APPEC: Chevron, BAPCO stress refining-petrochem integration for competitiveness

Integrating refining businesses with petrochemicals is crucial for adapting strategies to changing market dynamics and sustaining competitiveness in an evolving energy landscape, as demand for cleaner and more efficient energy solutions continues to grow, industry executives said at APPEC 2025 in Singapore on Sept. 8.

The world needs more energy than ever, which must be cleaner, more reliable and cost-effective, said Brant Fish, president of international products at Chevron, during a panel discussion at APPEC, hosted by S&P Global Energy. "As we explore solutions in the downstream and midstream sectors, it is essential to consider our role in this transition."

He noted that the shift to cleaner energy is not new; it has evolved from coal to kerosene and beyond.

As gasoline demand flattens or declines, there has been a noticeable shift toward investing in petrochemical capacity, according to Fish.

However, Fish cautioned that the petrochemical industry is currently in a long cycle that is slowing down investment. "There is a rush to invest in refining conversion to lighter products, but that is not being rewarded in the short to medium term."

Alexander van Veldhoven, group chief strategy officer at BAPCO Energies, echoed the importance of integrating refining and petrochemical operations.

The integration is vital for maximizing efficiency and capturing value in a competitive market, van Veldhoven said. "By aligning our refining capabilities with petrochemical production, we can better respond to market demands and optimize our resource allocation."

He said this strategic approach also positions companies to capitalize on the growing demand for petrochemical products, which are essential for various industries.

As the market evolves, van Veldhoven believes that companies must embrace this integration to remain competitive and sustainable in the long term.

Trading strategies

Both executives stressed the need for national and international oil companies to learn from trading companies. Fish noted that trading houses have demonstrated significant value potential by leveraging asset ownership and operational capabilities.

"The most successful competitors today are those who have learned both skill sets," Fish said, citing an analogy from mixed martial arts to illustrate the necessity of mastering both asset stewardship and trading strategies.

Meanwhile, van Veldhoven emphasized the need for companies to explore sales strategies beyond the traditional free on board (FOB) basis to enhance market competitiveness.

Relying solely on FOB sales limits opportunities for value creation and market penetration, van Veldhoven said. "By diversifying our sales approaches, such as adopting delivered pricing models or engaging in long-term contracts, we can better align with customer needs and market conditions."

This flexibility allows companies to optimize logistics and pricing structures, ultimately leading to improved margins and stronger customer relationships. As the market landscape evolves, van Veldhoven believes that embracing innovative sales strategies will be crucial for capturing additional value and expanding market reach.

Van Veldhoven said BAPCO is committed to building partnerships with knowledgeable trading firms to enhance its market presence. "We are collaborating with TotalEnergies to become an integral part of the trading world, leveraging our refinery's capabilities and logistics."

Meanwhile, Fish highlighted the strategic importance of key markets such as China, South Korea and Singapore. He said these regions are critical for refining and petrochemical products, and continue to demonstrate strong demand despite global fluctuations.

"Chevron views these markets as essential to our long-term strategy," Fish said, underscoring the need for companies to adapt their approaches to remain competitive.