• World
  • Columnist
  • Commodities
  • WORLD BUSINESS & ECONOMY
  • Executive Knowledge Series
  • Finance
  • Manufacturing
  • Markets
  • Risk & Governance
  • Small Business
  • Technology, Media & Innovation
  • Comments
  • Business AM WebTV
  • Login

Businessamlive
  • FRONTPAGE
  • FINANCE
    • AllAsset ManagementAuditBankingBondBudgetCapital MarketsC&I LeasingCurrencyDealDebt marketForexFund RaisingFundingGovernmentHedge FundsInsuranceInvestmentInvestorInvestor ServicesMergers & AcquistionsMoney marketTreasury BillsMortgagePensionsPersonal financePonziQuantitative EasingshareTaxationTSAWealth Management
      Finance

      Stringent regulations, business environment forced Stanbic IBTC out of BDC business

      January 15, 2021

      Finance

      Cautious equities trading see gains in Flour Mills, Mobil, Wapco push market cap to ₦21.09trn

      January 15, 2021

      Finance

      CBN issues guidelines for QR codes operation in Nigeria

      January 15, 2021

      Finance

      Global Equities: Positive sentiment buoys global markets’ performance on vaccine rollout, Biden confirmation

      January 13, 2021

  • MARKETS
  • ECONOMY
    • AllAfricaAgricAirportsAmericaAsiaAustraliaBreakthroughDealEuropeForeign InvestmentsforexGlobal marketGovernanceIMFMiddle EastNECANigeriaOutlookRich listSouth AfricaSport BusinessTradeU.KWest AfricaWorld Economic forum
      WORLD BUSINESS & ECONOMY

      Only 20% of UK financial services professionals believe firms possess ethical commitment

      20 hrs

      Frontpage

      Moody’s sees negative 2021 outlook for sub-Saharan Africa, with severe economic challenges

      January 15, 2021

      Commodities

      Metals make sluggish gains on LME, SHFE, as investors anticipate US stimulus

      January 15, 2021

      WORLD BUSINESS & ECONOMY

      Smart home market profits to reach $176bn in 2025, rising by 127%  

      January 15, 2021

  • COMMODITIES
  • ENERGY
    • AllConferenceElectricityOil and GasPowerRenewable
      Frontpage

      NNPC moves to rehabilitate downstream infrastructure, openscontract bids

      January 15, 2021

      Companies

      Ardova enters acquisition talks with Enyo as part of expansion drive  

      January 15, 2021

      Oil and Gas

      NNPC reaffirms commitment to OPEC+ agreement   

      January 15, 2021

      Imo

      FIRST E&P faces CSR headwinds in Bayelsacommunities, ahead OMLs 83, 85 production start

      January 15, 2021

  • TECHNOLOGY
  • MANUFACTURING
  • ANALYSIS
    • Analyst Insight

      Data privacy maturity model in organisations

      January 11, 2021

      Analyst Insight

      Stocks set for more record highs

      January 11, 2021

      Analyst Insight

      2021: Time for Nigeria to move into higher gear?

      January 11, 2021

      Analyst Insight

      The trouble with commissions

      January 5, 2021

Frontpage

10% of global independent refiners at risk of closure by 2025 as transition towards carbon-free world intensifies

February 22, 2018909 views0 comments

As the world moves towards lower carbon emissions, the business of oil refining appears to be at risk in the long run from tightening regulatory environment combined with transformation in the transportation sector, said Moody’s Investor Service.

While oil refiners only make up 3 percent of global carbon dioxide emissions of 32 gigatonnes in 2016, oil consumption contributes over 30 percent of the figure, said Moody’s in an oil and gas (O&G) sector in-depth report dated Feb 20.

Ultimately, efforts to reduce emissions from refined products such as gasoline is expected to “materially change crude and product flows and pressure refinery utilisation”, said the report.

The pressure, said Moody’s, will come from changes involving light passenger vehicles (LPV), as demand for gasoline is expected to peak much sooner than other oils, thanks to the race towards electric LPVs which constitute 26 percent of global gasoline demand.

Read Also:

  • Let the Great Transition Begin
  • Smart home market profits to reach $176bn in 2025, rising by 127%  
  • Global Equities: Positive sentiment buoys global markets’ performance on…
  • Taking bull by the horn: How 2020 crises unveiled potentials for…
  • Africa opens world’s largest single market (2)

Also adding to potential overcapacity is the possible expansion by refiners in Asia to meet its own growing energy appetite, followed by those in the Middle East, which coincides with OECD nations’ push to reduce carbon emissions.

While Moody’s expect global oil demand to continue growing through 2040, “demand in the OECD will peak much sooner”. It also sees global oil incumbency — particularly as fuel for heavy-duty vehicles — to continue to generate demand growth through “at least 2030”, due to technological challenges to electrify heavy-duty engines.

John Thieroff, Moody’s vice president said in a statement that around 10 percent of existing global throughput capacity by independent refiners (excluding integrated and national oil companies) is at risk of closure by 2025.

The figure, according to him may increase to 25 percent by 2035, saying “although we don’t see that scenario as likely at this time”. He added that any transition towards alternative fuels will be gradual.

“Carbon transition risks facing refiners include lower demand for refined products over time due to policy initiatives, vulnerability to changing consumer preferences and technological shocks, especially in the transportation sector,” Thieroff added.

“Accelerated growth in alternative fuel vehicles and electric vehicles will exacerbate declining demand, but the difficulty of predicting the degree and speed of rising popularity for alternative fuel vehicles poses challenges in itself,” said Thieroff.

“Producing these vehicles require changes to the manufacturing process, heightened coordination with auto-parts suppliers, improvements in battery life and costs, and the spread of supporting infrastructure such as power-charging stations,” he added.


Read also: Crude oil prices slump further on dollar strength, US supply concerns


 

However, fuel produced primarily in export markets with higher carbon prices would face competitive disadvantages against products with lower or zero carbon prices, said the report.

Also supporting growth would be demand for oil for petrochemicals. That, said the report, is expected to grow by over 45 percent in 2040 from just under 13 percent presently “given the more limited range of options for alternative fuels and the expectation for strong activity growth in those segments”.

In the bigger picture, emission-related regulations for refineries and refined products is expected to increase “noticeably” in the coming decades — but the timing and costs of such regulation will vary considerably between different places, giving an edge for refiners in jurisdictions that are slower to implement such regulations to generate higher operating margins, said Moody’s.

Regardless, as with the scenario in Asia and Middle East, lower-complexity refiners in Europe and US East Cost face the threat of stranded assets amid declining demand for LPV fuels.

“These refiners will be forced to become competitive in distant export markets or face the possibility of closure,” said the report.

Share on Facebook Tweet Email
Tagscarbon emissions global refiners independent refiners Oil and Gas world intensify
PreviousGlaxoSmithKline announces date of board meeting for approval of 2017 financial statements
NextTelegram aims to raise $1.6bn before ICO even starts

Leave a comment

- Cancel reply

MARKET DATA

Market Videos

Recent Posts

  • Only 20% of UK financial services professionals believe firms possess ethical commitment
  • Nigeria’s railway e-ticketing platform launch set for next week
  • Stringent regulations, business environment forced Stanbic IBTC out of BDC business
  • Copper faces downturn in H2 of 2021, analysts predict
  • NNPC moves to rehabilitate downstream infrastructure, openscontract bids

World

Africa

Buhari, Okonjo-Iweala congratulate Adesina over reelection as AfDB President

Europe

EU businesses to cut investments in 2020, says EIB report

America

U.S. increases cost of visa application for Nigerians

Africa

Thatcher-Loving Nigeria Candidate Plans to Overhaul Economy

Africa

AfDB scales up industrialization pace on the continent, delivers improved business access to finance, skills, energy

Frontpage posts

0

Sell Ajaokuta steel company, MAN, others tell FG

Frontpage June 12, 2019

1
2

Nigeria’s rising debt servicing cost unsettles investors –Report

Frontpage May 7, 2019

3

Stock market halts gaining streak, sheds N181bn

Equities January 15, 2020

4

FG seeks fresh legislation to amend 2015 Cybercrime Act

Frontpage August 20, 2018

5

Nigeria’s debt office says debt rebalancing has reduced interest rate, improved private sector lending

Frontpage August 15, 2018

SUPPORT

  • Photo Gallery
  • Help Centre
  • About Us
  • Accessibility

LEGAL & PRIVACY

  • Terms & Conditions
  • Privacy
  • Cookies
  • Copyright

SERVICES

  • Conferences & Events
  • Analysts Research
  • Advertising Rate
  • Ebooks

TOOLS

  • Portfolio
  • Newsletters
  • News feed
  • Currency Converter

SUBSCRIBE

Join us to get latest updates on business related news.

[mc4wp_form id="3076"]
  • ABOUT US
  • CONTACT US
  • CAREERS
  • TERMS & CONDITIONS
  • PRIVACY POLICY
Copyright 2017. All rights reserved. BusinessAMLive. A Businessnewscorp Member Company.