China may become the world leader in oil refining in 2021, pushing the US, which dominated the market since the mid-19th century, to the second place, Bloomberg reports.
Earlier this month, Royal Dutch Shell Plc pulled the plug on its Convent refinery in Louisiana.
Unlike many oil refineries shut in recent years, Convent was far from obsolete: it’s fairly big by US standards and sophisticated enough to turn a wide range of crude oils into high-value fuels.
Yet Shell, the world’s third-biggest oil major, wanted to radically reduce refining capacity and couldn’t find a buyer.
As Convent’s 700 workers found out they were out of a job, their counterparts on the other side of Pacific were firing up a new unit at Rongsheng Petrochemical’s giant Zhejiang complex in northeast China.
It’s just one of at least four projects underway in the country, totaling 1.2 million barrels a day of crude-processing capacity, equivalent to the UK’s entire fleet.
The Covid crisis has hastened a seismic shift in the global refining industry as demand for plastics and fuels grows in China and the rest of Asia, where economies are quickly rebounding from the pandemic.
In contrast, refineries in the US and Europe are grappling with a deeper economic crisis while the transition away from fossil fuels dims the long-term outlook for oil demand.