Switching to green: global oil refining may decrease by 20% by 2035%
Tougher environmental and tax policies, as well as the expectation of lower oil demand, may lead to a 21% reduction in global refining capacity by 2035. This is stated in the research of the company "Implementation", which was reviewed by Izvestia. According to experts, over the past 10 years, about 10% of such industries have already been closed in the world. Most of them were in China, Europe and North America. What position Russia occupies in this market and what awaits domestic refineries against the background of the global transformation of the industry is in the Izvestia article.
What are the prospects for global oil refining
In recent decades, the environmental and tax policy in the field of oil refining has undergone significant changes related to global environmental trends, the transition to sustainable development and changes in the global energy sector. Against this background, about 10% of the world's refining capacity has already been reduced (9 million barrels per day) and another 21% (18.4 million barrels per day) is under threat of closure by 2035. This is stated in the research of the company "Implementation", which was reviewed by Izvestia.
From 2015 to 2025, the largest volume of closures occurred in the Asia-Pacific region (19%) and China (30%). In Europe, 20% of the global decline decreased, in North America, the Middle East and other countries — by 5% and 7%, respectively.
As noted in the study, in China in 2015-2018, mainly small low-tech oil refineries (refineries) with a total capacity of 1.8 million barrels per day were closed. Experts also cite tougher environmental and tax policies as reasons.
In Europe, the La Mede plant (153 thousand barrels per day) was closed in 2016 due to low efficiency. Three years later, the site was converted to biodiesel production. And in 2019, the American Philadelphia Energy Solutions went bankrupt (330 thousand barrels per day). Later, warehouses and distribution centers for non-fuel products were located on its base.
In the future, according to Imlements, the structure of the closure of refining capacities by region will change significantly. By 2035, Europe may lose almost half — 49% — of its capacity, or 6.5 million barrels. In China and other Asia—Pacific countries, 16 and 18% of oil refining will be closed, respectively, the Middle East will lose 41% of its capacity, and North America - 7%.
According to Ivan Timonin, the company's project manager, 101 out of 420 refineries are at risk. The most vulnerable are old, small and expensive plants without deep processing and petrochemical integration.
How the green agenda affects oil refining
According to Energy monitor for 2024, China was the leader in terms of refinery capacity, with almost 18.5 million barrels of oil per day. The United States and Russia ranked second and third with figures of about 18.4 million and 6.7 million, respectively.
According to Ekaterina Kosareva, Managing Partner of VMT Consult, there is a tightening of environmental regulations and tax legislation in the world today.
— In many countries, the requirements for emissions, fuel quality, and environmental monitoring have increased. As part of the EU's Green New Deal, the goal is to achieve carbon neutrality by 2050, which will have a significant impact on the oil and gas industry. Russia also has a strategy in place to achieve zero net greenhouse gas emissions (climate neutrality) by 2050," the expert recalled.
According to Ivan Timonin, the reduction in global refining capacity is not due to a sharp drop in demand for petroleum products, but primarily to a deterioration in the economic efficiency of some refineries.
— Several factors are forming the pressure at once: slowing demand for gasoline and diesel, electrification of transport, rising environmental and carbon costs, as well as competition from large modern complexes in Asia and the Middle East. China, which has long been the main driver of the growth in demand for hydrocarbons, may reach its peak in oil consumption as early as 2027-2030. At the same time, the share of traditional cars with internal combustion engines in global sales will fall below 50% by the end of the decade," the expert noted.
According to Sergey Tereshkin, CEO of Open Oil Market, taking into account the slowdown in oil demand, the commissioning of new capacities in China will slow down, while refinery capacities in Europe and North America will decrease.
— In general, the industry will adapt to changing market conditions.: The demand for jet fuel, as well as for low—sulfur fuel oil and gas oil for marine transport will continue to grow, while the consumption of motor gasoline is likely to reach a plateau," Ivan Timonin noted.
What awaits Russian refineries
In Russia, according to data for 2025, there are about 30 large oil refineries and about 80 mini-refineries. Their total capacity is estimated at 328 million tons of oil per year.
The draft energy strategy of the country until 2050 sets goals to maintain refining volumes, while increasing exports of petroleum products. According to the target scenario, it is assumed that production will amount to about 275 million tons, while shipments abroad will grow from 132 million tons in 2024 to 146 million tons in 2050.
The authors of the strategy expect that this will happen due to the transition of Russian motorists to gas-powered fuel and other types of ecological transport. The refinery's refining depth should also increase from 84.4% in 2024 to 95% in 2050.
Russia, according to Ivan Timonin, is in a different logic compared to Europe or China. For domestic processing, the main challenge is not only energy transition, but sanctions, logistics, access to technology and infrastructure sustainability.
At the same time, Russian exports have already largely adapted to the new geography. The share of friendly countries in exports of domestic oil and gas condensate increased from 41% in 2021 to 96% in 2025, and from 18% to 80% for petroleum products, although the physical volume of exports decreased from 133 million tons to 107 million tons.
— In the long term, demand is shifting to countries outside the Western bloc: they may account for about 62% of global oil consumption by 2040. Therefore, for Russia, the issue is not so much the mass closure of refineries as the technological and economic sustainability of the industry. The priorities are chemicalization, deep processing, digitalization, import substitution of critical technologies and the production of products with higher added value," said Ivan Timonin.
A separate factor is the slower transformation of domestic demand, the expert emphasized.
— In Russia, gas-powered fuels are developing faster than electric vehicles, but the total share of passenger cars powered by alternative fuels is still less than 5%. This means that the domestic market for petroleum products will change more slowly than in Europe, but this does not negate the need to modernize refineries," he said.
It is important for Russia to maintain its market niche as one of the largest suppliers of diesel fuel, Sergey Tereshkin believes. According to him, this is generally a realistic task, since the electrification of freight transport will be slower than that of passenger transport.
Since 2028, Russia has been operating a mechanism for the "reverse excise tax on crude oil", which encourages companies to modernize their refineries, Ekaterina Kosareva recalled.
— I do not rule out that low-tech mini-refineries may close in Russia, which are currently experiencing difficulties selling products to both foreign and domestic markets due to the price pressure of petrochemical monopolists. However, modern oil refining complexes will continue to develop. At least two plants in the Far East are currently under development," the expert noted.
In the West, in her opinion, they are trying to artificially adjust the green agenda within a certain time frame at the legislative level, preventing the market from developing organically, which could lead to serious fuel crises in the future.
Переведено сервисом «Яндекс Переводчик»
