Bloomberg. Oil storage tanks stand at the GS Caltex Corp. oil refinery in this aerial photograph taken above Incheon, South Korea, on Tuesday, April 28, 2020. South Korea has run out of commercial storage space for oil, according to people with knowledge of the matter, a development thats likely to intensify a global scramble for tankers to store crude and fuels. Photographer: SeongJoon Cho/Bloomberg
(Bloomberg) -- Predictions of peak oil and the impending demise of fossil fuels will hit Asian oil refiners especially hard. The region is home to three of the top four oil-guzzling nations, and more than a third of global crude processing capacity. Yet, Asian refiners are expanding at a breakneck pace, even building massive new plants designed to run for at least half a century.
What is going on?
After a century ofpowering the worlds vehicles, oil refiners are having to plan for an oil-free future in mobility as cars begin switching to batteries, ships burn natural gas, and innovation brings on other energy sources such as hydrogen. Goldman Sachs Group Inc (NYSE:GS). predicts oil demand for transportation will peak as early as 2026.
Yet, even as a slew of headlines announce oil major BP (NYSE:BP) Plc selling its prized Alaskan fields or Royal Dutch Shell (LON:RDSa) Plc pulling the plug on refineries from Louisiana to the Philippines, Asias big refineries are planning for a much longer transition. Chinese refining capacity has nearly tripled since the turn of the millennium, and the nation will end more than a century of U.S. dominance this year. And Chinas capacity will continue climbing to about 20 million barrels a day by 2025, from 17.4million barrels at the end of 2020. Indias processing is also rising rapidly and could jump by more than half to 8 million barrels a day in the same time.