Bracing for the onslaught of US shale plants
PLAIN-VANILLA oil refineries around the world are tumbling like ninepins. This shakeout of older, less sophisticated plants continues, with the latest being planned divestments Down Under by oil majors Shell and BP. China's PetroChina is also reportedly delaying the start-up of two new refineries, and the expansion of a third.
A worldwide refining overcapacity, especially with newbuilding in China, plus the global economic slowdown is partly to blame. But the real game-changer has been the shale revolution in North America, which has resulted in bountiful and price-advantaged supplies of, first, easily tapped shale oil, followed by shale gas. The former has led to a revival of the US oil refining industry, with American petrochemicals set to get the next big leg-up from the latter.
On the other side of the coin, this has already hit oil refiners elsewhere, with the European refining industry under the greatest stress. The global petrochemicals sector, including in Europe, is next in the firing line. Furthermore, growing environmental concerns - with countries enforcing higher fuel-quality standards, such as lower sulphur in their transportation fuels - will take out even more of the smaller refineries in Europe and Asia.
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