Vacuum Gas Oil (VGO) Market

Vacuum Gas Oil (VGO) Market Synopsis

Vacuum Gas Oil (VGO) Market Size Was Valued at USD 1.20 Billion in 2023, and is Projected to Reach USD 1.92 Billion by 2032, Growing at a CAGR of 5.40 % From 2024-2032.

Vacuum Gas Oil (VGO) is a dense, high boiling point petroleum crude that is processed by subjecting crude oil to vacuum distillation. That is used as a feed in the processes of catalytic cracking and hydro processing of petroleum products. The most common application area to use VGO is in the manufacture of petrochemicals, automotive fuels and lubricants and therefore is a raw material input in the oil and gas industry. They are much more concentred and can be converted into high added value products like gasoline, diesel and special chemicals.

 The Vacuum Gas Oil (VGO) market is newly emerging market established as a key source of feed stock for fuel, lubricants and petrochemical industries. This paper aims to look at how vital and indispensable VGO has become in the present world where cleaner fuels and efficient refining processes are turning out to be costly necessities. Due to its versatility in manufacture of various other useful products, it has found a wide application into all facets of life thus guaranteeing market sustainability.

In terms of market distribution, Europe has shown remarkable growth first and foremost due to the highly developed system of upgrading in this region and the constantly growing demand for petrochemical products. Asia Pacific is projected to record strong growth attributed to industrialization and urbanization processes. The requirements for the VGO in North America still persist owing to continuous innovation in the refining technology and rising standards in environmental policies around the world. Other regions are also displaying respectable levels of growth because the entire world is becoming more concerned with efficiency in terms of energy and quality of fuels.

Vacuum Gas Oil (VGO) Market Outlook, 2023 and 2032: Future Outlook

Vacuum Gas Oil (VGO) Market Trend Analysis

Shifting Gears, The Rise of Hydrotreated VGO

The increase in hydrotreated VGO is another emerging trend within the VGO market based on the global analysis. Hydro processing of VGO improves the properties of this intermediate and the overall Sulphur content which may be beneficial in cleaner fuel synthesis. This trend is well observed against the backdrop of escalating global environmental standards, which are forcing refineries to upgrade to cleaner technologies.

Another trend is the increasing requirement on VGO in petrochemical field. VGO is progressively being adopted as a primary feed into chemical manufacturing industries and other petrochemical downstream products. This is highly attributed to the change in directions in production processes in order to adopt sustainable means, and also the high-quality results that are associated with chemicals.

Fueling Growth, The Surge in Demand for Refined Products

The main force for the VGO market is the escalating requirement for refined products which include diesel, gasoline, and petrochemicals. The consumption of VGO has increased due to summation in urbanization, industrialization and energy consumption, for refining of these demands more VGO is being processed by the refineries. This growth is most prominent in the emerging markets which present a growing requirement for infrastructure and automotive fuel.

Environmental regulation is the other factor that influence the VGO market in a significant they affect the way it is used, produced and managed. Environmental protection agencies in various country are increasing the restrictions in emissions especially in the light duty vehicles. This has resulted in greater utilization of low-sulfur fuels, which has increased the need for increasing use of VGO in hydro processing methods.

The Price of Progress, High Processing Costs in VGO

One of the most severe limitations to the mass implementation of VGO processing is its relatively high cost. Hydro processing and catalytic cracking, both of which are essential in converting VGO into better quality products, are expensive technologies. These high costs of operating VGO processing facilities may however restrict the extension of many facilities particularly in developing nations with comparatively primitive structures.

Another restraint is the unpredictable nature of crude oil prices hence the reliability of VGO because it’s a byproduct of crude oil. Volatility within oil prices affects the stability of refining companies and may affect the ability of suppliers of VGO to provide consistent prices to the market. It may deter the long-term investment on the generation of VGO processing plants and other supporting structures.

Green Horizons, VGO’s Role in the Sustainable Fuel Revolution

The prospect for the VGO market has greater exposure to highly sustainable energy solutions as the world shifts towards the direction of adopting alternative energy sources. VGO is a fuel that can be converted to high value, low sulfur products to meet the growing global demand for low carbon-based fuel. This places VGO in a vantage point of assisting in the supplies of energy requirement in the world in an environment friendly way.

However, opportunity lies in that improvements in refining technology can lead to higher efficiencies in VGO processing. A new catalytic cracking technology and hydrotreatment processes that are available to refiners enables them to increase their yields, save money, and get better-end products. The above technologies are expected to fuel the growth of the VGO market in the next few years.

Vacuum Gas Oil (VGO) Market Segment Analysis

Vacuum Gas Oil (VGO) Market Segmented on the basis of By Type, By Application and By End-Use Industry.

By Type

o   Hydrotreated VGO

o   Non-hydrotreated VGO

By Application

o   Petrochemical Production

o   Fuel Oil Production

o   Lubricant Production

o   Other Applications

By End-Use Industry

o   Oil & Gas

o   Chemical Industry

o   Automotive

o   Other Industries

By Region

o   North America (U.S., Canada, Mexico)

o   Eastern Europe (Bulgaria, The Czech Republic, Hungary, Poland, Romania, Rest of Eastern Europe)

o   Western Europe (Germany, UK, France, Netherlands, Italy, Russia, Spain, Rest of Western Europe)

o   Asia Pacific (China, India, Japan, South Korea, Malaysia, Thailand, Vietnam, The Philippines, Australia, New-Zealand, Rest of APAC)

o   Middle East & Africa (Turkey, Bahrain, Kuwait, Saudi Arabia, Qatar, UAE, Israel, South Africa)

o   South America (Brazil, Argentina, Rest of SA)

By Type, Hydrotreated VGO segment is expected to dominate the market during the forecast period

The Vacuum Gas Oil (VGO) market, based on the product, is divided into Hydrotreated VGO and Non-Hydrotreated VGO. Hydrotreated VGO is treated through the addition of hydrogen to reduce sulfur, nitrogen, and aromatics making it ideal for cleaner fuel preparation. Non-hydrotreated VGO retains its impurities and is adopted when high purity is not necessary in the application. Both types feed different market needs, but hydrotreated VGO is in higher demand because of presidential and changes in environmental legalizations.

By Application, Petrochemical Production segment expected to held the largest share

The VGO market is flexible suitable for a broad range of industries, and it mainly including sectors such as petrochemical industry, fuel oil industry, and lubricating oil industry. VGO is employed as feedstock in the manufacture of high value chemical, plastics and other petrochemical products. Besides, it is adopted in the formulation of diesel and gasoline and as a feedstock for lubricant manufacturing. Such other uses include use in production of asphalt and in other industries.

Vacuum Gas Oil (VGO) Market Regional Insights

Europe is Expected to Dominate the Market Over the Forecast period

Europe is the largest consumer of Vacuum Gas Oil (VGO), because of its highly developed refining capacity and strict environmental standards. There has been vigorous focus on emission reduction and cleaner energy across the EU which has boosted the demand for hydrotreated VGO because of its compliance to the emission standards. Also there are established markets for petrochemicals in Europe that add up to this strength it has to offer in the world market of VGO.

The United States ranks second consuming a high amount of VGO in fuel production and in the manufacture of high value petrochemicals. On the other hand, Europe’s already mature market and a relatively liberal regulatory system provide it with a market share advantage. The evolving demand of cleaner fuel and the incorporation of sophisticated techniques in the refining process, adds that strength and makes Europe the leader in the VGO market even more.

Vacuum Gas Oil (VGO) Market Share, by Geography, 2023 (%)

Active Key Players in the Vacuum Gas Oil (VGO) Market.

o   BP (UK)

o   Chevron Corporation (USA)

o   ExxonMobil (USA)

o   Indian Oil Corporation (India)

o   PetroChina Company Limited (China)

o   Reliance Industries Limited (India)

o   Royal Dutch Shell (Netherlands)

o   Saudi Aramco (Saudi Arabia)

o   Sinopec Limited (China)

o   TotalEnergies (France)

o   Other key Players

Global Vacuum Gas Oil (VGO) Market Scope