to reduce spending next year by about 7.5 percent to SR990 billion ($263.9 billion) as it seeks to reduce its deficit. This compares to spending of SR1.07 trillion this year, it said in a preliminary budget statement.

The Kingdom anticipates a budget deficit of about 12 percent this year falling to 5.1 percent next year.

Saudi Arabia released data on Wednesday showing that the economy contracted by about 7 percent in the second quarter as regional economies faced the twin blow of the coronavirus pandemic and continued oil price weakness.

The unemployment rate among Saudis increased to 15.4 percent in the second quarter compared with 11.8 percent in the first quarter of the year.

The challenging headwinds facing regional economies is expected to spur activity across debt markets as countries sell bonds to help fund spending.

Saudi Arabia has already issued about SR84 billion in sukuk in the year to date.

“Over the past three years, the government has developed (from scratch) a well-functioning and increasingly deeper domestic sukuk market that has allowed it to tap into growing domestic and international demand for Shariah-compliant fixed income assets,” Moody’s said in a statement on Wednesday. 

“This, in turn, has helped diversify its funding sources compared with what was available during the oil price shock of 2015-16 and ease liquidity pressures amid a more than doubling of government financing needs this year,” the ratings agency added.