Electric vehicles will cut global consumption of petrol and diesel, but urbanization could lead to higher demand for other refined oil products in the aviation, marine and petrochemical sectors.
Consultancy Rystad Energy says a global drive towards electrifying road transport to reduce carbon emissions could halve the world’s oil refining capacity demand in 2050.
“Going forward, we will be close to 90% electrification by 2050,” said Mukesh Sahdev, Senior Vice President and Downstream Head, Rystad Energy. .
Mukesh said electric vehicles will cut global consumption of gasoline and diesel, but demand for other refined oil products in aviation, marine and petrochemical sectors may remain high due to urbanization, which will be a challenge for the refining sector.
Global oil demand may increase in the near term.
He said, “How are we going to meet those demands with a 50% reduction in refining capacity? I think that’s a big sign that we may have a lot of shorts in the areas coming in with demand. “
“This will lead to a significant rationalization of downstream assets across the entire supply chain.”
For example, cokers upgrading units used to produce gasoline and diesel will have to shift their output to produce more petcoke to graphite in batteries, he said, adding that crude is converted directly to petrochemicals. Processing in is another trend.
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Still, global oil demand could pick up in the short term. The consultancy expects an increase in oil demand from the COVID-19 pandemic to drive global crude processing to 80.1 million barrels per day in the second half of 2021 as refiners maximize gasoline production.
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