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.
Global oil refining capacity to grow over 3 percent
