A New Era for Oil Refining and Chemicals as Three Major Forces Emerge

Europe: Golden Age Ends as Industry Hit by Wave of Closures

Data from the European Petrochemical Association reveals that since 2009, approximately 30 refineries have shut down continent-wide, leading to a 37% contraction in refining capacity over the past decade. Industry forecasts now indicate that 60% of Europe's total refining capacity is at high risk, accounting for 45% of the global high-risk total. Estimates suggest that between 40 and 50 European refineries may cease operations by 2035, primarily in France, Germany, and Italy, representing over 30% of Europe's total capacity. This trend is underscored by the withdrawal of several petrochemical giants from the European market.

On 6 October, Ineos announced the closure of two key facilities at its Rhenberg site in Germany, resulting in the loss of approximately 175 jobs. The units produce epichlorohydrin, chlorine, and caustic soda. The following day, on 7 October, INEOS announced a 20% workforce reduction at its acetyl plant in Hull, UK-the largest production base for chemicals like acetic acid and acetic anhydride in the UK and Europe. The company also plans to close its phenol plant in Gladbeck, Germany (650,000 tonnes/year phenol, 409,000 tonnes/year acetone); shut down propylene oxide and propylene glycol production in Cologne, Germany; and withdraw from relevant European Chemicals Council working groups by 2026.

In early October, ExxonMobil formally suspended two chemical recycling plant projects in Antwerp, Belgium, and Rotterdam, the Netherlands, involving investments of €100 million. ExxonMobil, once a key player, had previously sold parts of its European polyolefin operations to Ineos. In April 2024, it announced the permanent closure of its 425,000-tonne-per-year ethylene steam cracker in Gravelines, France.

In March, Royal Dutch Shell announced plans to explore US partnerships while preparing to close several European plants. By July 2025, this 'assessment scope' was upgraded to a 'formal exit plan', deciding to close aromatics and olefins units at its Rheinland site in Germany and certain units at Moerdijk in the Netherlands. A phased closure of the cracker at Mossmorran, UK, is planned between 2026 and 2027.

BP has sold all its European petrochemical assets to Ineos, marking a full withdrawal from Europe's traditional basic chemicals market. BP also plans to reduce capacity at its Gelsenkirchen plant by one-third.

Meanwhile, crude oil processing has been suspended at Livorno, Italy, while the Grangemouth site in the UK may also face closure.

LyondellBasell implemented exit measures between March 2024 and June 2025, proposing to sell four European olefins and polyolefins assets to Aequitas, with the transaction expected to conclude in the first half of 2026.

Saudi Basic Industries Corporation (SABIC) announced the closure of its 575,000-tonne-per-year cracker in Grinze, the Netherlands. It will also permanently shut down the No. 6 steam cracker at Wilton, UK, which has an ethylene capacity of 865,000 tonnes per year and has been idle since October 2020.

In July 2024, Dow announced the closure of three European chemical plants, with further shutdown plans to be announced in the fourth quarter of 2025. This includes halting a chemical recycling project at its Borun plant in Germany, which had an investment value exceeding US$100 million.

AkzoNobel will progressively close three production sites across Europe and Africa between 2024 and May 2025: Groot-Ams in the Netherlands, Cork in Ireland, and Lusaka in Zambia.

In April 2025, TotalEnergies announced the permanent closure by late 2027 of an ageing cracking unit at its Antwerp complex in Belgium. The facility has an annual capacity of 550,000 tonnes of ethylene and 230,000 tonnes of propylene.

This wave of closures is driven by multiple pressures: disruption from new energy vehicles, competitive pressure from new African capacity, rising carbon costs due to surging EU carbon prices, and challenges in North American shale gas regions. This represents a fundamental restructuring of the global chemical value chain, with the industry's centre of gravity shifting eastward.

China: Production Leader Pivots to High-End and Green

China has solidified its position as the world's largest producer and consumer of petroleum refining products. The industry is transitioning from 'scale expansion' to 'quality enhancement'. Leveraging its vast domestic market and comprehensive industrial chain, China's share of global chemical production capacity continues to rise.

According to Longzhong Information, China's refining capacity has stabilised at around 980 million tonnes in recent years, maintaining its position as the world's largest. Domestic refining capital expenditure has significantly slowed, marking a shift towards high-quality development. Strategies to reduce oil processing while increasing chemical production are enhancing refinery flexibility and global competitiveness.

Future Development Trends:

· High-end and Specialised Production: A shift from bulk fuels towards high-value-added chemicals, driven by large-scale integrated projects.

· Green and Low-Carbon Transition: Increased investment in energy-saving and carbon-reduction technologies under national 'dual carbon' goals.

· Intelligent Upgrades: Widespread application of AI and big data to boost efficiency and automate management.

India: Regional Hub at 300 Million Tonnes Refining Capacity

India's refinery capacity has expanded rapidly over the past four decades, from 557 thousand barrels per day to 4,970 thousand barrels per day. Excluding the impact of the 2020 global health crisis, refinery utilisation rates have exceeded 100% for 20 consecutive years, reaching a new high in 2023. International energy agencies anticipate India will be a primary driver of global crude oil consumption growth.

To meet domestic demand and expand exports, India is heavily investing in petrochemicals. Refining capacity is projected to exceed 300 million tonnes per annum by 2028, with a compound annual growth rate exceeding 6.5%. Fifty-eight percent of new capacity will come from expansions of existing refineries.

Future Development Trends:

· Downstream Integration: Major new integrated refining and petrochemical projects are enhancing overall competitiveness.

· Upstream Liberalisation: Policy reforms are attracting foreign investment to develop unconventional resources like shale oil and gas.

· Diversification of Import Sources: Actively expanding crude oil imports from non-OPEC+ nations to enhance supply resilience.

Middle East: Pushing into Downstream, High-Value Sectors by Leveraging Resources

The Middle East, with Saudi Arabia holding 16% of the world's proven oil reserves, is leveraging its resource base to extend into downstream sectors. A core goal of Saudi Arabia's Vision 2030 is to reduce dependence on crude oil exports. Middle Eastern refineries are a vital global supply source for refined products and chemicals.

Future Development Trends:

· Massive Downstream Investment: National oil companies are building world-class integrated projects to convert crude oil directly into high-margin chemicals.

· Development of Unconventional Gas: Vigorous development of shale gas and offshore fields to free up more crude oil for export.

· Global Expansion: Active investment in overseas refining and petrochemical projects in Asia to secure long-term export channels.