Asia-Pacific Oil Refining Market Outlook, 2030

The Asia-Pacific oil refining market has undergone a significant transformation over the decades, evolving from a fragmented, import-dependent sector to one of the most dominant refining hubs in the world. Historically, the region’s refining capacity was concentrated in countries like Japan and South Korea, which industrialized early and built advanced refining complexes. India’s Jamnagar Refinery, operated by Reliance Industries, is the world’s largest single-site refining complex. Demand for refined petroleum products like diesel, gasoline, aviation fuel, and petrochemical feedstocks has remained strong, particularly in emerging markets. However, regional demand growth has started to decelerate due to increased electric vehicle adoption, improved energy efficiency, and shifting consumption patterns. In February 2024, in Weifang, Shandong Province, China, the world’s largest white oil hydro-processing unit for Hongrun Petrochemical Co., Ltd. was launched by Chevron Lummus Global LLC (CLG). White oil is a highly refined mineral oil that is used in a broad range of applications, including industrial lubricants, food processing, cosmetics, and pharmaceuticals. Regulatory frameworks across Asia-Pacific are becoming more stringent, with countries enforcing tighter emissions standards, mandating cleaner fuel production, and encouraging hydrogen integration and biofuel blending. For example, in June 2023, Mitsubishi UFJ Financial Group (MUFG) attributed its decision in financing the East African Crude Oil Pipeline (EACOP) to the exceptionally high level of interest in the project, which can be credited to the dedicated efforts of activists from the StopEACOP coalition, 350 Japan, and other campaigners from Japan to Uganda and Tanzania. The proposed EACOP pipeline would be the world's largest heated crude oil pipeline, spanning about 1,443 kilometers.

According to the research report "Asia-Pacific Oil Refining Market Outlook, 2030", the Asia-Pacific Oil Refining market is anticipated to grow at more than 5.38% CAGR from 2025 to 2030. Traditional fuel-only refineries are being replaced or upgraded with integrated units that produce both fuels and high-value chemicals, improving profitability and resilience. This trend is visible in mega-projects like China’s Hengli and Zhejiang refineries, which combine large-scale refining with petrochemical manufacturing. In October 2023, a subsidiary of Oil India, India’s NRL (Numaligarh Refinery Ltd.), planned to start production of ethanol at its biorefinery in the northeastern state of Assam from March, said Bhasker Phukan, the company’s managing director. Governments are also offering tax incentives and policy support for high-conversion refineries and green energy initiatives. For instance, India mandates ethanol blending in gasoline, while China requires new refinery projects to meet energy efficiency and environmental benchmarks. Supporting events like the implementation of IMO 2020, which capped sulfur content in marine fuels, and regional fuel quality upgrades have also propelled investments in cleaner refining processes. Furthermore, the rise of petrochemical-integrated refining complexes is helping companies hedge against falling transport fuel demand by targeting plastics and chemical markets. While oversupply and margin pressures exist especially in China where smaller "teapot" refineries are struggling the region’s refining leaders are re-strategizing by modernizing infrastructure and aligning with low-carbon and circular economy goals. The adoption of stricter emission norms like Bharat Stage VI in India and China VI standards for vehicles has forced refiners to produce ultra-low sulfur fuels, creating demand for advanced refining technologies such as hydrocracking and desulfurization. The IMO 2020 regulation, which limits sulfur content in marine fuels, has further opened up opportunities for compliant fuel production, giving an edge to sophisticated refineries with desulfurization capabilities. In January 2024, two new auctions for subsidies to support the uptake of green hydrogen in ammonia production and oil refining were launched by India’s Ministry of New and Renewable Energy.

Market Drivers

• Rapid Urbanization and Industrial Growth: One of the primary drivers of the Asia-Pacific oil refining market is the region’s ongoing urbanization and fast-paced industrial development. Emerging economies like China, India, Indonesia, and Vietnam are experiencing soaring energy demand due to expanding urban populations, infrastructure development, and a growing middle class. This has led to increased consumption of transportation fuels, petrochemical feedstocks, and industrial fuels, creating strong incentives for expanding refining capacities. Governments and private investors are actively building new refineries and upgrading existing ones to meet both domestic consumption and export requirements.
• Strategic Investments and Capacity Expansion: The Asia-Pacific region has become a hub for refinery investments, with countries like China and India aggressively expanding their refining infrastructure to secure energy independence and capture a larger share of the global petroleum product trade. Mega-refineries with integrated petrochemical complexes are being developed to improve efficiency and profitability. State-backed oil companies and global energy firms are forming joint ventures, particularly in Southeast Asia, to enhance refining output and modernize facilities with advanced technologies. This investment momentum supports long-term growth and global competitiveness.

Market Challenges

• Environmental Regulations and Emissions Control: While Asia-Pacific is growing rapidly, the region faces increasing pressure to comply with stricter environmental regulations aimed at reducing air pollution and carbon emissions. Countries such as China, South Korea, and India have begun enforcing fuel quality standards and emission norms that require substantial upgrades to existing refining facilities. These changes involve high capital expenditures and could impact the financial viability of older, less efficient plants. Moreover, meeting targets related to sulfur content, carbon intensity, and energy efficiency is becoming increasingly complex for refiners operating on thin margins.
• Geopolitical and Trade Instability: The Asia-Pacific oil refining sector is vulnerable to geopolitical tensions and trade disruptions, especially considering its reliance on crude imports from the Middle East and Africa. Any instability in major crude-supplying regions can create volatility in feedstock availability and pricing. Additionally, trade tensions between key economies (e.g., China and the U.S.) can affect equipment imports, technology access, and product exports. Supply chain disruptions caused by global events, such as pandemics or conflicts, further complicate the smooth functioning of refining operations in the region.

Market Trends

• Integration of Petrochemical Production with Refining: A growing trend in the Asia-Pacific market is the integration of refinery operations with petrochemical production to increase value-added output. Complexes known as "refinery-petrochemical integration" facilities are being established to convert more crude into petrochemical feedstocks rather than just fuels. This is particularly prevalent in China and India, where petrochemical demand is surging due to rising consumption of plastics, packaging, and industrial materials. This integrated approach allows refiners to diversify revenue streams and improve profit margins, especially as global fuel demand gradually plateaus.
• Adoption of Digital Technologies and Automation: Refineries across the Asia-Pacific are increasingly embracing digital transformation to improve operational efficiency, safety, and environmental performance. Technologies such as AI-driven analytics, IoT-based monitoring systems, predictive maintenance, and process automation are being deployed to optimize refining processes and reduce downtime. Governments and companies alike are investing in smart refinery initiatives to boost productivity, reduce emissions, and remain competitive in a global market. This digital push is particularly strong in technologically advanced countries like South Korea, Japan, and parts of China.

Diesel/Gasoil dominates the Asia-Pacific oil refining industry due to its extensive use in transportation, industrial machinery, and power generation, especially in rapidly developing economies.

The dominance of Diesel/Gasoil in the Asia-Pacific oil refining industry is primarily attributed to the region's high demand across multiple critical sectors, particularly transportation, construction, and power generation. Countries like China, India, Indonesia, and Vietnam are experiencing robust economic growth, which drives the need for heavy-duty transportation and industrial operations both of which rely heavily on diesel. In many parts of Asia-Pacific, diesel remains the preferred fuel for freight trucks, buses, and commercial vehicles due to its fuel efficiency, torque output, and availability. Moreover, with large-scale infrastructure projects underway across the region including highways, ports, industrial corridors, and urban transit systems the demand for diesel-powered construction equipment and transport logistics continues to rise. Beyond transportation, diesel plays a crucial role in the agriculture sector for operating tractors and irrigation pumps, especially in rural areas of India and Southeast Asia where electrification is limited or unreliable. Additionally, diesel-fueled generators are widely used for backup and off-grid power supply, particularly in remote or underdeveloped areas, supporting both residential and industrial needs. Even as global trends push toward cleaner fuels, the transition in Asia-Pacific remains gradual due to the high upfront cost of alternatives and the lack of sufficient infrastructure for electric or gas-based solutions. Furthermore, governmental subsidies on diesel in some countries and relatively stable refining margins for diesel products continue to incentivize refiners to prioritize diesel production.

The growth of electricity generation in the Asia-Pacific oil refining industry is driven by increasing energy demand in remote and industrial areas where oil-based fuels provide a reliable and flexible power source.

Electricity generation as an application type is experiencing growth in the Asia-Pacific oil refining industry largely due to the region’s surging energy demand, particularly in remote, rural, and rapidly industrializing areas that lack stable grid connectivity. Many Asia-Pacific countries, including Indonesia, the Philippines, Myanmar, and parts of India, face challenges in expanding national power grids across geographically dispersed islands, mountainous terrains, or underdeveloped zones. In such areas, diesel and fuel oil generators remain essential for consistent and immediate electricity supply, both for households and industrial users. Additionally, as economic growth accelerates across emerging Asia, the demand for energy to support mining, manufacturing, agriculture, and construction sectors continues to rise, often in locations where centralized power infrastructure is absent or insufficient. Oil-based fuels such as diesel, gasoil, and heavy fuel oil serve as convenient energy carriers due to their portability, high energy density, and well-established distribution channels. Furthermore, frequent natural disasters in the region such as typhoons, floods, and earthquakes disrupt traditional electricity infrastructure, making standby oil-powered generators critical for disaster response, hospitals, telecom infrastructure, and emergency shelters. The refining industry in Asia-Pacific is responding to this demand by ensuring stable supply chains and increasing production of refined fuels suited for power generation. Moreover, oil-based electricity generation is also employed as a strategic reserve capacity during peak demand periods or energy crises, especially in countries with fluctuating renewable energy output or limited coal and gas supplies.

The use of Natural Gas Liquids (NGLs) as a feedstock is growing in the Asia-Pacific oil refining industry due to rising petrochemical demand and their cost-effective, flexible use in producing high-value refined and chemical products.

The growing adoption of Natural Gas Liquids (NGLs) as a feedstock in the Asia-Pacific oil refining industry is largely driven by the region’s expanding petrochemical sector and the increasing need for cost-efficient and versatile raw materials. NGLs which include ethane, propane, butane, isobutane, and natural gasoline are valuable feedstocks used in the production of fuels and a wide range of petrochemicals, particularly ethylene and propylene, which are critical to plastics, packaging, automotive components, and consumer goods manufacturing. With countries like China, India, South Korea, and Southeast Asian nations experiencing robust industrialization and urbanization, the demand for petrochemical derivatives is surging. Refiners and integrated oil companies in the region are shifting toward NGLs because they offer higher yields of lighter, cleaner, and more profitable products compared to traditional crude oil. Ethane, for example, is especially preferred in steam crackers due to its high ethylene yield and lower CO₂ emissions during processing, aligning with both economic and environmental priorities. The increasing availability of imported NGLs primarily from North America and the Middle East has also made them a more attractive feedstock choice. Advancements in liquefaction, shipping, and storage infrastructure have improved the logistics and affordability of NGL imports, enabling refiners in Asia-Pacific to diversify their feedstock mix. This is particularly relevant in China and India, where state-supported refinery expansions are increasingly integrated with petrochemical complexes that rely on NGLs to enhance product flexibility and profitability.

Deep Conversion is the largest complexity type in the Asia-Pacific oil refining industry due to its ability to maximize high-value product yields from heavy and sour crude oils, aligning with the region's growing demand for transportation fuels and petrochemicals.

The dominance of Deep Conversion refineries in the Asia-Pacific oil refining industry is largely a result of the region’s need to process a diverse range of crude types, particularly heavy and sour grades, while simultaneously meeting the rising demand for high-value refined products such as gasoline, diesel, jet fuel, and petrochemical feedstocks. Deep Conversion refineries are equipped with advanced technologies like fluid catalytic cracking (FCC), hydrocracking, coking units, and residue desulfurization, which allow them to convert heavy residual oils into lighter, cleaner, and more profitable products. As Asia-Pacific economies like China, India, South Korea, and Thailand continue to industrialize and urbanize rapidly, the demand for transport fuels and petrochemical derivatives has grown significantly. Deep Conversion facilities are strategically positioned to respond to this demand by improving refining efficiency and maximizing yields of middle distillates and light ends, which are in high demand across the region’s transportation, power generation, and manufacturing sectors. Moreover, many countries in the region import crude oil from the Middle East and Latin America, which are often of lower quality and require more complex processing capabilities to meet product specifications and environmental standards. Deep Conversion units enable refiners to handle such challenging feedstocks economically while complying with stringent fuel quality regulations that mandate low-sulfur and cleaner-burning fuels. The shift toward petrochemical integration in Asia-Pacific also supports the growth of Deep Conversion refineries, as these configurations allow co-production of transportation fuels and valuable chemical feedstocks from a single site, optimizing profitability and resource utilization.

China leads the Asia-Pacific oil refining industry primarily due to its massive domestic demand, state-driven investments in refining capacity, and strategic focus on becoming a global exporter of refined petroleum and petrochemical products.

China’s leadership in the Asia-Pacific oil refining industry is driven by a potent combination of surging domestic energy demand, long-term industrial strategy, and significant investment in both capacity and technology. As the world’s largest energy consumer and second-largest oil consumer, China has developed a highly integrated and expansive refining sector to support its growing urbanization, industrialization, and transportation needs. Over the past two decades, China has rapidly expanded its refining capacity, now surpassing that of the United States, with key mega-refineries such as Sinopec’s Zhenhai Refining and Petrochemical Complex and Zhejiang Petrochemical’s Zhoushan facility leading the way. These state-of-the-art refineries are capable of processing diverse grades of crude oil and producing a wide range of high-value products including gasoline, diesel, jet fuel, and petrochemical feedstocks. This growth is largely state-driven, with major national oil companies like Sinopec, PetroChina, and CNOOC playing dominant roles, backed by strong government policy support, subsidies, and five-year economic planning cycles that prioritize energy security and industrial upgrading. Simultaneously, China has encouraged private sector participation in refining through liberalized investment policies, evident in massive privately funded complexes like Hengli Petrochemical. Beyond satisfying domestic consumption, China has strategically positioned itself as a major exporter of refined products. Moreover, China’s refining sector is increasingly focusing on cleaner, more efficient technologies to produce low-sulfur fuels and meet environmental standards, helping to future-proof its capabilities.

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