By Florence Tan

SINGAPORE (Reuters) – A global drive towards electrification of road transport to reduce carbon emissions may cut demand for the world’s oil refining capacity by half in 2050, consultancy Rystad Energy says.

Senior vice president Mukesh SAHdev of Rystad Energie, said that by 2050, we would be at least 90% of electrification. He added that this would likely lead to a half-off in world refining capacity.

While electric cars will reduce global gasoline and diesel consumption, there will likely be a higher demand for refined oils in the aviation, maritime, and petrochemical industries. However, this will present a challenge for the refining sector.

How will we meet these demands when there is a half-scale reduction in our refining capacities? He said that he believes that this is a sign that there might be a lot more demand than we have capacity to meet.

The entire supply chain will see a substantial rationalization in downstream assets.

He said that cokers would need to adjust their production in order to make more graphite for batteries.

However, the global oil market could see a rise in the near term. As refiners increase gasoline production, the consultancy anticipates that the COVID-19-related oil shortage will drive global crude processing up to 80.1million barrels per day by 2021.