LEE NICHOLS, EDITOR/ASSOCIATE PUBLISHER

Lee.Nichols@HydrocarbonProcessing.com

Business Trends

Over the past year and a half, the world has witnessed a dramatic fall in crude oil prices. By early November, both Brent and
West Texas Intermediate crude prices had fallen from around
$110/bbl to $48/bbl and $46/bbl, respectively. With such an immense price impact to the upstream sector of the industry, what
has that meant to the downstream sector over the past year? And
what does the future look like for downstream project growth?
These were some of the questions that Hydrocarbon Processing editors tackled at the 42nd Annual Hydrocarbon Processing
Forecast Breakfast. The forecast presentation provided attendees an insight into major trends affecting the downstream hydrocarbon processing industry (HPI). This included a forecast
on capital, maintenance and operating expenditures for the petrochemical, refining and natural gas/LNG industries in 2016.
The event also included the launch of Hydrocarbon Processings HPI Market Data 2016. HPI Market Data 2016 is the largest and most detailed outlook that Hydrocarbon Processing has
ever produced. The market outlook spans more than 130 pages
with over 55 tables and 100 figures of data, trends and detailed
editorial analysis. Highlights from the presentation, as well as
major trends to be seen in 2016 and beyond, are detailed below.
HPI Market Data 2016 provides a detailed breakdown on individual regions and sectors, as well as comprehensive analysis
on worldwide economic, social and political trends driving HPI
activity across all sectors. The full report can be purchased at
www.Gulfpub.com.
Global construction and investment. According to Hydro-

carbon Processings Construction Boxscore Database, new project numbers for 2015 could not keep pace with the number of
announced projects witnessed in 2014 (FIG. 1). New project announcements have fallen from over 500 in 2014 to 300 in 2015.
This represents a 40% decrease in new project announcements.
Over the past year, regions such as Africa, Asia and the US have
all gained new project market share (FIG. 2). The US has continued to show considerable growth in new project announcements.
This is due mainly to the US shale gas boom, which has provided
cheap feedstock to fuel the gas processing and petrochemical
industries. The region has also announced a multitude of new
refining projects to process lighter crude slates produced from
domestic shale basins. The Asia-Pacific region has increased new
project market share by 4% over the past year. The region also
maintains the greatest total number of active projects.
The Middle East has seen a substantial drop-off in new project
market share since its wave of new capacity announcements a few
years ago. Middle Eastern nations rely heavily on oil export revenues. With the decrease in oil prices, the regions oil exporting
nations have taken a substantial hit in government revenues. This

has delayed the implementation of certain downstream projects

and resulted in multiple project cancellations. Regardless, the
region still maintains a vast amount of capital-intensive projects.
Europes new project market share has remained at 12% due to
increased refining and petrochemical projects in Eastern Europe,
Russia and the Commonwealth of Independent States (CIS).
Just like the Middle East, Latin American nations rely heavily
on oil export revenues. The region has seen tremendous petroleum product demand growth over the past decade. From 2004
2015, regional oil demand has surpassed 7 MMbpdan increase of more than 2 MMbpd in just over 10 years. To satisfy the
growth in demand, Latin America has relied heavily on refined
product imports from the US. The region has announced major
refining projects to help curb imports, but the drop in crude oil
prices has left little money to fund capacity expansions. In the
short term, Latin American nations would rather import refined
fuels than invest in major expansions or grassroots facilities.
180
Total new project announcements by region, 20132015

Hydrocarbon Processing forecasts nearly

$340 B in total HPI spending in 2016

2013
2014
2015

160
140
120
100
80
60
40
20
0

Africa

Asia-Pacific

Canada

Europe* Latin America Middle East

US

*European project totals contain projects in Russia and the CIS

FIG. 1. Total new project announcements by region, 20132015.

Source: Hydrocarbon Processings Construction Boxscore Database.

14%, 12%, 12%

7%, 6%, 5%
24%, 31%, 36%

16%, 16%, 7%
6%, 4%, 8%

8%, 9%, 5%

25%, 22%, 26%

FIG. 2. Market share analysis of new project announcements, 20132015.

Source: Hydrocarbon Processings Construction Boxscore Database.
Hydrocarbon Processing|DECEMBER 201511