OilReiningtionaIEnergyForumtemberAreportbytheInternationalEnergyForumandS&PGlobalightstember____________________________________________________________________________Writtenandproducedby:AllysonChsmarkitcomrbuddsihsmarkitcom____________________________________________________________________________AbouttheInternationalEnergyForumTheInternationalEnergyForum(IEF)istheworld'slargestinternationalorganizationofenergyministersfrom71countriesandincludesbothproducingandconsumingnations.TheIEFhasabroadmandatetoexamineallenergyissuesincludingoilandgas,cleanandrenewableenergy,sustainability,energytransitionsandnewtechnologies,datatransparency,andenergyaccess.ThroughtheForumanditsassociatedevents,officials,industryexecutives,andotherexpertsengageinadialogueofincreasingimportancetoglobalenergysecurityandsustainability.____________________________________________________________________________AboutS&PGlobalCommodityInsightsFormorethan100years,S&PGlobalCommodityInsightshasbeenatrustedconnectorthatbringstogetherthoughtleaders,marketparticipants,governments,andregulatorstoco-createsolutionsthatleadtoprogress.VitaltonavigatingEnergyTransition,itscoverageincludesoilandgas,power,chemicals,metals,agriculture,andshipping.S&PGlobalCommodityInsightsisadivisionofS&PGlobal,theworld'sforemostproviderofcreditratings,benchmarks,analytics,andworkflowsolutionsintheglobalcapital,commodity,andautomotivemarkets._____________________________________________________________________________TableofContentsExecutiveSummary 3Introduction:TurbulentEnergyMarkets 4CurrentStateofPlay:RefineriesRunningatFull-Tilt 5DemandhasrecoveredfromCOVID-19 5Productpricesarerisingfasterthancrudeprices 6Noquickoreasyfixes 7HowWeGotHere:APerfectStorm 8ClimatepoliciesandCOVID-19acceleratedrefineryclosuresandgreenconversions 8MarketsroiledbyRussia’sinvasionofUkraine 9China’sunderutilizedrefiningcapacityunlikelytosavetheday 11algaspricesfeedbackloopHigherrefiningcostsandincreasedoildemandWhat’sNext:ReliefontheHorizon? 14Twomillionbarrelsperdayofnetcapacityisplannedtocomeonlinebyend-2023 14Historyshowsramp-upscouldtakeayearormore 14Balanceslikelytoremaintightforseveralyears 15Medium-TermInvestmentTrends 15Capexinvestmentneedstoreach$190bnthrough2030 15Downstreamdecarbonizationspendingontherise 16Russiancapacityupgrades(+650kb/d)willbestalled 16AnEvolvingDownstreamModel 17Refineriesarestuckbetweenthehammerandtheanvil 17Fuelstandardscontinuetotightenglobally 18Evolvingshippingregulations 18Biofueldemandtodoubleby2050 19EVpenetrationacceleratingandoffsetting4mb/dofdemandby2030 20Demandgrowthforpetrochemicals 21ChallengingInvestmentEnvironment:WhoSurvives? 22Paramountuncertainty 22Survivalofthefittestandlucky 23Conclusion 24_____________________________________________________________________________3yrttermdynamics?Globalrefiningcapacitydeclinedforthefirsttimein20yearsin2020,andagainin2021asthepandemicweakenedmargins,acceleratedrefineryclosures,andmotivatedofgrossatmosphericcrudedistillationcapacityclosedbetween2020andmid-2022.ioncapacityandreducedpetroleumproductexportsfromRussiaandChinahavedrivenrefinerymarginstorecordlevels.Productmarketsarecurrentlyfraughtasrefineryutilizationacrossmostregionsareatmaximum,inventoriesarelow,tsballoonedintheseverebottlenecksinthesector.?RussiaandChinaaretheprimarytwocountriesthathaveavailablerefiningcapacity,butlargestexporteroffueloilandheavyfeedstocks,butsanctionsandembargoshavedisplacednearly3mb/dofproductsthatarenoteasilyrerouted.Chineseproductexportsaredown30%from2019levelsasthegovernmenthasstrategicallyshiftedtoprioritizingdomesticmarkets.?Productmarketswilllikelyremainverytightuntilmid-decade.Morethan2mb/dinnetcapacityisscheduledtocomeonlinebyend-2023,buthistoryshowsdelaysandoriented,refineriestobebuiltastheenergytransitionwilllimittheneedforconventionalrefinerycapacityinthefuture.?Inboththeshort-termandmedium-term,thebalanceforfuelmarketswillbefragile.AnyngedrefineryoutagecouldcausehighandvolatilepricesTherewillnotbesignificantextracapacity,noranysignificantprojectscomingonline.Thisunderscorestheneedtomaintainrobustinventoriesandcontingencyplansforsupplies.outlookexpectationthattheenergytransitioncouldmakerefineriesstrandedassetshasdeterredtreaminthenextfewyears.?Downstreamrefiningcapitalexpenditureswillneedtoreach$190bnthrough2030forupgradestorefiningcapacity,petrochemicalfeedstockbuildouts,andsustainingexistingThisisdownnearlyfrompreCOVIDlevelsandwilllikelybemetMeanwhileinvestmentsinpetrochemicalcomplexesanddownstreamdecarbonizationeffortsaresettorise._____________________________________________________________________________4?Only2.3mb/dofnetCDUcapacitywillcomeonlinebetween2022-2027.TheaddedcapacitywillbeconcentratedeastofSuez.Capacitywillshiftgeographicallytobetterreflectglobalconsumptionpatterns.?Theenergytransitionsanddecarbonizationpolicieswillmeanthedownstreamsectorwillneedtoreduceyieldsoftraditionalhydrocarbontransportationfuelsandincreasepetrochemicals.?PassengerEVsalesareforecasttorisesharplyintheupcomingyearsaspolicysupportcontinues,thecostofEVmanufacturingdeclines,andmoreEVmodelscometomarket.Plug-invehiclesalesareforecasttogrowfrom6.6millionin2021,to35.7millionin2030.y65%ofthecapacityadditionsoverthenextdecadewilladdatleast300thousandbarrelsperday(kb/d)incapacity.Mega,integratedrefining-and-petrochemicalplantshavebeenthemostresilientinrecentyears,duetotheirflexibilityandscale.?Thelaststandingrefinerieswillbeefficientandhighlyintegratedcomplexesthatleveragedecarbonizationtechnologiesanddigitalization.Investorswilllookbeyondthecurrentforthepotentialforhydrogen,greenfuels,andCCUS,evenif,insomecases,theydonotachievestrongprofitorperformanceintraditionalfuelmarkets.bulentEnergyMarketsEnergydemandandsupplyhavebeenrockedonaglobalscaleoverthepasttwoyears.COVID-19createdaglobaldemandshockthatsankcrudeandpetroleumproductpricestonewlows.Thenaspandemiclockdownpolicieswaned,demandrecoveredstronglyandwasimmediatelymetwithasupply-sideshock;initiallyasproducersscrambledtorampcapacitybackup,thenassanctionsandembargosimpactedRussianenergyproductionfollowingMoscow’sinvasionofUkraine.Crudeoilanddownstreammarketsareofteninfluencedbyglobalfactors.Today,geopolitical,economic,andpolicyoutcomesarehighlyuncertainandarecomplicatinganddelayingenergymarketsfromfindingbalance.Energysecurityhasmadeasuddencomebacktotheforefrontofpolicyconcerns.Thecurrentcrisesaccentuatetheneedforgovernmentstostrikeadelicatebalancebetweenacceleratingtheenergytransitionfortomorrowandensuringadequateenergysuppliesneededtoday.Theenergytransitionhasandwillcontinuetorestructurethelandscapeandbusinessmodelfortheoilandgasupstreamanddownstreamsectors.Demandgrowthwillshiftfromhydrocarbon-basedtransportationfuelstowardpetrochemicalsandbiofuelsalongnewtraderoutes.Investmentsadaptingtothesefuturechangesneedtobestrategicandcatertoevolvingdemandtrends._____________________________________________________________________________5Thisreportfocusesonthepositionofthedownstreamrefiningsectorintoday’sdisruptedenergyenvironmentandhowfundamentalswillevolveintheshort-andmedium-term.Wealsoexaminethehurdlesforinvestmentthrough2030andhowtheenergytransitionisreshapingthedownstreambusinessmodel.urrentStateofPlayRefineriesRunningatFullTiltDemandhasrecoveredfromCOVID9GlobaloildemandhaslargelyreboundedfromtheCOVID-induceddrop.However,therecoverysacrossregionsandfueltypesChinasCOVIDzeropolicyhasresultedinsignificantlockdownsoffandonin2022whilemanyothercountrieshaveremovedbarrierstotravel.Globaljetfueldemandremains~15%belowpre-COVIDlevelswhilegasoline,diesel,andLPGdemandareatorabovepre-pandemicquantities.archandhasgrownbymbdThisputspressureonallavailablerefiningcapacitytorunathighutilizationlevelstokeepupwithdemand._____________________________________________________________________________6pricesarerisingfasterthancrudepricesTightnessinglobalrefiningcapacity,lowinventories,andcontinuedstrongdemandarepushingpetroleumproductpriceshigherrelativetocrudeoilprices.Asaresult,refiningmargins(commonlyassociatedwithproduct“crack”spreads)balloonedtorecordlevelsin2Q2022andwerethreetofivetimeshigherthanthefive-yearaverage.Marginstimesabovethefive-yearaverage.Thereiseveryeconomicincentivetoproducemoreproduct,buttheresimplyislittleavailablerefiningcapacitytodoso._____________________________________________________________________________7asyfixesorbringmorerefiningcapacityonlinequickly.Buildingnewcapacityrequiressignificantcapitalandlonglead-times.Strategiccrudeoilinventorieshavebeentappedmultipletimestorelievemarketssincethebeginningoftheyear,demonstratingthesenseofurgencytosupplymarkets.TheUSandIEA(about1.0-1.2mb/dformostoftheyear),butonly8%oftheamountscheduledtodrawarepetroleumproductsand92%crudeoil–bluntingthereleases’effectivenessgiventightmarketstcontrolledstocksandarepredominatelylocatedinEvidinglittlebuffertothemarket._____________________________________________________________________________8Somegovernmentshavereducedfueltaxesorprovidedsubsidiestoshieldconsumersfromhighprices.Whilethismayprovidesomerelieftoconsumers,itprolongstightnessinthemarketbytoincreasesupply,itappearsincreasinglylikelythatdemanddestructionistheonlypathtorebalancingthemarketuntilnewcapacitycomesonline.ereAPerfectStormClimatepoliciesandCOVIDacceleratedrefineryclosuresandgreenconversionsSinceJanuaryninecountrieshaveclosedatleast15%oftheirnationalrefiningcapacity,includingseventhathaveclosedmorethan30%.Around80%oftheclosuresandconversionssinceCOVIDbeganhaveoccurredinOECDcountrieswhere,ingeneral,environmentalregulationsaremoremature.TheseclosureswereforthemostpartpredictedtohappenabsentCOVID,butoverthecourseoffiveormoreyears,notallatonce.Whilethepandemicslowedconsumptionofpetroleumproducts,progressonclimatepolicyaccelerated.Mostofthenetzerocommitmentsmadebynationalgovernments,companiesandfinancialinstitutionsweredeclaredin2020and2021.Whilelonger-terminnature,thesetargetshavereinforcedtheexpectationthatoildemandwilldeclinelong-termandlessrefiningcapacitywillbeneeded._____________________________________________________________________________9Sinceearly,refinerieshaveclosedforavarietyofreasons:?Poormarginsandprohibitivecostsmeantitwasnotprofitabletofixsomedamagedrefineries.?Otherrefineriesclosedbecausetheywereunprofitable,ill-equippedforcomingchanges,orbecauseofpressuresfromothermore“competitive”refineries.?Otherrefineriesconvertedtoproducegreenfuels.Theseclosures/conversionsincluderefineriesacrossnearly20countriesandrangeinsizefromkb/dto270kb/dofCDUcapacity.Additionally,newrefinerystart-upsweredelayedbyissuesrelatedtosupplychains,labor,andcapital(e.g.615kb/dAlZourrefineryinKuwaitand618kb/dDangoterefineryinNigeria).sroiledbyRussiasinvasionofUkraineRussia’sinvasionofUkraineisspurringanunprecedentedreshufflingofglobalrefinedproductexportsarestrugglingtofindbuyersandsignificantamountsareendingupinforeignandlimiteddomesticinventories,forcingdomesticrefineryrunslower.ReroutingtraditionalflowsofRussia’spetroleumproductexportsismorecomplicatedthanfortoaspecificmarket(octane,sulfur,ethanoletc.),andthescarcityofalternativesuppliesforimportersiscausingpricestorise.Reroutingofproductflowsisalsoresultinginlongerdistancetripsforcleantankers(tankersthatcarryrefinedproductsratherthancrudeoil).Longerdistancetripstranslateintofeweravailableshipsforbookingandhighertankerratesingeneral.ofproductspre-invasion,ofwhichtheEUimported2.2mb/dwhiletheUSimported0.4mb/d._____________________________________________________________________________Becauseofverylimitedalternativesupplies,EuropeandtheUShavestruggledthemostwithselexportsfromtheUSIndiaandtheMiddleisalsocommonlyexportedtoEuropefromRussia;however,lowerEast-of-Suezdemandiscurrentlyeasingavailabilityandprices.OncetheAsiancrackerdemandreturnslaterin2022,themarketisprojectedtotighten.IfRussiacannotfindbuyersforitsdieselandsemi-processedfeedstocks,refineryrunswillhavetofallfurtheronceinventoryoptionsareexhausted.ThiscouldresultinaverytightornegativetcouldndomesticrefineryrunsThiswillputmorestrainonthealreadytightglobalproductmarket.ThemostlikelyalternativemarketsforRussianproducts,particularlydiesel,areAfricaandLatinAmerica.However,thetransittimeforproductdeliveriesfromRussiatoWestAfricaandLatinAmericais25-30days,comparedto8daystoEurope.Alreadyhighfreightrates,andaloominginsurancebanmeansthesetradesmaybeuneconomicforbothbuyerandseller.AnEUembargoonimportingRussiancrudeviapipelinecomesintoeffecton5thDecember2022,andabanonimportingrefinedproductsofRussianoriginfrom5thFebruary2023.Thereareallproductimports.embargo.Withoutinsurance,manyshipowners/operatorswillbeunabletotransportRussiancargoes,drasticallylimitingthenumberofvesselsavailabletoRussianexporters.AlternativestoLondondominatedshippinginsurancesystemareverylimitedandmaynotbeacceptedbysomemarketparticipants.TheRussianSovkomflotfleetisnowinsuredbydomesticinsurers,however,thefleetsizeisrelativelysmallcomparedtototalRussiancrudeoiltrade.EUandparticipatinginsurershaveuntiltheendof2022toenacttheban._____________________________________________________________________________llowexemptionfromtheinsurancebanforpurchasesbelowacertainprice.However,thefullimpactofapricecapisuncertain,asitwillrequireunwaveringcooperationfromimportingcountriesandwilldependonRussia’swillingnesstosellatsteepdiscount.Finally,tradefinanceisafurthercomplicationtodisplacingRussianoilfromtraditionalwesternheEUbanisinplaceRussianandnonsanctionedcountrybanksmaystepintoprovidethisvitalservicebutatanaddedcostandlevelofuncertainty.MostlargeinternationaltradinghouseshavestatedtheywillnottradeRussianoilanditisthesecompaniesthathavekeycontractswithAfricanandLatinnationstosupplyproducts.ChinasunderutilizedrefiningcapacityunlikelytosavethedayOutsideofRussia,Chinaisoneofthefewplaceswherethereisunderutilizedrefiningcapacity.However,thiscapacityisunlikelytohelpeaseglobalmarkets.oincreaseexportsChina’sgovernmentprovidesrefinery-specificexportquotalimitsontransportationfuelsandhasbeenreigninginthesequotasformorethanayear.Thetotalexportquotaallocationforthusfarisonparwith2021butdown~30%from2019levels.Thereductioninexportallocationsfrom2019-20levelsisastrategicshifttoconsolidatedomesticsuppliesandmeetdecarbonizationtargets(althoughthedecarbonizationtargethasbeenrelaxedthisyeartobalanceeconomicgrowthandensureenergysecurity).Chinaincreasedtotalproductexportsfromkbdin2013to1.4mb/din2019.Sofarin2022,anddespitecontinuedrefinerycapacityadditionsandrecordcrackspreads,exportshaveaveragedonly950kb/d,includingonly530kb/dofprimarytransportfuels._____________________________________________________________________________China’sgovernmentclimatepoliciesaimtoreduceinefficientrefiningcapacity.CDUcapacitywillcontractmid-decadewhiledomesticdemandwillcontinuetogrow.China’sdomesticmarketsforrefinedproductswilltightenthroughthemedium-termincreasingthelikelihoodthatreducedproductexportsarethenewnormasChina’sgovernmentfocusesonsecurityofsupply.HighnaturalgaspricesfeedbackloopHigherrefiningcostsandincreasedoildemandSoaringnaturalgaspricesmaynothavehadasmuchofanimpactonproductmarketsasthethreeissuesraisedabove,butithasbeenacontributingandcomplicatingfactor.Refineriesusesignificantamountsofnaturalgas,primarilyforheatneededindistillationandhinEuropeandAsia,nearing$300-450perbarrelequivalent(atthetimeofwriting),significantlyincreasingtheoperatingcostsforregionalrefineries.Theincreaseinrefinerycoststhengetspassedthroughtoconsumersvialargerspreadsbetweenpetroleumproductsandcrudeoil._____________________________________________________________________________Refineriesusenaturalgastomakehydrogenthatisinturnusedtoremovesulfurfrompetroleumproductssothattheycanmeetqualityandenvironmentalstandards.Highernaturalgaspricessmorecostlyandthereforefurtherdrivinguppricesforverylow-sulfurpetroleumproducts.Theproductionofdieselfromhydrocrackingunits,whichconsumeslargequantitiesofhydrogenperbarrelofproduct,areparticularlycostlyandresultinginhighdieselandjetfuelcrackspreads.Refineriesalsousesignificantamountsofelectricitytooperateequipment,whichissometimesgeneratedonsiteusingnaturalgas,orpurchasedfromthelocalgrid.Dependingontherefinery’sesresultinginyetanotherincreaseincoststransferredontopetroleumproductprices.Highnaturalgaspricesarealsoleadingtofuelswitchingincertainsectorsandlocations.Certainoilttothisswitchinginadditiontothelimitedequipmentcapacityforthesefuels.Still,anecdotalevidenceshowsGermanhavebeenbroughtbacktoreplacenaturalgas.Duringhighnaturalgaspriceslastwinter(2021-opeNortheastUSPakistanandotherlocationsturnedtomoredirectburnofcrudeoilandpetroleumproductsforpowergeneration.costs,leadingtohigherpetroleumproductprices,whiledemandforfuelincreasesassomeindustrialconsumersswitchfromnaturalgastopetroleumproductsbecauseofhighnaturalgasprices._____________________________________________________________________________What’sNext:ReliefontheHorizon?Twomillionbarrelsperdayofnetcapacityisplannedtocomeonlinebyend-2023entanincreasinglylikelynegativedemandshockthebesthopetorebalancethemarketandlowerproductpricesaretheramp-upoflargenewrefineriesintheMiddleEast,Africa,andAsia.edontimeandcanrampupoperationsquicklybothfarfromguaranteed.ryshowsrampupscouldtakeayearormoreHistoryshowstherecouldbedelaysorchallengesinrampupoperationsofnewrefineries.Largemorethantwoyears.Ramp-upoflarge-scalerefineries(+150kb/d)areoftenriddledwithdelaysandvariability.Eachlarge-scaleplantfacesuniquechallenges,asattestedbydelaysinJizan(KSA—abovegroundrisks),Ruwais(UAE—fire),andRAPID(Malaysia—fire)._____________________________________________________________________________lanceslikelytoremaintightforseveralyearsGradualramp-upsandunexpectedchallengeswilllikelydelaymarketbalancingtothemiddleofregularity—willfurthertightenthemarketandlengthentherebalancingtimeline.Inthepast,highrefiningmarginsledtomoreinvestmentandexpandedrefiningcapacity,buttheexpectationsthistimearedifferent.Theenergytransition,shiftingconsumerpreferences,andgovernmentpolicies,haveresultedinconcernsthattherefineryinvestmentstodaycouldbecomethestrandedassetsoftomorrow,amajordeterrenttonewprojectdevelopment.Asaresult,thelastgroupofmajorgreenfieldfuel-only-orientedrefinerieshavelikelyreceivedfinalinvestmentdecisionsandwillcomeonstreaminthenextfewyears.stmentTrendsCapexinvestmentneedstoreachbnthrough2030Downstreamcapitalexpenditureswillneedtoreach$190bnthrough2030forupgradestoatmosphericcrudedistillationunit(ACDU)capacityandconversion/secondarycapacity,andforsustainingexistingassets.Thisisdownnearly50%frompre-COVIDlevelsandwilllikelybemet._____________________________________________________________________________Fuelbalanceswillloosenslightlyin2025-2026asnewcapacityisrampedup,butthentightenagainthrough2030untiltheenergymixtransitionstolowercarbonalternatives.ThelackofinvestmentforCDUcapacitypost-2025meanstightmarketswillonlyberelievedbyreductionstodemand,eitherfromhigherpricesorfromEVandbiofuelsubstitutions,asnewsupplywillbeamdecarbonizationspendingontheriseAlongsideinvestmentsintransportationfuelsandpetrochemicalcapacity,refineriesarealsooperationsThemaincategoriesincludecarbon-relatedefficiencyimprovements,low-carbonhydrogenproduction,andcarboncaptureandstorage.Biofuelsandpetrochemicalintegrationareexcludedfromthiscategory(discussedinmoredetailbelow).Themajorityoftheseclean(low-carbon)refinery-focusedinvestmentsareconcentratedinEuropeandNorthAmerica,supportedbyemissions-reductiontargets.However,ChinaandpartsofAsiawillquicklycatchupafter2040.Thetimingandapproachtocleantechinvestmentwillvarystronglybetweenregions,withpoliticalsupportandcompanyESGgoalskeyininfluencingcapitalflows.Globally,therefiningindustryisoncleantechnology,whichisinadditiontothetraditionalcategoriesofcapex(ACDUcapacity,conversioncapacity,andsustainingassets).ssiancapacityupgradeskbdwillbestalledTheongoingRussianinvasionofUkrainewillexacerbateoilanddownstreammarketuncertaintyandcomplexitynotjustintheshort-term,butdurably.ForyearsRussia’sgovernmenthasbeensupportiveofrefinerymodernizationeffortsandhasprovidedsubsidiesthatsupporttheseprojects.In2020-2021,14refineriessignedinvestmentagreementswiththegovernmentthatenvisagedacollectiveRUB800billion($13bn)investmentinconversioncapacityprojects.Thiswasexpectedtohelpstreamabout662kb/dofconversion_____________________________________________________________________________eproductslikediesel.AsaresultofRussia’sinvasionofUkraine,WesterngovernmentsimposedseveralroundsofsanctionsincludingabanontheexportofWesternrefiningtechnologyandequipmenttoRussia.Despitesomedomesticalternatives,RussiahasbeenextensivelyrelyingonWesternrefiningtechnologyandcatalysts.SanctionswillalsomakeitdifficultforRussiatosourcereplacementpartsifthereareanyaccidents/damagestodomesticrefineries.ThiscouldultimatelyleadtoRussianeedingtoimportproductsthatitcurrentlyproducesdomestically.EvenifRussiacansourcerefiningtechnologyfromalternativeproviders(potentiallyChina),itisstillhighlyuncertainiftherewillbefundingfortheseprojectsandanoutletforRussiandieselexportsbythetimeprojectsarestreamed.Thusonlyaroundhalfoftheseprojectsarenowexpectedtoberealized,mostlythosethatarealreadyclosetocompletion.AnEvolvingDownstreamModelneriesarestuckbetweenthehammerandtheanvilEveninlesscomplicatedtimes,refiningwasachallengingsectorinwhichtomakeinvestmentlypushforlowerdemandforpetroleumproductsthroughfuelefficiencyimprovementsandtheuseofbiofuels,whilealsorequiringrefineriestoinvesttomeetincreasingenvironmentalstandards.Additionally,refineryinvestmentdecisionsneedtoconsiderfluctuationsinboththesupplyandcharacteristicsofcrudeoil,aswellasshiftingpatternsinpetroleumproductdemand.Theenergytransitionnowfurthercomplicatestherefininginvestmentcalculus,throughstructuralchangestotheenergydemandmix,especiallyinthetransportationsectorwherethepaceofchangeishighlyuncertain._____________________________________________________________________________ndenergysourcesWiththeseshiftsTraditionaltransportationfuelswillremainanintegralpartoftheenergymixfordecadestocome;however,higherfueleconomystandards,biofuelsandelectrificationwilltogethercausehydrocarbon’scontributiontothesetransportationfuelstoplateauby2028.Waningdemandgrowthwillcaptheinvestmentneededfornewrefiningcapacity.Ascomplexindustrialfacilities,refinerieshavealonglifeandarequitecapitalintensive,forcinginvestmentdecisionstobedrivenbytheexpecteddemandandreturnsoverthelongterm—morethanjustadecade.rdscontinuetotightengloballyMostmajormarketsarenowatultralowsulfurlevelsegpartspermillions)foron-roadfuels.BeginninginApril2020,IndiaadoptedEuro6equivalentfuelstandards,whileIndonesia,BrazilandSaudiArabiaareheadingforlowersulfurstandardsinthemedium-term.Otheremergingeconomieswilllikelyfollowsuit,resultingingreaterglobalconvergenceonfuelqualitystandards.Thesenewstandardswillrequire