Global refining stands at a pivotal crossroads as shifting regional demand patterns, escalating sustainability pressures, and heightened energy security concerns reshape the industry landscape.
According to research from Rystad Energy, although the number of refineries worldwide has decreased over the past two decades, overall refining capacity has expanded to meet the rising volume of oil requiring processing.
In the last 20 years, global primary refining capacity grew by approximately 13.5 million barrels per day (bpd), about a 15 per cent increase.
However, the absolute number of refineries peaked in 2011 and has since steadily declined — an outcome driven by aging infrastructure, shrinking profit margins, and weakening fuel demand amid advancing electrification.
The current growth in global refining capacity is primarily fuelled by the Middle East, China, and India, with China and India serving as key drivers in Asia.
China’s refining capacity nearly doubled from 10.6 million bpd in 2005 to an estimated 18.8 million bpd in 2025.
This expansion reflects efforts to meet rising domestic demand, bolster energy security, and position China as a major exporter of refined products.
India’s capacity also increased steadily from 2.9 million bpd in 2005 to about 5.2 million bpd in 2025, supported by strong domestic consumption and strategic investment in refining infrastructure.
The Middle East has similarly expanded refining capacity from roughly 8 million bpd to 13 million bpd over the past two decades, primarily through major additions in Saudi Arabia and the UAE.
This growth reflects a strategic shift to move beyond crude oil exports by capturing greater value through downstream integration.
The region is developing complex, large-scale refineries designed not only to serve growing domestic demand but also to supply key export markets globally.
Arne Skjaeveland, Vice President of Oil & Gas Research at Rystad Energy, explains the regional dynamics: “The Middle East and Asia are driving global refining growth by focusing on large, integrated mega-refineries that secure energy supplies and meet rapidly rising demand.
“In contrast, Europe and the US are retreating, with older, less efficient plants closing due to high costs and uncertainty over future fuel needs.
“This shift has sparked a wave of rationalisation, where smaller, less flexible refineries are being shut down while bigger, more adaptable facilities gain ground through economies of scale.
“Today, nearly all new projects are larger and more economically viable, so even though the total number of refineries worldwide has declined, overall refining capacity continues to grow significantly.”
Regarding emissions, the evolving refinery landscape tells a divided story.
Emissions intensity across the sector has remained relatively steady, but absolute emissions show a marked regional split.
Total refinery emissions surged in Asia and the Middle East owing to rapid capacity growth and throughput.
The newer, sophisticated refineries in these regions often consume more energy by design but achieve better carbon efficiency per barrel due to modern technologies and tighter integration.
In contrast, emissions in North America and Europe have remained flat or declined, driven mostly by retrofits and refinery closures rather than substantial carbon efficiency improvements.
As climate policies tighten and demand for low-carbon solutions increases, the gap between leading refineries in Asia and the Middle East and those lagging behind elsewhere is expected to widen, reshaping competitiveness and investment decisions within the sector.
A clear divide in strategies is visible among major global refiners.
Companies like Chevron and TotalEnergies focus on consolidation and modernisation amid stricter regulations and shifting fuel demand.
Chevron invests approximately US$1.5 billion annually upgrading legacy sites such as Pascagoula and Pasadena, achieving high utilisation rates of 86 per cent despite aging assets.
TotalEnergies is actively preparing for a lower-carbon future by integrating advanced biofuel technologies into its refining portfolio.
By contrast, national oil companies such as Saudi Aramco are aggressively expanding their refining footprints with multibillion-dollar investments.
Projects like the Jazan complex and joint ventures including YASREF and SATORP boost capacity and complexity but come with higher emissions intensity — averaging around 41 kilograms of carbon dioxide equivalent (CO₂e) per barrel — reflecting the processing of heavier crudes and energy-intensive operations.
This evolving global refining landscape underscores a balancing act between growing demand, sustainability imperatives, and energy security considerations that will define the sector’s trajectory in the years ahead.