Oil and gas
BMI has said that it maintains a subdued outlook for Italy’s oil and gas industry due to a projected gradual decline in the country’s oil and gas reserves as well as a rapid downsizing of the refining sector. Yet, while the increased investor interest in the country’s prospective Adriatic and gradually improving regulatory environment are positive signs, BMI has said that it believes these improvements will take some years to garner more substantial industry changes.
Eni’s recent announcement of extensive refining cuts, including the closure of three refineries, BMI says is reflective of the deteriorating downstream sector in the country. BMI have therefore revised down its Italian downstream capacity forecast, and highlighted that further capacity cuts in Europe are to be expected in coming years.
When it comes to gas, BMI has said that Italy could boost its imports from Algeria, Libya and the Netherlands to offset any supply disruption from Russia. Italy generates approximately 40% of its electricity from gas and is heavily dependent on Russian gas amid declining Algerian imports and limited Libyan supplies.
BMI has said that the major positive factor for Italy’s petrochemicals sector is the expectation that it will become a significant producer of biochemicals, which will add value and diversity to production.
BMI has also highlighted some trends and developments in the sector and has said that in order to improve margins, Vesalis is looking to import cheap gas from the US, which can be used in its Brindisi cracker which can utilise ethane as a feedstock. Also, by converting existing European plants into biochemical plants, Versalis will produce both more specialty products, as well as the biobased products for which the Italian chemists expect demand to rise. It also, BMI has said, cushions the company against high energy prices.
Capacity utilisation has room to rise as firms put idle capital to use in 2015, BMI has said, at which time the company expects easing supply side credit constraints and rising production volumes to spur higher investment. As a result, industrial production growth is set to remain above broader economic trends in the medium term, fuelling demand for petrochemicals.
Edited from report briefs by Claira Lloyd
Read the article online at: https://www.hydrocarbonengineering.com/refining/18022015/oil-gas-petchems-bmi-italy/