By the end of the decade, BMI has labelled Australia as the next major player in the LNG sector. However, investment in the region is sliding and this, according to BMI, will inhibit growth momentum. The country is also having to contend with a continuing reliance on oil imports as domestic production grows weak. Things aren't looking good for the refining sector either as facilities close and loose competitiveness in the global market.
Gas production is expected to increase significantly between 2015 and 2018 as developments come forward backing LNG export projects that are due to come online. After this however, BMI expects growth to slow due to high development costs and the difficulty of transporting gas from Western Australia to elsewhere in the country impact investment.
Oil and gas consumption will move upwards with economic growth, but oil consumption growth is expected to be lower than in the previous decade due to a slowdown in economic growth overall. Vehicle efficiency improvements are also expected to impact oil demand. Gas consumption growth will be higher than oil.
India’s downstream sector is growing from strength to strength, according to BMI, however it is heavily influenced by the state. The upstream sector however is not so strong and new developments are wavering and is also heavily influenced by the state. Gas production has been in decline, however BMI anticipates a return to growth this year with a key change being increased output from Reliance’s main well. Gas distribution infrastructure does however remain inadequate. BMI attributes this to bureaucracy and land ownership issues which are slowing down development.
In the refining sector, India is due to add 300 000 bpd worth of capacity to the Paradip refinery. In India in total, approximately 1 million bpd of additional capacity is expected to be built over the next five years. As the refining sector is expanding in the country and domestic oil demand is on the up, in 2013, India over took Japan and became the third largest importer of crude in the world.
The first cracker in the country saw a difficult start due to a halt in operations at the middle of the year when the facility broke down and started a fire. BMI expects the cracker to ramp up operations in the second half of this year and predicts strong polymers output growth in the next few months. BMI has said that this type of mechanical set back is not unusual when bringing cracker units into production.
In Vietnam, BMI believe that in the short term crude oil and liquids output will rise as new resources are brought online and production levels are ramped up. However, after 2018, this is expected to reverse. Gas production is expected to rise over the coming years, but BMI have said that Chevron’s exit from a major project is a clear indication of the continuing challenges being faced by investors in Vietnam’s gas sector. The attractiveness of the country’s gas pricing terms needs to be addressed in order to attract and retain foreign investors. Gas demand is expected to out do supply from 2017, leading the country towards gas import dependence.
Refining capacity in the country is set to increase with the construction of two new refineries. The Nghi Son and Vung Ro refineries will see capacity rise from 140 000 bpd in 2013 to 450 000 bpd in 2018 and then even higher to 500 700 bpd by 2023.
Edited from report briefs by Claira Lloyd
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