Oil & Gas Downstream Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

As of 2018, the global oil refining capacity was approximately 100.05 million barrels per day. The global oil & gas downstream market is expected to grow at a CAGR of more than 4% during thr forecast period. Factors such as increasing refining capacity across Asia-Pacific and the Middle-East, and rising industrialization in developing countries, are expected to drive the oil & gas downstream market during the forecast period. However, the growing share of fuel-efficient vehicles and increasing penetration of electric vehicles in both developed and emerging economies are expected to hinder the market growth during the forecast period.

Key Highlights

• Refinery segment is expected to dominate the market during the forecast period.
• Digitalization and modernization of the refining and petrochemical sector is expected to reduce the refining costs and process losses. This, in turn, is expected to create an opportunity for the market during the forecast period.
• Asia-pacific has dominated the oil & gas downstream market, with the majority of the demand coming from China, Southeast Asia, and India.

Key Market Trends

Refineries to Dominate the Market

• The global energy demand is anticipated to grow by 50-60%, in the next two decades. This growth in demand can be attributed to the growing world population and an improvement in living standards in the developing countries. Even though new and renewable energy sources are gaining popularity around the world, the petroleum fuel remains a major energy source, globally. This trend is expected to continue for the next few decades and benefit all the sectors of the petroleum industry.
• Further, increasing industrial activity and economic growth are likely to support the refining industry. In the developed countries, such as the United States, Brazil, the demand for diesel and other distillate is expected to be robust in the coming years. This demand growth can be attributed to the strong refinery industry in these countries.
• For instancee, in 2019, Brazil’s semi-public oil company Petrobras is planing to increase the refinery capacity of Abreu e Lima Refinery (RNEST). The refinery is being planned to have a processing capacity of 230,000 barrels per day. The plant will feature two refining trains with a capacity of 115,000 b/d each.
• Hence, the refining industry is anticipated to recover over the next five years as fuel prices rise and consumption increases. Thus, the refinery industry is expected to be major factor for the growth of the downstream market during the forecast peiod.

Asia-Pacific to Dominate the Market

• Asia-Pacific has dominated the oil & gas downstream market in 2018 and is expected to continue its dominance in the coming years as well. In 2018, Asia-Pacific accounted for almost 35% of the global refining capacity.
• As of 2018, India accounted for almost 5% of global oil refinery capacity. The growing demand for refined petroleum products has driven the downstream companies to invest in new projects and expansion of existing facilities.
• Indian Oil Corp. and Hindustan Petroleum have allocated CAPEX for refinery expansion projects in Gujarat and Mumbai, respectively, in their FY18-19 budgets. Both the projects are expected to come online in 2021 and 2022.
• Further, the Indian petrochemicals industry is expected to witness increasing emphasis on investment in petrochemical hubs. The government is planning to set up petrochemical complexes all around the 22 refineries in the country. Clustering is expected to reduce operational costs and involve brownfield and greenfield development.
• As of 2018, China accounted for 15.6% of global oil refining capacity. The country's petrochemical and refinery sector is expected to be on the positive side during the forecast period.
• In October 2019, China National Chemical Engineering Group Corporation has signed an agreement worth around EUR 12 billion with Russia's RusGasDobycha in Chengdu, Southwest China's Sichuan province. This project is expected to be the biggest ethylene integration project in the world.
• Hence, the region is expected to dominate the oil & gas downstream market during the forecast period owing to the increasing investment in refining and petrochemical sector coupled with the expansion of existing downstream infrastructure in respective countries.

Competitive Landscape

The oil & gas downstream market is fragmented. Some of the key players in the market include Reliance Industry Limited, BP PLC, Saudi Aramco, China National Petroleum Corporation, and Chevron Corporation.

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