Despite narrower refining margins, downstream refinery capital spending will remain robust in the next two years, with about $9.2 billion worth of active capital projects (scheduled for construction start in 2016-2018) planned for 2016 and $9.3 billion in projects in 2017, according to market research firm Industrial Info Resources (IIR). Some observations of the downstream market that will pave the way for Optimization Projects:
- Crack spread continues to influence capital spend
- Oil prices fell quicker than prices of finished products creating a tailwind.
- Downstream margins fell in the later part of 2015 as gasoline and distillate inventories built up
- Capital project will be smaller reliability, optimization addressing octane improvements, sulfur reduction, and other regulatory-driven requirements.