Future-Proofing the Energy Industry
The global energy transition is rewriting the rules for the oil industry.
As fuel demand declines, base oils and lubricants — once a niche segment — are emerging as a strategic lifeline for refineries.
This article explores how electrification, policy shifts, and new technologies are transforming the sector, and how refineries can remain relevant through 2050 by embracing advanced chemistry, integration, and sustainability.
The world’s energy mix is evolving faster than ever before.
According to international energy outlooks, global oil demand is projected to peak by 2030, driven by the rapid rise of electric vehicles, stricter decarbonization targets, and the growth of biofuels and sustainable aviation fuels (SAF).
For refiners, this marks a turning point: survival now depends on efficiency, innovation, and diversification. While traditional fuels such as gasoline and diesel are losing momentum, base oils and lubricants — despite accounting for less than 1% of total refinery output — can contribute up to 15% of overall value.
As internal combustion engine (ICE) demand weakens, fuel-oriented refineries in Europe and North America face shrinking margins and capacity closures. Meanwhile, integrated complexes in Asia and the Middle East — supported by lower feedstock costs and advanced hydrocracking capabilities — remain better positioned to adapt.
EV adoption alone could displace nearly 1.7 million barrels per day of oil demand by 2030, rising to around 3 million barrels per day by 2040. Refineries must evolve from fuel producers to multi-product energy hubs to stay relevant.
Key Insight: Complex refineries that integrate petrochemical and base oil production are best equipped to withstand long-term demand shifts.
Base oil production demands advanced hydroprocessing — costly to install but highly profitable. The industry’s transition from Group I to Group II and III base oils represents a major technological leap toward cleaner, higher-performance lubricants.
Group II and III base oils offer:
Over the last decade, Group I capacity has declined significantly across mature markets, while Asia and the Middle East are expanding high-VI Group III and III+ facilities to supply global demand. Technology leadership has become a key factor in industry resilience.
Demand for lubricants is increasingly concentrated in emerging economies. By 2040, nearly all growth will come from India, Southeast Asia, and Africa, where industrialization and mobility expansion continue to accelerate.
Global base oil demand is projected to rise steadily through the 2030s before stabilizing around the mid-century mark. The strategic focus must now shift toward regional API group balance and localized production models that align with new centers of consumption.
As fossil feedstocks decline, refiners are turning to Gas-to-Liquids (GTL) and bio-based base oils to maintain both performance and environmental standards.
Together, these technologies define the hybrid feedstock era, blending performance with sustainability.
To remain competitive, refineries are expanding integration between fuel, chemical, and lubricant production. This multi-output model enables refiners to offset fuel declines with high-value specialty products such as:
Integration offers economic resilience and supports carbon reduction through optimized resource use and shared utilities.
The sustainability agenda has evolved from a corporate initiative into a global compliance requirement. Mechanisms such as carbon pricing, border adjustment taxes, and biofuel mandates are now core drivers of refinery decision-making.
Producers exporting to regions with strict environmental regulations must demonstrate low-carbon intensity and sustainable operations or face rising cost penalties.
Future-proofing now means:
Key message: The path forward is not post-oil — it’s smarter oil.
Base oils and lubricants may represent a small portion of the barrel, but they hold outsized strategic value in an energy system transitioning toward net zero.
The industry’s future belongs to those who innovate and integrate — combining advanced chemistry, sustainability, and data-driven intelligence to build long-term resilience.
Remember…the future of energy isn’t post-oil — It’s smarter oil.