Refining capacity will reach 816 million tonnes this year and rise to 889 million tonnes by 2025, according to a report from Economics & Technology Research Institute, which is affiliated with China National Petroleum Corp.

Capacity will outstrip local demand by at least 145 million tonnes a year by 2025, CNPC said.

A frenzy of refinery building means China is on track to surpass the US as the world’s biggest crude processor this year, while a government drive to de-carbonise the economy will weigh on demand growth for fuels like diesel and gasoline later in the decade.

The growing imbalance between supply and consumption in China is set to lead to an increase in its fuel exports.

In the shorter term, worldwide refining margins will be under pressure as global production is gradually restored following the pandemic, CNPC said in the report. It forecast China’s net fuel exports will jump by 32% to 49.6 million tonnes this year.

Domestic demand for diesel, gasoline and kerosene will peak at around 341 million tonnes in 2025 and then plateau from there, the Chinese energy giant said.

Processing capacity at China’s independent, or non-state-owned refiners, will account for 29.2% of the total this year, CNPC said. A total of 34 refiners in the country will have capacity of over 9 million tonnes a year, it said.