Changes in regional balances
Onur Capan, Downstream Oil Service Manager, Wood Mackenzie gave a presentation at Tank Storage Asia which began by discussing the global themes in today’s oil and oil products storage sector (note that all projections were to 2020). As a whole, across the world, Capan said that new refining capacity is anticipated to outpace demand. It’s unsurprising that this is possibly going to be the case as the world becomes more energy efficient and begins turning to renewable fuels to be a bigger part of the energy mix.
Breaking things down further when looking at global themes, it was said that in the US the shale boom is going to see high investments and high refinery runs. Not only this but there is expected to be a turn towards a surplus of gasoline in the country due to the light crudes that are now in large supply due to unconventionals. Also, Gulf coast refineries are seeing very strong refining margins at the moment and these are expected to stay, at least for a while. Looking at Europe, there is a very different story to tell and Capan called the European refining market, ‘the most miserable in the world’, and this is expected to have a big impact across greater Europe and in some instances those who rely on the region. Russia, has always been a traditional exporter of fuel oil. However, it is thought that fuel oil export levels are going to decrease as a result of the changes in the export duties and large scale refinery upgrade projects. For the Middle East, significant refining investment is on the cards according to Wood Mackenzie. Jubail is to come online this year, Yanbu in 2015 and Jizan in 2018.
The presentation of course, due to the nature of the conference, focussed heavily on Asia. One of the trends that will be seen across Asia, according to Capan, is that gasoline will move from being in surplus to deficit. Looking at specific regions, and starting with India, it was said that the country is going to become a big exporter of all major oil product groups and supply a large portion to Africa with some going to Europe. New Zealand and Australia are expected to see further deficits of refined product as more refineries close in the region. India and North Asia are anticipated to absorb to a certain extent these deficits with the surplus of refined products that will be produced in the regions.
In North Asia overall, Wood Mackenzie believes that Japan is going to see more refinery closures but on the whole, there will be high levels of refined product in surplus, which will be utilised to a large extent, as mentioned above. In China things are expected to stay pretty balanced to 2020, but it is likely going to become a net importer of fuel oil. For South East Asia, Capan said that seven projects have been announced and are expected to come into fruition by 2020, but the others are considered unlikely to materialise.
Future trade of Asian oil
When it comes to Asia’s incremental gasoline deficit, it is thought that North America and Europe will cover it and the deficit is expected to start between now and 2015. Overall however, Wood Mackenzie does not expect much to change in Asia. Singapore is tipped to have to handle an increase in imports and it is projected that by 2020, the country will be dealing with 40% of the volume of all imports and exports in Asia. Gasoline imports into Asia are forecast to grow to 20 Mt/yr by 2020 while the region's diesel trade with the rest of the world is expected to remain at around 30 Mt/yr. In total, Capan said that to 2020, 30 million tpy of additional gross trade is expected to hit Asia’s trading hub, Singapore.
Additional gross trade will see another 5 million tpy passing through Singapore, further cementing its position as an Asian trading hub. The drop in fuel oil production will reduce trade growth slightly between Asian countries, but North America is expected to cover this incremental drop.
To close, Capan briefly looked at the impacts of the Amsterdam-Rotterdam-Antwerp (ARA) trading hub on the world of oil trade flows. ARA is the biggest trading hub in Europe and indeed competes with Singapore. Between 2010 and 2020, some 7 million m3 has been built or are currently under construction.. However, demand in the area is down, despite the investments, which will see capacity increase 45% in five years, throughputs are expected to drop to 160 million m3.
Written by Claira Lloyd
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/10102014/oil-trade-flows-storage-tsa/