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Released October 09, 2025 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Spending on new refinery capacity is shifting to Asia, the Middle East and Africa, driven by growing demand from those regions, according to a recent presentation by Industrial Info.
The presentation was prepared by Hillary Stevenson, vice president for energy intelligence at IIR Energy.
Click on the image at right for maps showing capacity shifts to the Global East.
Refining Capacity Increases Slow to Meet Demand
Refining capacity rose around 1 million barrels per day (BBL/d) each year 2022 through 2024. During that time, 2023 was the biggest increase year (~1.4 million BBL/d) when many grassroot projects that were delayed by the pandemic were completed. This helped to keep pace with global liquid fuel demand, which grew 1.5 million-2 million BBL/d each year for the same period.
Looking forward, refining capacity is still expected to grow between 2025 and 2027, but a slower pace. Global refining capacity for 2025-2027 is expected to grow by 620,000 BBL/d on average across those three years. Similarly, global demand is expected to rise at a slower rate of 1 million-1.5 million BBL/d annually for the same period.
Most of that demand growth will come from Africa, India and the Pacific Basin/Global East. Growing populations, particularly in Africa, India and Asia, are driving global refining projects, especially as a tailwind for capacity expansions and grassroot developments.
Demand from the U.S. and Europe is expected to remain flat or decline, due to the adoption of electric vehicles, higher vehicle gas mileage efficiency, flattening populations and changed transportation behaviors that have caused many refiners to seek exports, especially for gasoline.
Spending Outlook and Trends
Globally, $314 billion in refinery spending is planned for 2025-2027. High-probability projects that are expected to kick off in 2025 amount to $48 billion. This follows a "disappointing" $30 billion kicked off in 2024.
Most of the project spending ($237 billion) for 2025-2027 is earmarked for the Asia, Middle East and Africa regions, with $117 billion to be spent on new site construction.
In the Middle East, planned new capacity projects could push the regional refining capacity to 16 million BBL/d by 2030, rivalling capacity in the U.S. and China. Iran alone plans to add 1.5 million BBL/d in new capacity, but faces financing issues and international sanctions. Iraq, meanwhile, plans to add 1.2 million BBL/d, but faces challenges due to delays in project financing.
In the U.S., refining capacity has peaked despite a slight rebound following pandemic rationalizations. While some new plants are proposed, the startup of new grassroot refineries are unlikely for 2027-2030. Some refineries in California are set to close in 2025 and 2026, but most U.S. refineries are not at risk of closure during the next few years. The U.S. is expected to become a net exporter of gasoline as a result of global growth in gasoline demand thanks to a complex refining fleet and access to low risk, lower break-even crude supply.
For more on the California closures, see October 3, 2025, article - Phillips 66 Schedules California Refinery Closure.
This year looks to be another peak year in maintenance activity, as many planned maintenance turnarounds were pushed out from the previous year. Aging U.S. refineries require lots of maintenance. The average age of a crude distillation unit at operational refineries is 64 years. The oldest unit is 107 years old, and more than 3 million BBL/d of crude processing capacity is now more than 90 years old.
In Europe, where gasoline demand already has peaked, refinery capacity is falling, dropping from 8.47 million BBL/d in 2023 to 8.2 million BBL/d in 2025. That amount could rebound slightly in 2028 due to a larger unit replacement. Most refinery additions in Europe are for renewable fuel projects.
Alternative Fuels
As of September, global renewable diesel and sustainable aviation fuel (SAF) operating capacity was 8 billion gallons per year, with 70% of that amount in North America and 15% in Europe. The amount of renewable diesel and SAF capacity "is really laughable in the grand scheme of things," Stevenson said, noting that global diesel and jet fuel demand is more than 400 billion gallons per year.
Planned new capacity as of September amounted to 20 billion gallons per year. Planned spending for projects planned to kick off in 2025 through 2027 amounts to $129 billion.
About 2 billion gallons per year of capacity is under construction, with more than half of that in Europe. However, BP plc (London, England) recently pulled the plug on a $600 million SAF plant project at its Rotterdam refinery, and Shell plc has cancelled an 820,000 ton-per-year SAF project, also in Rotterdam. For more information, see October 6, 2025, article - BP Drops $600 Million Biofuels Plant in Netherlands and September 16, 2025, article - Shell Scraps Biofuels Project in Rotterdam.
Many projects in Europe are being planned alongside mandates that require both traditional and synthetic sustainable aviation fuel volumes. Synthetic fuel approaches (Alcohol-to-Jet, Carbon Dioxide-to-Jet) are being planned but not yet proven at scale.
Additional capacity in North America has stalled for a few years due to an uncertain regulatory outlook in the U.S., but more projects could kick off in 2026 through 2027 as a result of higher U.S. renewable fuel standard blending obligations and extensions to the 45Z tax credit for low-carbon transportation fuels.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).
The presentation was prepared by Hillary Stevenson, vice president for energy intelligence at IIR Energy.
Refining Capacity Increases Slow to Meet Demand
Refining capacity rose around 1 million barrels per day (BBL/d) each year 2022 through 2024. During that time, 2023 was the biggest increase year (~1.4 million BBL/d) when many grassroot projects that were delayed by the pandemic were completed. This helped to keep pace with global liquid fuel demand, which grew 1.5 million-2 million BBL/d each year for the same period.
Looking forward, refining capacity is still expected to grow between 2025 and 2027, but a slower pace. Global refining capacity for 2025-2027 is expected to grow by 620,000 BBL/d on average across those three years. Similarly, global demand is expected to rise at a slower rate of 1 million-1.5 million BBL/d annually for the same period.
Most of that demand growth will come from Africa, India and the Pacific Basin/Global East. Growing populations, particularly in Africa, India and Asia, are driving global refining projects, especially as a tailwind for capacity expansions and grassroot developments.
Demand from the U.S. and Europe is expected to remain flat or decline, due to the adoption of electric vehicles, higher vehicle gas mileage efficiency, flattening populations and changed transportation behaviors that have caused many refiners to seek exports, especially for gasoline.
Spending Outlook and Trends
Globally, $314 billion in refinery spending is planned for 2025-2027. High-probability projects that are expected to kick off in 2025 amount to $48 billion. This follows a "disappointing" $30 billion kicked off in 2024.
Most of the project spending ($237 billion) for 2025-2027 is earmarked for the Asia, Middle East and Africa regions, with $117 billion to be spent on new site construction.
In the Middle East, planned new capacity projects could push the regional refining capacity to 16 million BBL/d by 2030, rivalling capacity in the U.S. and China. Iran alone plans to add 1.5 million BBL/d in new capacity, but faces financing issues and international sanctions. Iraq, meanwhile, plans to add 1.2 million BBL/d, but faces challenges due to delays in project financing.
In the U.S., refining capacity has peaked despite a slight rebound following pandemic rationalizations. While some new plants are proposed, the startup of new grassroot refineries are unlikely for 2027-2030. Some refineries in California are set to close in 2025 and 2026, but most U.S. refineries are not at risk of closure during the next few years. The U.S. is expected to become a net exporter of gasoline as a result of global growth in gasoline demand thanks to a complex refining fleet and access to low risk, lower break-even crude supply.
For more on the California closures, see October 3, 2025, article - Phillips 66 Schedules California Refinery Closure.
This year looks to be another peak year in maintenance activity, as many planned maintenance turnarounds were pushed out from the previous year. Aging U.S. refineries require lots of maintenance. The average age of a crude distillation unit at operational refineries is 64 years. The oldest unit is 107 years old, and more than 3 million BBL/d of crude processing capacity is now more than 90 years old.
In Europe, where gasoline demand already has peaked, refinery capacity is falling, dropping from 8.47 million BBL/d in 2023 to 8.2 million BBL/d in 2025. That amount could rebound slightly in 2028 due to a larger unit replacement. Most refinery additions in Europe are for renewable fuel projects.
Alternative Fuels
As of September, global renewable diesel and sustainable aviation fuel (SAF) operating capacity was 8 billion gallons per year, with 70% of that amount in North America and 15% in Europe. The amount of renewable diesel and SAF capacity "is really laughable in the grand scheme of things," Stevenson said, noting that global diesel and jet fuel demand is more than 400 billion gallons per year.
Planned new capacity as of September amounted to 20 billion gallons per year. Planned spending for projects planned to kick off in 2025 through 2027 amounts to $129 billion.
About 2 billion gallons per year of capacity is under construction, with more than half of that in Europe. However, BP plc (London, England) recently pulled the plug on a $600 million SAF plant project at its Rotterdam refinery, and Shell plc has cancelled an 820,000 ton-per-year SAF project, also in Rotterdam. For more information, see October 6, 2025, article - BP Drops $600 Million Biofuels Plant in Netherlands and September 16, 2025, article - Shell Scraps Biofuels Project in Rotterdam.
Many projects in Europe are being planned alongside mandates that require both traditional and synthetic sustainable aviation fuel volumes. Synthetic fuel approaches (Alcohol-to-Jet, Carbon Dioxide-to-Jet) are being planned but not yet proven at scale.
Additional capacity in North America has stalled for a few years due to an uncertain regulatory outlook in the U.S., but more projects could kick off in 2026 through 2027 as a result of higher U.S. renewable fuel standard blending obligations and extensions to the 45Z tax credit for low-carbon transportation fuels.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).
