Middle Distillate Refining Market - Global Industry Analysis, Size, Share, Growth, Trends and Forecast, 2013 - 2019

Globally refiners continue to face several challenges as environmental policies are becoming increasingly stringent. The profitability of refiner’s is influenced because of strict regulations on sulphur content of gasoline & diesel oil and curbs on refinery emissions. Agencies such as the International Maritime Organizationhas already proposed changes in specifications of bunker fuel oil. These regulations will drastically impact the refinery’s profitability which would then have a tough time increasing or maintaining current refining margins. Thus those refineries which currently produce a substantial amount of residual oil and lack the complexity to upgrade it to middle distillates will face difficulties. They either have to invest in commercially proven and reliable solutions to convert residual oil to more valuable liquid products or face a threat to shut down the refinery as the operation becomes uneconomicalto continue. With the increasing crude oil prices and growing demand for middle distillates refiners have felt the need to invest in this segment.

The increasing demand for middle distillates is one of the primary driver for this market. With strict environmental norms, the need to install upgradation units is becoming a necessity if refiners want to stay in the market. Globally the production of sweet grade crude oil has declined and is costly if compared to sour grade crude. Thus to maintain the refining margins the refineries need to install upgradation units and increase the productivity of middle distillates.The decision on which technique to use must be arrived at before installation of such upgradation units. Some of the market restraints hindering adoption of such units include huge capital investments, high replacement lead time of the new unit with the older one. However as the demand for high sulphur products is in a downtrend due to strict environment policies, refiners need to invest in conversion units in future. Thus there is definitely an opportunity for players who wish to providerefiningsolutions in this market segment.

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Middle distillates can be obtained using a number of process units. The common processes are: Distillate hydrotreater, Fluid catalytic cracking, Reforming, Hydrocracker, and Visbreaking. The decision on which process to adopt depends on the sulphur content of the crude oil and the configuration of end products desired. All these techniques are adopted by refineries to break down heavy fractions into more valuable lighter products. These refining processes are also used to remove or lower the impurity content present in the refined products, depending upon the market needs.

The current demand for middle distillates is not only expected to grow in the US, Europe but also in the emerging markets. Currently refining investment is mainly made in Asia-Pacific especially China and India, theMiddle East, Russia and LatinAmerican regions. This is because of increasing demand for refined products in these regions. Existing refineries in these areas have to invest in deep conversion units to comply with the strict product qualityspecifications. Some of the major players present in this market segment are Warren Letzch, Honeywell UOP and Grooves Equipments.

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