Many oil refiners have announced project delays as crude oil prices fall amid a global economic downturn. Yet, while petrol-producing refineries in the US and Europe are struggling, China and other Asian countries, where local economies are recovering, are seeing a steady increase in refining capacity. This is driven by demand for plastics and petrochemicals , which have recovered from an earlier dip in demand. However, the uncertain situation across oil markets and shifting global consumption will still have a long-term impact on the oil refining industry. Last year, about 1.7 million barrels a day (bpd) of refining capacity was halted, with more than half of the stoppages happening in the US. This year, US polythene demand could shrink by 4 per cent, compared to a global dip of 0.8 per cent. In November, Royal Dutch Shell pulled the plug on its refinery in Convent, Louisiana, confirming its plans to slash its refining capacities. About two-thirds of European refiners are not making enough money in fuel production to cover their costs. Europe needs to reduce its processing capacity by a further 1.7 million bpd in five years, but some experts already anticipate the loss of 2 million bpd this year alone. In Asia, the situation seems radically different, as a new breed of integrated refineries sprout to convert oil into petrochemicals – the building blocks for everything from food packaging to car interiors – while producing fewer fuels such as petrol. According to industry consultant Wood Mackenzie, more than half of the oil refining capacity that comes on stream by 2027 will be added in Asia, and around 70-80 per cent of this will be plastics-focused. Overall, petrochemicals will account for more than a third of global oil demand growth to 2030 and nearly half through to 2050, the International Energy Agency (IEA) predicts. The increase will be driven by growing demand for plastics and other products. In comparison, petrochemical feedstock accounts for just 12 per cent of global oil demand now. Demand for petrochemicals in Asia is strongly correlated with macroeconomic growth. As Asia’s massive, still-developing economies continue to recover, there is an increasing demand for plastic and other petrochemical products. This outlook establishes Asia as the powerhouse for the industry and is set to attract many influential players. In April, ExxonMobil began constructing its US$10 billion petrochemical complex in Huizhou, China. According to the IEA, Chinese oil refining capacity is set to overtake that of the US next year. The region’s top consumers have been heavily investing in integrated refineries. In China, oil refining capacity has nearly tripled since 2000, and its crude processing capacity is expected to reach 1 billion tonnes a year by 2025, according to China National Petroleum Corp’s Economics & Technology Research Institute. This year, China started construction on the Yulong refinery and petrochemical complex in Shandong, a major project with investments totalling US$20.85 billion. It will include a refinery with a crude processing capacity of 400,000 bpd and an ethylene plant producing 3 million tonnes per year. Covid-19, climate crisis may not keep oil prices down for long China was already an oil refining and petrochemical powerhouse before the pandemic, re-exporting petrochemicals to East and Southeast Asian countries lacking the infrastructure. As its economy continues to recovery, its clout in the industry will grow, not just through increasing domestic production capacity but also through international expansion. In August, Russian petrochemicals producer Sibur and China Petrochemical Corp (Sinopec Group) began work on what is set to become the world’s largest polymer plant, the Amur Gas Chemical Complex in Russia. The US$11 billion venture is expected to produce 2.3 million tonnes of polythene and 400,000 tonnes of polypropylene per year. Sinopec is set to take a 40 per cent stake in the complex, which is due for completion from 2024. Petrochemical projections across Asia look healthy and, given that the region’s post-pandemic recovery will happen faster than in the West, we can expect more investments in the industry in the coming year. Dmitriy Frolovskiy is a political analyst and independent journalist. He is a consultant on policy and strategy, and has written about Russia’s foreign policy