European Oil Product Storage - Easyfairs€¦ · Diesel/Gasoil* Fuel Oil Other products Refinery...
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European Oil Product Storage Rotterdam StocExpo Chris Barry – Principal Downstream Consulting March 2017
Transcript of European Oil Product Storage - Easyfairs€¦ · Diesel/Gasoil* Fuel Oil Other products Refinery...
European Oil Product Storage
Rotterdam StocExpo
Chris Barry – Principal Downstream
Consulting
March 2017
© Wood Mackenzie 2
Over the last 40 years, Wood Mackenzie has evolved
naturally along the energy value chain to capture all
the key components affecting global markets.
Our integrated approach allows us
to spot trends and forecast future
dynamics before anyone else
Upstream
Oil & Gas
Energy
Markets
Gas
Power
Refining &
Oil Products
LNG
NGL Chemicals
Macro
Economics
Metals & Mining
1973 2017
© Wood Mackenzie 3
Source: Wood Mackenzie
Notes: Includes Other Products and Refinery F&L
Global Crude Oil Supply
Oil product demand growth is driven by the transportation and chemicals
sectors, predominantly within Asia and the Middle East. Non OPEC crude
supply remains robust
0
20
40
60
80
100
120
2005 2010 2015 2020 2025 2030 2035
Dem
an
d (
mb
/d)
Sub Saharan Africa Asia Pacific Greater Europe
Middle East North America Russia and Caspian
South America
Global Oil Product Demand
40%
41%
42%
43%
44%
45%
46%
0
20
40
60
80
100
120
2005 2010 2015 2020 2025 2030 2035
% O
PE
C
Su
pp
ly (
mb
/d)
Non-OPEC OPEC % OPEC
RUSSIA AND
CASPIAN
ASIA PACIFIC
MIDDLE EAST
NORTH AMERICA
LATIN AMERICA & AFRICA
EUROPE
Declining fuel demand, increasing
competitive threats and increasing
regulatory pressures resulting in
financial pressure on refining
Construction and commissioning
of ‘mega’ refineries resulting in
the ME moving from net importer
to net exporter
Shale oil and the resulting ramp up
in domestic crude production has
led to relatively cheap feedstocks
for US refiners.
US is in the process of switching
from gasoline importer to gasoline
exporter
Lowering of distillate export duties,
and increasing domestic refining
capacity are resulting in additional
incentives and pressure to export
currently largely deficit across key transport
fuel groups
Deficits, in most cases, are forecast to increase,
as demand grows without significant response
on the supply side
Demand is forecast to grow, we expect
additional supply will not keep pace,
resulting in significant gasoline short
and erosion of middle distillate length.
Major Regional Trends
A number of major trends are driving change in the global oil product
markets
© Wood Mackenzie 5
The storage industry will face a number of challenges going forwards, but
there are also opportunities
Source: Wood Mackenzie
Notes:
Major Themes Opportunity Threat
The road vehicle fleet is evolving
IMO Marpol will have a major impact on bunkering
European refining sector is looking more robust
New sources of oil product supply will emerge
Global crude production is changing
More new storage capacity is to come on-line
Oil product gross trade expected to grow
Market contango may not persist
M&A activity has been increasing
1
2
3
4
5
6
7
8
9
© Wood Mackenzie 6
Source: Wood Mackenzie
Share of Car Parc by Fuel Type
Global vehicle numbers are expected to increase by over 600 million in the
next 20 years, 6% of passenger cars will by hybrid / electrics by 2035
Increase in Global Vehicle Stock (2016 – 2035)
1,223
1,825
7 10 10 13 17 27 47
75
96
229
70
1,000
1,200
1,400
1,600
1,800
2,000
Wo
rld
Car
Po
pu
lati
on
(m
illi
on
20
16
- 2
03
5)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003 2008 2013 2018 2023 2028 2033
Gasoline* Diesel** LPG CNG AEV/PHEV*** Other
1
© Wood Mackenzie 7
A decision has been made by the IMO to implement a 0.5% sulphur limit for
global marine fuels in 2020
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2000 2005 2010 2015 2020 2025
Su
lph
ur
co
nte
nt
%
Global ECA
Global limit is to be
enforced in 2020
All shipping is subject to
International Maritime
Organisation regulations
Some voyages are subject to
regulations agreed within regional
Emission Control Areas (ECAs)
• Deliberations at the IMO Marine Environmental Protection Committee meeting in October (MEPC 70)
recognised the many implementation challenges, including fuel availability, blending, stability, compatibility
and safety issues
• An implementation road map should be forthcoming at the next IMO MEPC meeting in May 2017 (MEPC 71)
and there appears to be recognition that a period of transition will be required.
IMO = International Maritime Organisation; ECA = Emissions Control Areas
Timeline for enforcement of MARPOL Annex VI SOx emission limits –
2
© Wood Mackenzie 8
The IMO regulations will have a significant impact to the marine fuel mix, we
expect that unscrubbed HSFO will still form a part of this
Marine Fuel Demand by Type
0
1
2
3
4
5
6
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Mb
bl/
d
Distillate Unscrubbed HSFO Scrubbed HSFO
LSFO ULSFO LNG
Wood Mackenzie have developed a feasible bunker
fuel outlook post 2020 IMO MARPOL
» We do not expect full compliance is feasible by 2020
» We expect this will still have a significant impact to
distillate and HFO pricing
Around 0.8 mbd of distillate fuel will need to displace
fuel oil based bunkers in 2020
We expect a relatively high degree of unscrubbed
HSFO will still be consumed
ULSFO market develops from 2020 onwards but
begins to get squeezed as scrubber penetration
takes place
LNG economically attractive, but infrastructure is still
limited in 2020 reducing its impact
Shippers able to burn cheaper fuel (using a
scrubber) will be advantaged compared to
competitors
Scrubber penetration will increase over time
2
© Wood Mackenzie 9
Source: Wood Mackenzie
Notes: Includes Other Products and Refinery F&L
Incremental Oil Product Demand
NW European oil product demand has entered structural decline, as
efficiency gains outstrip new energy demand creation
North West Total Oil Product Demand
LPG Naphtha Gasoline Jet/Kerosene Diesel/Gasoil Fuel Oil Other Products Refinery Fuel & Loss
0
1
2
3
4
5
6
7
8
9
10
2005 2010 2015 2020 2025 2030 2035
Dem
an
d (
mb
/d)
-0.7
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0.0
0.1
0.2
5 - '10 10 - '15 15 - '20 20 - '25 25 - '30 30 - '35D
em
an
d (
mb
/d)
1
2
-3.5%
+0.2%
-3.0%
-1.1%
2016 – 2035
CAGR
© Wood Mackenzie 10
A large volume of refining capacity has closed in Europe recently, however
the rate of closures has slowed throughout 2015 and 2016
Source: Wood Mackenzie
Firm Capacity Reductions/Refinery Closures
(not including capacity reduction only)
Partial CDU closures (refinery remains
operational)
Converted to storage terminal
Planned conversion to storage terminal
Capacity reduction 2011 - 2016
Refinery Country Owner CDU
kb/d Closed
Arpechim Romania OMV 72 2011
Reichstett France Petroplus 85 2011
Wilhelmshaven Germany Hestya 260 2011
Cremona Italy Tamoil 90 2011
Berre l'Etang France LyondellBasell 105 2012
Coryton UK Petroplus 175 2012
Paramo Czech
Republic Unipetrol 20 2012
Fawley* UK ExxonMobil 80 2012
Rome Italy ERG, Total 92 2012
Gonfreville * France Total 110 2012
Harburg Germany Shell 114 2013
Porto Marghera Italy Eni 106 2013
Petit Couronne France Petroplus 162 2013
Frassino Italy MOL 57 2014
Stanlow* UK Essar 101 2014
Gela Italy ENI 120 2014
Milford Haven UK Murco 135 2014
Collombey Switzerland Tamoil 55 2015
Lindsey* UK Total 110 2015
La Mede France Total 160 2015/16
* Capacity reduction
Limited capacity closure during
2015-16 versus 2011-2014
European refinery capacity closures 2011-’16
3
© Wood Mackenzie 11
Following the period of capacity rationalisation the outlook for Europe's
refining sector is more positive
NWE Refining Gross Margin Outlook NWE Refinery Utilisation
3
65%
70%
75%
80%
85%
90%
-
5
10
15
20
25
2005 2010 2015 2020 2025
Refi
ne
ry U
tili
sa
tio
n, %
Refi
ne
ry C
ap
ac
ity,
mb
d
Refinery Capacity Crude Intake
Average Utilisation Rate
0
2
4
6
8
10
12
14
2005 2010 2015 2020 2025G
ros
s M
arg
in, $
/bb
l
NWE Brent Cracking NWE Urals Hydrocracking
Complex refining
margins supported
by middle distillate
market
© Wood Mackenzie 12
US – Net Exporter
Major developments outside of the EU will have a major impact on existing
trade flows
31.0% 27.4%
15.2%
29.2% 28.4%
34.9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2015 2020LPG Naphtha
Gasoline* Jet/Kerosene
Diesel/Gasoil* Fuel Oil
Other products Refinery Fuel & Loss
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
2005 2010 2015 2020 2025
Ba
lan
ce
s (
kb/d
)
LPG Naphtha
Gasoline Jet/Kerosene
Diesel/Gasoil Fuel Oil
USA becomes net
gasoline exporter Persian
Gulf, Iran
360 kb/d,
Jan 2017-
Jan 2018
Ruwais, UAE
417 kb/d,
April 2015 Yanbu YASREF,
Saudi Arabia
400 kb/d,
January 2015
Shuaiba, Kuwait
-200 kb/d,
June 2017
Karbala, Iraq
140 kb/d,
January 2020
Jazan, Saudi Arabia
400 kb/d,
June 2018
SIRAF, Iran
360 kb/d,
January 2021-
January 2022
Al-Zour, Kuwait
615 kb/d,
June 2020
Russia – Major Upgrades ME – New Refineries
4
© Wood Mackenzie 13
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
LPG Naphtha Gasoline Jet/Kerosene Diesel/Gasoil Fuel Oil
Bala
nce
(m
b/d
)
2010 2015 2020 2025 2030
Surplus
Deficit
NWE Oil Product Balance
Europe's gasoline surplus is expected to increase as domestic demand
declines, refiners will need to look for new export markets
Source: Wood Mackenzie
4
Placing surplus gasoline into
competitive export markets
is a key challenge
Need for middle distillate
imports will peak
Fuel oil surplus
will persist
© Wood Mackenzie 14
Source: Wood Mackenzie
OPEC Production
European crude production is in decline, a greater call on OPEC production
will be required over time to meet demand
Non-OPEC Regional Production
5
0
5
10
15
20
25
30
No
rth
Am
eric
a
Euro
pe
Ru
ssia
&C
asp
ian
Asi
a
Lati
nA
mer
ica
Mid
dle
Eas
t
Afr
ica
mb
d
0
2
4
6
8
10
12
14
Alg
eria
An
gola
Ecu
ado
r
Iran
Iraq
Ku
wai
t
Lib
ya
Nig
eria
Qat
ar
Sau
di A
rab
ia
UA
E
Ven
ezu
ela
Ind
on
esia
OP
EC N
GLs
mb
d
2005 2010 2015 2020 2025 2030 2035
Non-OPEC production is
supported by North
American tight oil
Increased OPEC
production will be
needed to meet demand
© Wood Mackenzie 15
A number of oil product terminal expansions are currently being planned
which will bring further competition to ARA
Source: Wood Mackenzie
Notes:
ARA Oil Product Storage Capacity
0
5
10
15
20
25
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
mil
lio
ns
m3
Total oil product storage capacity in the ARA
region is around 21 million cbm
Around 6.5 million million cbm of capacity
was added since 2010 supported by strong
storage rates and growth in gross trade
There are a number of significant additional
storage expansion projects currently planned
which will add ~ 2 million cbm over the next
few years
Additional new capacity will increase
competition to attract customers
6
© Wood Mackenzie 16
ARA throughput levels peaked in 2013
» Throughput levels have declined since
2013 which has resulted in the
throughput/capacity ratio also dropping off
» Storage capacity additions have also to
reduced the trade-to-capacity ratio
Throughput levels are expected to start to
recover from 2017
» ARA ports continue to act as an oil trading
hub and help address NWE market
imbalances
The trade/capacity ratio is a proxy for the
average number of tank turns per year
i.e. usage of storage assets across ARA
» High trade/capacity ratio indicates high
storage asset usage and therefore
directionally higher storage fee rates 4
6
8
10
12250
200
150
100 2008
Th
rou
gh
put to
Ca
pa
city
Ra
tio
2020 2022 2024
Oil
Pro
du
ct T
hro
ug
hp
ut (M
illio
n m
3)
2010 2012 2014 2016 2018
ARA Oil Product Throughput
Throughput /Capacity Ratio (RHS)
Source: Wood Mackenzie
ARA Trade to Capacity Ratio Outlook
7 ARA throughput peaked in 2013 whilst throughput/capacity ratio peaked in
2010 – both are forecast to ramp up again going forwards
Turning the tanks:
Navigate the future of Europe's oil product
trade flows and storage
Multi-Client Study
Changing oil product supply and demand
fundamentals
The downstream oil market has experienced a period of
significant change over the past few years, including a large
decline in crude and product prices as well as the closure
(or conversion) of many European refineries.
Such developments have had a considerable impact on oil
product supply and demand fundamentals which are driving
the outlook for oil product trade and oil storage requirements
within Europe.
The oil storage industry is critical to ensuring the large
European oil product market can be effectively served.
Demand for oil storage has been increasing as structural
imbalances between product supply and demand continue
to grow, driving both investment and the level of
competition. As a result, businesses are continually looking
for ways to gain the edge, better position themselves for the
future and maximise returns.
Our European Oil
Storage Multi-Client
Study is designed to
support key decision-
makers within existing
storage businesses,
potential investors in
the sector and end-
users of oil storage
facilities.
The study provides the information and insight you
need to understand the changing market dynamics
of the oil product storage market, including:
Global, country, and port-level gross trade
forecasts for oil products
A coastal oil storage facility database
A terminal competitiveness ranking tool
An oil storage tariff rate benchmark forecast
A report covering the major themes and drivers
which will impact the European oil storage
industry
© Wood Mackenzie 20
How can you benefit from this study?
Understand the macro environment and trade
outlook which are driving the oil storage sector
Understand how the complex European market
can fit into your strategic plans
Ascertain which assets can potentially provide a
foothold in the region
Exporters targeting European market
Gain a detailed view on future trade flows at the
port level
Get a detailed perspective on the external oil
market
Understand the competitive position of the assets
in your portfolio
Oil storage companies
Identify structural market opportunities based on our supply /
demand fundamentals-based view of gross trade
Understand how major market developments will impact trade
flows
Determine where structural opportunities may arise
Identify potentially attractive storage locations based on their
location and physical attributes, such as capacity, draft and
offtake options
Oil traders
Understand the potential of an asset’s main revenue drivers as
well as the current and future business environment
Identify opportunities and make informed investment decisions
regarding oil storage assets
Identify oil storage assets in structurally advantaged locations
Support asset valuations with trade flow and storage rate
benchmark assessment
Financial institutions (Banking, Private Equity, Infrastructure funds)
© Wood Mackenzie 21
Delivering commercial insight
www.woodmac.com
-8000
-6000
-4000
-2000
0
2000
4000
6000
kt
Intra Short
Long
Source: Wood Mackenzie
Malta is one of the few trading hubs in the Med and a major bunkering
point
Positioned between the Strait of Gibraltar, the Suez Canal and the
Bosphorus, Malta is close to several major shipping lanes. It is a major
bunkering point with bunker fuels accounting for 60% of the country’s
total oil demand.
As general trade volumes increase in the Med, bunkering business in
Malta will remain robust reaching an estimated 1.7 Mt in 2020, up from
1.5 Mt in 2012. MOBC, Nordic Storage and Oiltanking are the main
bunker suppliers.
Actual oil product inland demand in Malta was around 950 kt in 2012 and
this is expected to grow only slightly to reach some 1,050 kt by 2020.
Enemalta’s terminal is the main supplier of the inland market.
Remaining volumes are related to regional diesel/gasoil and fueloil
trading operations. Malta’s location provides a freight advantage versus
Spanish and French ports, and the island captures a niche redistribution
business in the region. With some 562,000 m3 storage capacity,
Oiltanking’s Malta terminal is one of the largest independent facilities in
the Med. The terminal can facilitate intra-regional trade (Euro-Med to
North Africa or between Euro-Med) but it can also break cargoes of up to
120,000 dwt coming from short destination such as the Black Sea.
Product Movements and Oil Demand in Malta
Exports
Imports
Domestic demand
© Wood Mackenzie 5
The study will contain:
ARA oil storage benchmark rate assessments to assess the
outlook for storage rates based on the operations and costs of a
‘typical’ storage facility located within the ARA region based on
our in house benchmark storage facility model.
Historical and forecast oil product gross trade out to 2022
covering gasoline, diesel / gasoil, jet / kerosene, and fuel oil on a
global, country and port-level basis within Europe.
Data on over 300 coastal terminals including storage capacities,
number of tanks, port draft, and connections to road, pipeline or
rail infrastructure for inland distribution.
A benchmark index to evaluate and compare the relative
competitiveness of each terminal based on its location and
various technical features.
A database of ongoing and planned capacity additions and
recent transactions.
Assessment of future demand for storage capacity in Europe
over the next five years.
Highlights of shortages and surpluses of storage capacity in
each region and the associated investment opportunities.
A supporting report outlining the major key themes and drivers
which will impact the storage industry within Europe.
Italy, Adriatic & Malta Terminals (2012 Capacities)
Civitavecchia
Brindisi
LivornoSavona
Piombino
La Spezia
Porto Torres
Malta~140,000 m3 ~1,300,000 m3
Key
Koper
Trieste
Venice
Gaeta
Napoli
Genova
Augusta
PloceRavenna Split
ITALY
SLOVINEA
SARDINIA
CROATIA
BOSNIA AND
HERZEGOVINA
MONTENEGRO
ALBANIA
CORSICA
SICILY
HUNGARYAUSTRIASWITZERLAND
SERBIA
Key deliverables
Report outlining the market fundamentals, oil storage rate benchmark outlook, recent
major developments, themes, and key drivers of the oil storage sector (detailed
PowerPoint).
Country- and port-level gross trade forecast data containing an outlook for all coastal
European countries (excel-based).
European oil storage terminal database and competitiveness model (excel-based)
Recent oil storage transactions and new build database (excel-based).
© Wood Mackenzie 23
Contacts
Chris Barry
Principal – Downstream Consulting
T +44 20 3060 0575
Gerrit Venter
Product Manager – Downstream Oil Service
T +44 20 3060 0577
Americas +1 713 470 1700
Asia Pacific + 65 6518 0888
Europe +44 131 243 4477
Wood Mackenzie Client Helpdesk
Lincoln Behm
Global Account Manager
T +44 20 3060 0619
© Wood Mackenzie 24
Disclaimer
This report has been prepared for the Rotterdam StocExpo by Wood Mackenzie Limited.
The report is intended solely for the benefit of the Rotterdam StocExpo and its contents
and conclusions are confidential and may not be disclosed to any other persons or
companies without Wood Mackenzie’s prior written permission.
The information upon which this report is based on our own experience, knowledge and
databases. The opinions expressed in this report are those of Wood Mackenzie. They have
been arrived at following careful consideration and enquiry but we do not guarantee their
fairness, completeness or accuracy. The opinions, as of this date, are subject to change.
We do not accept any liability for your reliance upon them.
Strictly Private & Confidential
Europe +44 131 243 4400
Americas +1 713 470 1600
Asia Pacific +65 6518 0800
Email [email protected]
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