REPORT ATTRIBUTE | DETAILS |
---|---|
MARKET SIZE (2032) | USD 647.5 Billion |
MARKET SIZE (2023) | USD 435.5 Billion |
CAGR (2023-2029) | 6% |
HISTORIC YEAR | 2019 |
BASE YEAR | 2023 |
FORECAST YEAR | 2032 |
BY TYPE | Light Vacuum Gas Oil (LVGO) Heavy Vacuum Gas Oil (HVGO) |
BY APPLICATION | Gasoline Production Diesel / Kerosene Production |
GEOGRAPHIC ANALYSIS | North America, Europe, Asia Pacific, Latin America, and Middle East & Africa |
KEY PLAYERS | LUKOIL, TAIF-NK, Husky Energy Inc., Kaz Munay Gas, PJSC Lukoil, Axeon Specialty Products, Neste, Vertex Refining, Honeywell UOP, Gazprom Neft, Kuwait Petroleum Corporation, Zhejiang Petrochemical Corporation, Others. |
Vacuum Gas Oil Market Overview
The global vacuum gas oil market size reached US$ 435.5 Billion in 2023 and expects the market to reach US$ 647.5 Billion by 2032, exhibiting a growth rate (CAGR) of 6% during 2024-2032.
Vacuum Gas Oil Market Definition
Vacuum gas oil (VGO) is a petroleum distillate commonly obtained through the vacuum distillation process in oil refineries. This method helps in isolating heavier components like VGO from lighter fractions such as gasoline and diesel. VGO serves as a flexible raw material for different refining procedures aimed at manufacturing gasoline, diesel, and other refined petroleum products.
Vacuum Gas Oil Market Trends
The refinery activities have a significant influence on the market. When crude oil is refined, a valuable intermediate product called VGO is produced. Refineries produce various refined products such as petrol, diesel, jet fuel, and VGO from crude oil. The demand for transportation fuels and other petroleum-based goods is increasing due to the growth in the world's population and industrialization. This leads to a higher demand for refined products like VGO to meet the energy needs of industries such as transportation, manufacturing, and power generation.
Refineries use techniques like distillation and cracking to divide crude oil into different components. Vacuum distillation, which operates under reduced pressure, is commonly used to extract heavy hydrocarbon components from crude oil and generate VGO. The complexity and effectiveness of the refinery's processing units play a crucial role in determining the yield and quality of VGO. Complex refineries with advanced processing equipment like fluid catalytic crackers (FCC) and hydrocrackers can convert heavy, low-value feedstocks into high-value outputs like petrol and diesel. As VGO is a byproduct of cracking processes, more advanced refineries tend to produce larger volumes of it.
The production and consumption of transportation fuels directly impact the demand for VGO. The expansion of the automotive industry, especially in emerging economies, drives the demand for fuel. VGO can undergo further processing in secondary refining plants through catalytic cracking or hydrotreating to produce more petrol, diesel, and lighter products. Therefore, to meet the demand for transportation fuels, VGO must be readily available and used as a feedstock in secondary refining processes. Changes in fuel standards and environmental restrictions can also significantly affect the VGO market. Governments worldwide play a role in shaping these factors.
Vacuum Gas Oil Market Analysis:
Vacuum Gas Oil Market Dynamics
Drivers
Increasing Demand for Refined Petroleum Products
As developing economies and populations continue to grow, the consumption of transportation fuels and refined products is also on the rise. VGO is essential in the refining process, serving as a crucial feedstock to meet the increasing demand. The automotive sector's expansion, especially in emerging markets, further drives the necessity for VGO as a fundamental element in producing essential fuels and petroleum-based goods. The surging global demand for gasoline, diesel, and other refined petroleum products is a major factor contributing to the growing need for vacuum gas oil (VGO).
Stringent Environmental Regulations for Low-Sulfur Products
VGO plays a crucial role in the manufacturing of low-sulfur gasoline and diesel, which are necessary to meet strict environmental regulations focused on decreasing air pollution and emissions. Governments and regulatory agencies across the globe are enforcing these rules to minimize the environmental effects of transportation fuels. Consequently, the need for VGO as a raw material for creating cleaner fuels is on the rise, stimulating market expansion and prompting refineries to invest in technologies that facilitate the production of low-sulfur goods.
Increasing Investments in Refinery Expansion and Upgradation
The increasing demand for VGO is a direct result of countries' efforts to modernize their refining infrastructure and enhance their refining capacity in order to meet the growing energy demands. These investments are focused on improving efficiency, expanding production capacity, and complying with evolving regulatory standards. Furthermore, refineries are leveraging advancements in refining technologies to upgrade their facilities and produce higher-quality products, which in turn fuels the demand for VGO as a vital feedstock.
Opportunities
Feedstock Driving Petrochemical Innovation
VGO plays a vital role in the production of different chemicals and polymers in the petrochemical industry. With the increasing demand for petrochemical products like plastics, resins, and fibers, the demand for VGO also rises. The versatility of VGO as a feedstock for a diverse range of petrochemical products makes it an invaluable asset in the petrochemical sector. Furthermore, the growing emphasis on innovation and product advancement in this industry is anticipated to generate substantial market prospects.
Technological Advancements in Refining Processes
Ongoing progress in refining technologies is focused on enhancing the effectiveness of converting VGO into higher-value products like gasoline, diesel, and jet fuel. Refineries can optimize the production of valuable products from VGO through advanced refining methods such as hydrocracking and fluid catalytic cracking, thereby increasing their profitability. Furthermore, technological advancements are elevating the quality of VGO-derived products, making them more competitive in the market. As refineries continue to invest in facility upgrades and embrace advanced technologies, the demand for VGO as a primary feedstock is expected to grow, leading to new market opportunities for vacuum gas oil (VGO).
Restraints
Trade Restrictions on Global Supply and Demand Dynamics
Trade barriers related to the import or export of crude oil or refined products have the potential to cause disruptions in supply chains and restrict access to important markets. Such limitations can impact the availability of VGO in specific regions, resulting in price and supply variations. Moreover, these trade restrictions can introduce market uncertainty, complicating refineries' ability to predict demand and adjust production plans accordingly. As nations enforce trade regulations that influence the movement of crude oil and refined products, the VGO market may encounter obstacles and struggles in meeting consumer needs.
Challenges
Fluctuations in Crude Oil Prices
Refineries heavily depend on crude oil as their main raw material, and fluctuations in crude oil prices can have a direct impact on their financial performance. High crude oil prices may prompt refineries to cut down on production or explore other raw materials to manage expenses, which could result in a decrease in the demand for VGO. On the other hand, lower crude oil prices can trigger an increase in refinery operations and a higher demand for VGO as a raw material. The unpredictable fluctuations in crude oil prices pose a challenge for refineries when it comes to planning and investing in VGO production, ultimately leading to volatility in the market.
Key Companies in the Vacuum Gas Oil market include
Vacuum Gas Oil Market Segmentation
Middle East and Africa
Recent News
January 5, 2024: Kuwait Petroleum Corporation completed the sales of Norway Assets and Exit of KUFPEC (China) Inc.
January 2, 2024: Vertex Energy Inc. announced that it has successfully amended its existing term loan agreement.
December 8, 2023: During the Conference of the Parties to the UN Framework Convention on Climate Change (COP28) in the UAE, PJSC LUKOIL formally endorsed the Oil & Gas Decarbonization Charter. This significant move aligns LUKOIL with a coalition of 50 oil and gas companies worldwide, collectively representing more than 40 percent of the global oil production. Prominent industry participants supporting this initiative include ADNOC, Equinor, Petrobras, Saudi Aramco, SOCAR, BP, ENI, Shell, Total Energies, and various others.
FAQs
Ans: The global Vacuum Gas Oil market size was valued at USD 435.5 Billion in 2023.
Ans: The global market is projected to grow at a CAGR of 6% during the forecast period, 2024-2032.
Ans: North America had the largest share in the global market.
Ans: The key players in the market are LUKOIL, TAIF-NK, Husky Energy Inc., Kaz Munay Gas, PJSC Lukoil, Axeon Specialty Products, Neste, Vertex Refining, Honeywell UOP, Gazprom Neft, Kuwait Petroleum Corporation, Zhejiang Petrochemical Corporation, Others
Ans: The Low Sulfur Vacuum Gas Oil had the largest share in the global market.
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