Vacuum Gas Oil Market By Type (Heavy VGO, Light VGO); By Application (FCC, Hydrocracking, Marine Fuels, Base Oil Production); By End Use (Refineries, Traders, Integrated Petrochemical Operators); By Geography, Segment Revenue Estimation, Forecast, 2024–2030

1. Introduction and Strategic Context

The Global Vacuum Gas Oil (VGO) Market is projected to grow steadily at a CAGR of 5.4% , rising from USD 52.3 billion in 2024 to an estimated USD 71.8 billion by 2030 , according to Strategic Market Research estimates.

 

At the heart of modern refining operations, vacuum gas oil plays a pivotal role in maximizing fuel yield from crude oil. VGO isn’t just a byproduct — it’s a valuable feedstock used primarily in fluid catalytic cracking (FCC) and hydrocracking units to convert heavier hydrocarbons into premium products like gasoline, diesel, jet fuel, and base oils . With global energy consumption remaining elevated despite transitions to renewables, VGO has emerged as a strategic lever for refineries trying to balance throughput, efficiency, and profitability.

 

From 2024 to 2030, the relevance of VGO is rising for two key reasons. First, the ongoing shift toward cleaner fuels is pushing refiners to extract more low-sulfur, high-octane products from every barrel. VGO cracking technologies allow for that flexibility, especially in complex, deep-conversion refineries. Second, with geopolitical pressures affecting crude supply routes , downstream operators are investing more in in-house optimization — and that often starts with maximizing vacuum distillation outputs.

 

Structurally, the VGO market links closely with the global transportation fuels supply chain , particularly in the automotive, aviation, and marine sectors . Stakeholders range from major integrated oil companies and independent refiners to equipment manufacturers , trading houses , and even environmental regulators . Emerging economies — especially in Asia and the Middle East — are building out refinery complexes that depend heavily on VGO streams to meet rising domestic fuel demand.

 

Meanwhile, the decarbonization agenda is forcing refineries to extract more from less. Blending optimization, residue upgrading, and energy efficiency are all top priorities — and VGO sits right in the middle of those conversations. New hydrocracking technologies, zero-flaring refinery goals, and tighter marine fuel sulfur caps (IMO 2020) are pushing refiners to upgrade VGO handling and processing capabilities.

 

2. Market Segmentation and Forecast Scope

The vacuum gas oil (VGO) market is segmented by type , application , end use , and region . These dimensions help explain how different industries and geographies interact with the VGO value chain — from refining to distribution.

By Type

• Heavy Vacuum Gas Oil (HVGO ) Used in hydrocracking and FCC processes, HVGO has higher sulfur content and viscosity. It’s common in high-conversion refineries that produce middle distillates. HVGO currently holds the larger market share due to its suitability for diesel production and secondary processing.

• Light Vacuum Gas Oil (LVGO ) Less dense and easier to process, LVGO is more often routed through FCC units to produce gasoline and light ends. It's also used as a blending component for bunker fuel.

Light VGO demand is growing faster, especially in regions aiming to expand gasoline output while minimizing residue waste.

By Application

• FCC Feedstock The most common use case. FCC units convert VGO into gasoline, light olefins, and LPG. This segment is essential in U.S., India, and China where gasoline demand remains strong.

• Hydrocracking Feedstock Especially relevant in Europe and Asia, where there's a larger focus on low-sulfur diesel and jet fuel production. Hydrocrackers are more expensive to operate but produce cleaner outputs.

• Marine Fuel Production With IMO 2020 sulfur limits, VGO is increasingly used in low-sulfur fuel blending to meet shipping industry standards.

• Base Oil Manufacturing A niche but growing application. VGO is cracked into high-viscosity base stocks used in lubricants and specialty oils.

By End Use

• Refineries The primary consumers of VGO, handling both upstream distillation and downstream cracking. Complex refineries with FCC and hydrocracking capabilities depend on steady VGO supply and optimized feedstock quality.

• Traders & Distributors VGO is a traded commodity, especially in Asia and Europe. Trading companies play a role in arbitraging prices between surplus and deficit markets.

• Petrochemical Producers In select geographies, VGO-derived streams feed into olefins production (ethylene/propylene), particularly in integrated refinery-petrochemical complexes.

Refineries dominate usage by volume — but integrated complexes are growing, especially in China and the Middle East.

By Region

• North America

• Europe

• Asia Pacific

• Latin America

• Middle East & Africa

We'll dive into regional dynamics in Section 5. But for now, it’s worth noting that Asia Pacific leads in volume , while North America and Europe lead in process complexity and product diversity.

 

3. Market Trends and Innovation Landscape

The vacuum gas oil (VGO) market is being reshaped by pressures on both sides — refiners are upgrading technology to process it more efficiently, while environmental regulations are tightening the rules around what comes out of the barrel. So, even though VGO isn’t a finished product, its processing tech is anything but static.

Catalytic Cracking Innovation Is Getting Smarter

Over the last few years, FCC and hydrocracking units have become more intelligent — not just more powerful. Process automation, yield optimization software, and adaptive catalyst injection are helping refiners fine-tune VGO cracking in real time.

One refinery in Texas reported a 3% uplift in diesel yield after installing an AI-supported FCC catalyst control system in 2023.

Newer catalysts are now designed to handle heavier HVGO streams , reduce coke formation, and maximize propylene — all critical for balancing margins in volatile downstream markets.

Shift Toward Cleaner Outputs

Regulatory pressure is making refiners rethink their outputs — especially for marine fuels, diesel, and jet fuel . As a result, hydrocracking of VGO is being prioritized in regions with stricter sulfur and emission limits.

The IMO 2020 mandate drastically cut allowable sulfur levels in marine fuels. This forced a change in how VGO is blended or cracked — and has expanded demand for hydrodesulfurization systems that pair with VGO streams before processing.

Blending Economics and On-Site Reconfiguration

Traditionally, VGO quality wasn’t questioned much — refiners took what they had. But now? Blending strategies are under the spotlight. Refineries are mixing different grades of VGO to stabilize sulfur content, viscosity, or density before sending it into FCCs.

Some are investing in on-site VGO hydrotreaters or reblending units to adapt to shifting feedstock supply. This has turned VGO from a passive intermediate to an actively managed commodity , especially in hubs like Singapore and Rotterdam.

Energy Efficiency and Hydrogen Cost

Hydrocracking is hydrogen-intensive — and hydrogen isn't cheap. As green hydrogen remains limited, refiners are exploring:

• Lower-severity hydrocracking

• Closed-loop hydrogen recovery

• Hydrogen outsourcing from adjacent industrial clusters

The economics of hydroprocessing VGO now depends as much on hydrogen pricing as it does on crude spreads.

Data-Driven Process Optimization

A growing number of refiners are linking VGO handling systems to their digital twins . These AI-driven models simulate operational trade-offs: cracking temperature, catalyst injection rate, yield volatility — all tied to profit per barrel.

According to a refining consultant based in Dubai, “In complex plants, VGO margins are made in the control room, not on the crude slate.”

Sustainability Pressures Prompting Retrofits

Sustainability might not sound like a VGO issue, but it is. Scope 1 and 2 emissions from FCC units are among the highest in the refinery. This has triggered a wave of equipment retrofits:

• Heat recovery systems to reduce flaring

• Lower-NOx FCC burners

• Carbon capture pilots on FCC and hydrocracker exhaust

These shifts aren’t optional for refiners operating in Europe or California — they’re becoming a license to operate.

 

4. Competitive Intelligence and Benchmarking

The vacuum gas oil (VGO) market isn’t led by traditional “product companies” — it’s driven by refiners , process licensors , and technology solution providers that control the flow, yield, and economics of VGO processing. Market competitiveness is shaped less by brand and more by refinery design, catalyst technology, and operational flexibility.

ExxonMobil

A pioneer in hydrocracking and FCC process licensing , ExxonMobil operates multiple high-conversion refineries with advanced VGO utilization strategies. Its MSCC (Maximum Selective Catalytic Cracking) units are tailored to maximize gasoline from VGO-heavy feeds.

They’ve also invested in data-integrated yield modeling systems , giving them a competitive edge in adjusting VGO processing routes based on real-time crude quality and product demand shifts.

Chevron Lummus Global (CLG)

CLG — a joint venture between Chevron and Lummus Technology — leads in hydrocracking process licensing . Their high-efficiency VGO hydrocrackers are deployed across Europe, Asia, and the Middle East.

Their edge is clear: proprietary catalysts and process schemes allow refiners to convert >90% of VGO into ultra-low sulfur diesel . CLG also licenses dewaxing units that help convert VGO into Group II/III base oils — an expanding niche segment.

Honeywell UOP

A critical player in FCC and hydroprocessing , UOP’s R&D pipeline is tightly focused on improving catalyst activity and process intensification.

Their Unicracking ™ platform is widely used in hydrocracking VGO, offering flexibility to switch between diesel, naphtha, and jet output — a valuable feature for refiners juggling product slate volatility.

UOP is also leading digital integration in FCC control, offering refiners VGO feed optimization software tied to market pricing dashboards.

Shell Catalysts & Technologies

Shell is both a user and a vendor. Their refining units, especially in Singapore and Rotterdam, process significant volumes of VGO using in-house FCC and hydrocracking platforms .

Their VGO focus is less about volume and more about cleaner fuels . Through Shell GTL and renewable integration, they’re testing blends of VGO + synthetic waxes to produce ultra-clean diesel cuts.

Shell also supports licensing of residue upgrading units — helping refiners process heavier VGO streams that would otherwise be wasted.

Axens

Based in France, Axens offers a comprehensive suite of hydrocracking and FCC technologies for VGO streams. Their HyK ™ series is used by refiners in Asia-Pacific and the Middle East to process high-sulfur HVGO into ultra-clean fuels.

Axens has also introduced energy-efficient FCC regenerators and low-carbon hydrocrackers , making them a preferred partner in markets where carbon intensity per barrel is now a KPI.

Indian Oil Corporation (IOC)

A major downstream player, IOC operates some of Asia’s largest FCC units — heavily reliant on VGO feed. They've partnered with global licensors (like CLG and UOP) but also built in-house catalyst development capacity .

IOC is pushing innovation in vacuum distillation unit optimization , allowing better cut-point control and VGO quality management — crucial in a price-sensitive refining economy like India.

 

5. Regional Landscape and Adoption Outlook

VGO demand and processing patterns vary across the globe — driven by regional refinery complexity, fuel demand, regulations, and crude slate quality. While every region uses vacuum gas oil, how they use it tells a bigger story about industrial priorities and energy transitions.

North America

This is a mature, complex refining region with heavy use of both FCC and hydrocracking units . The U.S. has a large number of deep-conversion refineries that rely heavily on VGO to optimize gasoline production , especially in the Midwest and Gulf Coast.

Key drivers here:

• Tightening emissions regulations , particularly in California, are pushing refiners to integrate hydrodesulfurization and carbon capture into VGO processing.

• U.S. gasoline demand is still stable, making FCC applications the dominant route for VGO.

Also, large independent refiners like Valero and Marathon are actively blending VGO streams from imported heavy crude, creating arbitrage opportunities.

Europe

Europe leans more on diesel and jet fuel production, which makes hydrocracking the preferred VGO pathway . Environmental policies are strict, so low-sulfur, high-efficiency refining is the norm.

But here’s the tension: European refiners are facing margin pressure and capacity closures, so they’re being forced to optimize feedstock use like never before .

• Countries like Germany and the Netherlands are home to highly integrated refinery-petrochemical clusters that convert VGO into base oils or chemical feedstocks .

• The EU Green Deal is pushing refineries toward low-carbon output and energy efficiency , reshaping how VGO is processed.

To be honest, VGO processing in Europe is becoming less about volume and more about carbon footprint per ton.

Asia Pacific

The region leads in refining capacity growth , particularly in China, India, and South Korea . Here, VGO demand is expanding due to:

• Massive capacity additions in coastal refining hubs like Jamnagar (India) and Zhoushan (China).

• Strong domestic demand for both gasoline and diesel.

• Integrated refinery-petrochemical complexes turning VGO into base oils and aromatics.

China in particular is investing in residue upgrading technologies that allow deeper VGO conversion and cleaner outputs. Meanwhile, Indian refiners are increasingly exporting diesel , using VGO as a feedstock advantage.

Asia Pacific is where volume lives — and where technology investments are most aggressive.

Middle East & Africa

In the Middle East, national oil companies like Saudi Aramco, ADNOC, and Kuwait Petroleum are building mega-refineries that rely heavily on VGO streams for export-grade fuel products.

• Hydrocrackers are the preferred path due to high diesel output needs and access to sour crudes .

• Some new complexes are set up to convert VGO into Group II/III base oils for the global lube market.

Africa, on the other hand, remains underdeveloped in VGO infrastructure. Many refiners operate simple configurations that either sell VGO as a byproduct or underutilize it due to lack of FCC/hydrocracking capabilities.

However, new investment in Nigeria and Egypt may change that picture over the next 5 years.

Latin America

Countries like Brazil and Mexico are home to several heavy crude refineries that produce large volumes of VGO.

• PEMEX (Mexico) and Petrobras (Brazil) are upgrading legacy infrastructure to better handle high-sulfur VGO streams.

• New investment in FCC retrofits aims to increase gasoline yields and reduce VGO waste.

That said, political instability and funding delays continue to limit high-efficiency processing upgrades across much of the region.

 

6. End-User Dynamics and Use Case

End users in the vacuum gas oil (VGO) market fall into three main categories: refiners , trading companies , and integrated petrochemical operators . While the molecule itself doesn’t change, how and where it’s used makes a big difference to operational complexity and profit margins.

Refining Companies (Primary Users)

Refiners are the backbone of the VGO market. Their main job is to process VGO into value-added fuels like gasoline, diesel, jet fuel , and sometimes base oils . How they use it depends on configuration:

• FCC-focused refineries (common in the U.S., India, parts of China) use VGO to maximize gasoline and light olefins output.

• Hydrocracker-equipped refineries (typical in Europe, South Korea, the Middle East) prefer VGO as a diesel and jet feedstock, especially for low-sulfur fuel specs.

These refineries invest heavily in catalyst systems, real-time process optimization software, and emissions controls to make the most out of VGO — both in terms of yield and regulatory compliance.

The highest-performing refiners don’t just crack VGO — they manage it as a live commodity with real-time market tie-ins.

Trading and Blending Companies

Though VGO is mostly consumed on-site, it’s also actively traded , particularly in Europe and Asia. Independent traders — including Glencore , Vitol , and Trafigura — purchase VGO from high-residue refineries and blend it into marine fuels, or resell it into FCC-equipped plants that are short on feedstock.

Key use cases include:

• VGO-to-bunker blending for very-low sulfur fuel oil (VLSFO)

• Arbitrage between light and heavy VGO grades to optimize feedstock pricing

These traders often blend on spec — tailoring viscosity, sulfur, or metals content to meet refinery or marine standards. Their success depends on deep knowledge of regional refining configurations and fuel regulations.

Integrated Refinery–Petrochemical Players

Large operators like Reliance Industries , Sinopec , and Saudi Aramco use VGO not just for fuels but also as a petrochemical feedstock . In these cases, the focus is on turning VGO into:

• Base oils for lubricants

• Light olefins via cracking

• Aromatic precursors for plastics and solvents

This dual-role use of VGO — as fuel and as feedstock — is gaining traction, especially in new Asian mega-refineries. These setups maximize return per barrel by diversifying the output from every VGO stream.

Use Case: VGO Optimization in India’s Jamnagar Refinery

India’s Jamnagar Refinery , operated by Reliance, handles one of the world’s highest volumes of vacuum gas oil. Facing a growing demand for ultra-clean diesel in both domestic and African export markets, the refinery implemented a VGO routing control system in 2023.

This allowed them to dynamically reallocate VGO between FCC and hydrocracking units based on:

• Global diesel/gasoline spread

• Catalyst activity data

• Daily crude assay results

The result? A 6% boost in diesel yield and $28 million in additional margin over the fiscal year. They also avoided bottlenecks in the FCC unit during low gasoline demand periods — a common challenge in monsoon quarters.

This proves that VGO management is no longer passive — it's strategic. Refiners that know how to adapt on the fly are pulling ahead.

 

7. Recent Developments + Opportunities & Restraints

Recent Developments (2023–2025)

1. Chevron & Honeywell UOP Pilot VGO-Dedicated AI Suite In 2024, Chevron partnered with Honeywell UOP to launch a pilot system integrating real-time VGO quality sensing with FCC catalyst injection controls. Early results showed an average 2.1% yield uplift in middle distillates , alongside a measurable reduction in coke formation.

2. Reliance Industries Expands Base Oil Capacity from VGO Hydrocracking Reliance announced in 2023 the addition of a dedicated Group III base oil train using VGO feedstock at its Jamnagar facility. The move aligns with global lube demand and tightens vertical integration within its refinery-petrochemical chain.

3. Kuwait Integrated Petroleum Industries Company (KIPIC) Begins VGO Optimization Trials In 2025, KIPIC began testing VGO blending strategies at its Al- Zour refinery — one of the largest grassroots refinery projects globally. The trials focus on blending HVGO with lighter cuts to increase FCC compatibility and diesel output.

4. Axens Deploys Low-NOx Hydrocracker Burner in Europe Axens implemented a low-NOx hydrocracker upgrade for VGO processing at a French refinery in 2023. The retrofit, designed to cut emissions by 18%, supports the EU’s push for decarbonized refining operations.

5. Vitol Group Expands VGO Trading Operations in Southeast Asia In 2024, Vitol opened new blending hubs in Singapore and Thailand targeting marine fuels and flexible VGO re-distribution into independent refineries across the region. The company cited IMO 2020 and tighter crude quality control as demand drivers.

 

Opportunities

1. Base Oil Manufacturing from VGO With demand for high-viscosity Group II and Group III base oils on the rise, refiners are now evaluating VGO as a clean, scalable feedstock. This niche is growing faster in Asia and the Middle East, where lubricant demand is surging.

2. AI-Driven Optimization for Feed Flexibility The complexity of modern refineries is driving adoption of data-led VGO routing and cracking models. AI-enabled FCC and hydrocracking systems offer a 15–30% reduction in off-spec products and faster reconfiguration during price swings.

3. VGO Valorization in Carbon-Constrained Markets Regions with carbon pricing (e.g., EU, Canada) are encouraging investment in low-carbon hydrocracking and heat recovery for FCC units , where VGO is central to processing efficiency. Companies that lower VGO’s carbon footprint can gain regulatory and economic advantage.

 

Restraints

1. High Capital Cost of Hydrocracking Infrastructure Despite its clean yields, hydrocracking VGO requires significant hydrogen input , high-pressure reactors, and heat integration. This limits adoption in smaller or older refineries, particularly across Latin America and Sub-Saharan Africa.

2. Volatility in Feedstock and Product Spreads Because VGO lies between crude and refined product, it’s vulnerable to volatility on both ends. Margins can swing sharply based on diesel/gasoline differentials , crude quality, or even local sulfur spec updates — challenging long-term planning.

 

7.1. Report Coverage Table

Report Attribute	Details
Forecast Period	2024 – 2030
Market Size Value (2024)	USD 52.3 Billion
Revenue Forecast (2030)	USD 71.8 Billion
Overall Growth Rate	CAGR of 5.4% (2024 – 2030)
Base Year for Estimation	2024
Historical Data	2019 – 2023
Unit	USD Million, CAGR (2024–2030)
Segmentation	By Type, Application, End Use, Geography
By Type	Heavy VGO (HVGO), Light VGO (LVGO)
By Application	FCC, Hydrocracking, Base Oils, Marine Fuels
By End User	Refineries, Traders, Petrochemical Operators
By Region	North America, Europe, Asia-Pacific, Latin America, Middle East & Africa
Country Scope	U.S., China, India, Germany, Brazil, Saudi Arabia, etc.
Market Drivers	- Demand for clean fuels - Advancements in FCC/hydrocracking - High yield flexibility from VGO
Customization Option	Available upon request