PTQ Q2 2025 Issue

Vol 30 No 3 Q2 (Apr, May, Jun) 2025 ptq PETROLEUM TECHNOLOGY QUARTERLY

Navigating tightening margins

S trong global crack spreads in the mid-2000s drove much of the investment in refinery capacity expansions that have come online over the past decade. However, narrowing crack spreads are expected throughout 2025 due to fuel surpluses for certain market segments, such as the bunker fuel market. For example, crude oil-based bunker fuels like low-sulphur fuel oil (LSFO) and marine gas oil (MGO) are readily available and relatively inexpensive. As we look ahead to 2025, refiners will likely see sluggish demand and regional supply disruptions amid ongoing geopolitical tensions. Global crude oil demand is increasing even with alternative fuels, to almost 104.5 million bpd. The shift to higher margins petrochemical feedstocks predicates continued refinery-petro - chemical integration in China and India, boosting naphtha processing capabilities (for example, for mixed feed steam crackers) while seeking flexibility in shifting production between fuels and naphtha. Going back to the fuels business, refinery conversions for sustainable aviation fuel (SAF) production are expected to continue in Europe and North America. Blending mandates like those in the EU could grow SAF demand by five-fold in 2025. Going forward, we could see more LNG-fuelled vessels and, later, ships powered by clean methanol, clean ammonia, and biofuels to meet greenhouse gas emissions standards, as discussed in the accompanying PTQ Gas 2025 publication. Certain markets and efforts towards circularity are falling short of goals. However, they are still viable, such as the monetisation of associated process gas (APG) from flaring in upstream and midstream oil and gas production. The prob - lem is that flare sites can be widely scattered or remote, making efficient connec - tions from individual sites to a small or medium-sized upgrading facility unfeasible. It is more efficient to leverage APG as an onsite energy source, such as for fuel - ling electric generators previously powered by diesel. In the past, diesel gensets were often used for power generation, but that solution is becoming less finan - cially viable as the cost of both diesel fuel and its storage increases. In addition, the specific CO2 footprint of APG is approximately 30% lower than diesel. Some interesting refinery expansion projects to watch are in the Indian subcon - tinent, which is covered in more technical and strategic detail at the Refining India 2025 conference hosted by PTQ and IDS. As many as 11 crude oil capacity expan- sion projects could come online in India through 2028. This includes the Ratnagiri megaproject with an estimated 1.2 million bpd of capacity, where hydrocracking capacity expansions could total more than 200,000 bpd across multiple project proposals, and distillate hydrotreating capacity could total more than 600,000 bpd. Elsewhere, several refineries have come online in the Middle East within the past year, and the impact of these refineries on global markets is still evolving. In addition to plant expansions, at least 11 new refineries and expansions to exist - ing refineries are being tracked for completion by the end of 2028. They run the gamut of major refinery units typically seen in refinery operations, as well as new configurations. For the industry targeting circularity and sustainability, processing and conver- sion of plastic waste-derived pyrolysis oil down to their basic monomer for re- entry into the plastics/polymer value chain is reaching a crucial point, as discussed in this issue’s article by BASF. These are just some of the segments influencing refinery and petrochemical complexity that first movers in the industry are trying to embrace, or they will decide to pursue other pathways to profitability.

Editor Rene Gonzalez editor@petroleumtechnology.com tel: +1 713 449 5817

Managing Editor Rachel Storry rachel.storry@emap.com Editorial Assistant Lisa Harrison lisa.harrison@emap.com

Graphics Peter Harper

Business Development Director Paul Mason sales@petroleumtechnology.com tel: +44 7841 699431

Managing Director Richard Watts richard.watts@emap.com

Circulation Fran Havard circulation@petroleumtechnology. com

EMAP, 10th Floor, Southern House, Wellesley Grove, Croydon CR0 1XG tel +44 208 253 8695

PTQ (Petroleum Technology Quarterly) (ISSN No: 1632-363X, USPS No: 014-781) is published quarterly plus annual Catalysis edition by EMAP and is distributed in the US by SP/Asendia, 17B South Middlesex Avenue, Monroe NJ 08831. Periodicals postage paid at New Brunswick, NJ. Postmaster: send address changes to PTQ (Petroleum Technology Quarterly), 17B South Middlesex Avenue, Monroe NJ 08831. Back numbers available from the Publisher at $30 per copy inc postage.

Rene Gonzalez

PTQ Q2 2025