(John Kemp is a Reuters market analyst. The views expressed are his own) LONDON (Reuters) – Slumping fuel consumption during the pandemic is accelerating the long-term shift of refining capacity from North America and Europe to Asia, and from older, smaller refineries to modern, higher-capacity mega-refineries. The result is a wave of closures, often centring on refineries that only narrowly survived the previous closure wave in the years after the recession in 2008/09. Fuel consumption has been stagnant or falling across most of North America, Western Europe and Japan since 2007 as a result of efficiency improvements. North American, European and Japanese refineries have been left battling to protect their share of a declining market, creating downward pressure on profitability. The problem of overcapacity has been masked during periods of strong economic growth but exposed every time the business cycle turns down (tmsnrt.rs/3pgMb0V). ASIA FUEL GROWTH In contrast to Western Europe, North America and Japan, fuel consumption has grown rapidly across the rest of Asia over the last decade. The region’s three sub-markets in West Asia (centred on the Gulf), South Asia (centred on India) and East Asia (China) have been responsible for more than two-thirds of worldwide oil consumption… continue reading
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