According to a report published by consultancy services firm Rystad Energy, there will likely be a 50 per cent drop in demand for oil refining capacity of the world by 2050 because of the efforts across the world to shift to electrification of road transport in order to scale back the emission of carbon dioxide and greenhouse gases.
“Going forward we’ll be touching by 2050 somewhere very on the brink of 90% of electrification,” Mukesh Sahdev, senior vice chairman and head of downstream at Rystad Energy said.
There will potentially be signficant decline in demand for fossil fuels and consequently a 50 per cent decline in global refining capacity because of the changed scenario, he added.
According to Mukesh, while there will be a huge drop in demand and consumption globally for gasoline and diesel used in road transportation because of increased use of electric vehicles, there will still be high demand for other refined oil products that are used in aviation, maritime and petrochemical sectors because of higher levels of urbanization which can be a source of challenge for the global oil refining sector.
“How are we getting to meet those demands with a 50% scale down in refining capacity? i feel that’s an enormous signal that we’d have tons of shorts within the sectors which are coming with demand,” he said.
“This goes to steer to a big rationalisation of the downstream assets across the whole supply chain,” he added.
For example, he said that their production mechanisms would be needed to be changed and altered by cokers, that are the upgrading units that are used for production of gasoline and diesel, so that they are able to produce and supply more of petcoke for graphite used in electric batteries. Another potential trend for the future would be the direct processing of crude oil into petrochemicals products, he added.
Despite the shift towards electric vehicles, there can be an increase in oil and petroleum products in the short term. According to the forecast of the consultancy firm, the pnt up demand for oil from the Covid-19 pandemic could push up global crude processing to 80.1 million barrels per day by the last half of 2021 as refiners would be pushed to maximise their gasoline output.
(Adapted from Reuters.com)