Downstream capacity additions and investments

The upcoming projects landscape for the medium-term (2016–2021) for OPEC Member Countries’ downstream sector is affected by two factors: the lifting of international sanctions on Iran, and the return of Gabon to the Organization. A significant number of new investments are set to occur in OPEC Member Countries. Almost 8 mb/d, of potential refining projects in OPEC Member Countries with a relatively new surge in capacity additions from Iran, if all projects are implemented as planned. However, a review of viability of these projects suggests that around 2.2 mb/d of distillation units will be added to the refining sector in OPEC Member Countries in the period 2016–2021. This combines around 1.7 mb/d of additional crude distillation capacity and 0.44 mb/d in the form of condensate splitters. Condensate splitters additions are planned in Iran and Qatar and set to start falling off by 2020. The overall OPEC Member Countries’ distillation capacity (including splitters) is set to reach a level of 13.3 mb/d by 2021. An important set of secondary units will also be undertaken during the period 2016–2021, the bulk, around 1.9 mb/d, will be added in the form of desulphurization units, and the rest, estimated at around 1.2 mb/d, will come in the form of conversion capacity (0.62 mb/d), and octane units (0.63 mb/d).

The additional refining capacity in OPEC Member Countries will come from condensate splitters, new greenfield and ‘grassroots’ projects, supplemented by expansions at existing facilities. The largest OPEC Member Countries’ new refineries are megaprojects, expected to come on stream during the medium-term period; these are in Kuwait (Al Zour project), Saudi Arabia (Jizan project) and Venezuela (Anzoetagui). Other relatively sizable projects, with a common trend among crude producers to process heavy crudes domestically and also aiming to satisfy increasing local demand, include new refineries in Lobito, Angola; Manabi (Refinery del Pacifico), Ecuador; Khozestan and Kermanshah projects in Iran; Fujairah and Dubai projects in the UAE. Algeria has chosen to settle for medium capacity refineries in Arzew, Hassi Messaoud and Tiaret to satisfy its growing local refined products demand. No clear picture can be envisaged yet from projects in Libya. The total estimated additions will bring OPEC Member Countries’ base capacity to over 13.3 mb/d in 2021 and will require a level of investments of $66.5 billion in order to implement the foreseen additions (distillation and secondary units) between 2016 and 2021. It is worth recalling that this is part of OPEC’s ongoing efforts to support market stability by supplying required products to consumers.