Asia will lead refining capacity growth over the next 5 years: McKinsey

Global refining distillation capacity is expected to grow by over 6.8 million barrels per day over the next five years, according to McKinsey's report Global downstream outlook to 2035. From 2019 to 2024, capacity is expected to grow at a rate of 1.2 per cent per annum.

The growth will be mainly driven by new projects in Asia and the Middle East. Asia's distillation capacity grew by more than 600 thousand barrels per day in 2018, thanks to expansions in China and India, as well as Vietnam's new Nghi Son refinery. In the Middle East, two new condensate splitters in Iran contributed to the region's capacity growth of over 300 thousand barrels per day last year.

In the long term, more capacity additions will be needed in Asia to meet growing product demand due to robust economic and industrial growth. China is expected to add two condensate splitters in 2025 and 2027. India is expected to add two refineries in 2026 and 2030. Altogether, they will add about 800 thousand barrels per day to global capacity.

Despite growing capacity in Asia, global oil demand is still expected to slow down and peak by the early 2030s. The slowing of global oil demand is mainly due to the impact of electric vehicles.

For more insights into the global refining market, read the full report Global downstream outlook to 2035.