SINGAPORE (Reuters) - Asia’s fuel demand will grow by 2 percent in 2018 as the region’s economies expand at a healthy level, forcing refiners to upgrade and install new capacity, energy consultancy Wood Mackenzie said on Tuesday.
In a demand environment in which overall global oil consumption is expected by the International Energy Agency (IEA) to grow by below 1.5 percent a year, Asia has become the focal point in finding new customers. Wood Mackenzie said China and India alone represent 40 percent of global demand growth.
Asia’s demand to refine crude oil into fuel products like gasoline and diesel will average 34.5 million barrels per day (bpd) in 2018, up 630,000 bpd from the year before, Wood Mackenzie senior research analyst Joe Willis said in a media briefing in Singapore.
To meet this increase in demand, Asian refiners are expected to increase crude oil distillation capacity, although Willis said that the bulk of new investments would only be ready in the second half of the year.
Should there be delays, Willis said, Asia’s fuel market would tighten, pushing up profits for existing facilities but also requiring more imports.
Some delays have already been announced. The start-up of Vietnam’s 200,000 bpd Nghi Son refinery, for example, has been pushed back from its planned start in late 2017, said Willis.
“If the Ngi Son refinery, or any of the other investment, is pushed back (further), we could actually see the Asian market...becoming tighter in terms of supply and demand of oil products,” said Willis.
The bulk of this year’s growth in oil demand will be driven by increased use of road fuels like gasoline and diesel, as well as liquefied petroleum gas used for cooking and transport, as well as in the petrochemical industry, Wood Mackenzie said.
Reporting by Roslan Khasawneh; Editing by Henning Gloystein and Kenneth Maxwell