According to Sandeep Sayal, VP of oil markets and downstream with S&P Global, one of the most pressing issues challenging the downstream industry is how to balance meeting the demand for traditional refined products with trying to make refinery and petrochemical investments in order to meet transition goals over the long term — all while remaining competitive.
Ghanim N. Al-Otaibi, deputy CEO of fuel supply operations with Kuwait National Petroleum Company (KNPC), said one particularly influencing factor that KNPC is facing when making big investments in the traditional fuel space is "the political situation" between Russia and Ukraine. "That highlights the importance of energy security," as Europe is tending to move away from the Russian products.
KNPC, Al-Otaibi said, has established "a sort of roadmap to understand how we can go faster" in achieving the goals of the company’s short-term and long-term planning.
"We are really open to any investment… that helps improve efficiency," Al-Otaibi said, speaking on a panel discussing investing in downstream during CERAWeek by S&P Global, held in Houston.
Politics, decarbonization impact downstream investment
Ghanim N. Al-Otaibi, deputy CEO of fuel supply operations with KNPC. Photo courtesy of CERAWeek by S&P Global.
Bryan Glover, president and CEO with Honeywell UOP, observed that more and more refineries are being designed to be a natural integration between fuels and petrochemicals.
"They’re sort of naturally taking the molecules and doing reasonable molecular management in order to generate petrochemicals and clean fuels that will be relatively low carbon intensity," Glover said. He added that there’s going to be a balance based on crude and the crude source and what that natural point is between petrochemicals and refining.
Glover said he believes this is especially important in the transitional climate for resource owners who seek to develop a profitable project, manage carbon intensity and design for the future.
"There are a lot of different strategies out there from entirely crude to petrochemicals, which can be done," Glover continued. "I think it’s increasingly looked at as a strategy today, but it all depends on the efficiency of the molecular management. You can do it ‘the difficult way’ — you can have a lot of capital and spend a lot of energy converting everything to petrochemicals — or you can do it in a little bit more of a holistic way with the right crude and the right kinds of low-intensity molecular management to make a lot of petrochemicals."
While crude to petrochemicals to completeness is one strategy, Glover said, balancing crude to petrochemicals is another.
"We certainly see within the industry a lot of existing refineries looking at a more balanced approach, whether that’s more propylene or perhaps adding ethylene capacity that is well integrated, and then lowering the intensity of fuel operations by introducing renewable fuels, clean hydrogen and electrification in some ways," he said.
The panelists agreed that expanding fuel and petrochemicals production in the face of uncertain demand has its own set of obstacles and challenges, regardless of whether their companies are resource providers or operating companies.
Justin Jackson, senior VP of process and chemicals with Wood, noted that mega-scale projects are going to continue, even though the amount of time it takes to complete some of these investments is considerable, as are the resources.
The reality is, Glover concluded, that sometimes there’s just uncertainty, "whether it’s about the regulatory scheme, about demand or acceptance of technologies. There’s just a lot of uncertainty out there."
