This moth began on a high note for China, as its very own Dutch Shell Plc let the plug on its Convent factory in Louisiana. Over the years, Convent has had its fair share of fame and standards, until the world’s third-biggest oil major – Royal Dutch Shell Plc – began radically reducing its refining capacity, until it could not find a buyer. However, unlike most of the oil refineries in recent years in the US, Convent not near obsolete.
As the 700 workers at Convent woke up to the realization that they were jobless, their counterparts in Asia were launching a new refining base at Rongsheng Petrochemical’s giant Zhejiang plant in N.E China. This is one of the multi-million projects underway in the country purposed to increase the country’s crude processing capacity.
While the coronavirus pandemic has plunged countries into bottomless pits of economic crises, it has also hastened the seismic shift for the refining industry in favor of China, which is currently rebounding from the pandemic.
The Rise of Asia
Since the beginning of the oil age in the mid-19th century, the US has been on top of the refining pack. However, this is set to change from early as next year, reinstating China to this glory. The rise of China’s refining industry, plus development of multiple large plants in India and the Middle East is having a huge impact on the global energy system. Oil venders are exporting lots of crude oil to Asia and not as much to distant clients in the US and Europe, boosting China’s refiners. Simultaneously, China’s steel industry is growing to meet the demands of the exploding oil industry.
Even as the refinery capacity continues to rise in China, Middle East and India, oil demand may take time before it can fully improve from the closures and reduced production experienced during the pandemic.
The growing demand for petrochemicals used to make plastics is the primary driver for the new projects. It is expected that by 2027 70 to 80 percent of the refining capacity that comes from stream will be plastic-focused.
However, experts warn that China should trend careful not to get ahead of itself. They note that by 2025, there will be an oversupply of oil products in the country, as the demand slows thanks to the country’s transition to carbon neutrality.
Currently, the shift seeks to balance the environment by reducing carbon emission in parts of the world that have been doing so for years. This is likely to continue for the next 4 to 5 years.