China is on track to dethrone the US as the leader in oil processing. The first step in this challenge is the launch of a new crude distillation unit (CDU) in Rongsheng Petrochemical, the gigantic oil refinery complex in Zhoushan in the North-east of the country.
According to Bloomberg, this plant is one of the four world’s largest oil processing projects with an utmost capacity of 1.2 million barrels per day. Energy strategists say that the COVID-19 pandemic has triggered fundamental irreversible changes in production capacities around the world. The most powerful refineries are now clustered in Asia, having outpaced oil processing capacities in the US and Europe. Demand for plastics and petroleum is steadily growing in Asia.
At the same time, experts point out that Western refineries are now scaling back their capacities. The European countries find it hard to combat a grave energy crisis induced by the pandemic. Another reason behind less oil consumption in Europe is that the authorities are shifting focus towards environmentally clean fuel away from fossil fuel.
Experts believe that China’s leadership in the oil refining industry is a question of time. The International Energy Agency says that until present, the US has been reigning in the industry since the dawn of the oil boom, i.e. since the middle of the XIX century. Nevertheless, experts are certain that China will set the tone in oil processing in 2021.
Nowadays, China is taking the lead in the global steelmaking industry. Its several huge steel plants cope with both domestic and foreign demand. Besides, this emerging economy is challenging European and American oil refineries.
Experts acknowledge that China has been at the forefront of the robust expansion of Asian economies. China owes its economic power to increasing capacities of its local oil processing plants as well as launching a few plants in India and the Middle East. China buys large volumes of petrol, diesel and other kinds of fuel for its oil processing plants. In parallel, output of oil companies in Europe and the US is dwindling.
The boom in China’s oil processing was driven by buoyant demand for petrochemical products as intermediate materials for plastics production. Experts say that even though Asian countries have entered the cycle of rapid economic growth, Asia remains a net petroleum importer. The International Energy Agency estimates that global oil consumption could shrink by 8.8 barrels per day in 2020. However, demand is expected to revive in 2021.