KBC IoE Webinar - Regional Pivot Points in Global Refining
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© 2012 KBC Advanced Technologies plc. All Rights Reserved. Regional Pivot Points in Global Refining Webinar Presented by Karl Bartholomew 22 May 2012
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Transcript of KBC IoE Webinar - Regional Pivot Points in Global Refining
© 2012 KBC Advanced Technologies plc. All Rights Reserved.
Regional Pivot Points in Global Refining Webinar Presented by Karl Bartholomew
22 May 2012
Agenda > Old World order > New dynamics > New World order—changing ‘pivot’ points > Conclusions
22 May 2012 2 PROPRIETARY INFORMATION
Old World Order
22 May 2012 3 PROPRIETARY INFORMATION
Diesel / Gasoil Exports From-To
22 May 2012
0
50
100
150
200
250
300
350
400
Europe Latin America
North America
Africa Latin America
Middle East North America
Europe Latin America
Asia Europe North America
000'
s b/
d
2005 2006 2007 2008 2009 2010 2011
Asia retaining distillate to meet
local demand
Europe moving lower quality to
others
Source: KBC Energy Economics North America
moving more ultra-low to Europe and
Latin America
4 PROPRIETARY INFORMATION
Gasoline Exports From-To
22 May 2012
0
100
200
300
400
500
600
700
North America Africa Latin America Middle East North America Latin America
Asia Europe North America
000'
s b/
d
2005 2006 2007 2008 2009 2010 2011
Asia retaining gasoline to meet
local demand
Europe moving lower quality to others and less to the Middle
East and North America
North America moving more to
Latin America
Source: KBC Energy Economics
5 PROPRIETARY INFORMATION
New Dynamics > Key drivers of transport fuel demand are economic activity, population
age and growth rate, and relative standards of living – Asia/Latin America Booming – Africa/Middle East Growing – US/Europe Contracting
> Trade flows will reflect market realities – Excess global supply will flow to local demand – Trade routes are changing—new paradigms are being created
> New ‘pivot’ points that reflect excess regional supply are emerging – Surplus capacity depending on the region – Post crisis demand growth and contraction
22 May 2012 6 PROPRIETARY INFORMATION
Outlook Depends on the Economy
22 May 2012
GDP Growth Rates PPP, Constant Dollars
2010-2015 CAGR*
2015-2020 CAGR*
WORLD 5.0% 5.5%
Total Asia 7.8% 8.0%
China 10.9% 10.5%
Middle East 5.5% 5.6%
Europe 1.9% 2.5%
US 3.0% 3.7%
South America 5.1% 4.7%
7 PROPRIETARY INFORMATION
Current State of Economy > US economy sluggish – 2.1% > Eurozone almost in recession 0.1%
– Portugal -2.2% – Italy -1.3% – Greece -6.2% – Spain -0.4% – France – 0.3% – Germany – 1.2% – United Kingdom - 0.0%
22 May 2012 8 PROPRIETARY INFORMATION
Effective Fed Funds Rate
22 May 2012
-6%
-4%
-2%
0%
2%
4%
6%
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Recession
9 PROPRIETARY INFORMATION
ECRI Weekly Leading Index
22 May 2012
Below 0% for extended period signals recession
(25.0%)
(20.0%)
(15.0%)
(10.0%)
(5.0%)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Recessions
-4.5% May 2012
10 PROPRIETARY INFORMATION
China > 2Q 2012 GDP forecasted at 7.5%
– Lowest since 2009 – However, in line with government target
> Lending slowed down
22 May 2012
Chart source: Wall Street Journal, May 16th
11 PROPRIETARY INFORMATION
Poll Question #1 > What is global oil demand?
a) 88.6 million b/d b) 89.5 million b/d c) 91.2 million b/d d) 85.5 million b/d
22 May 2012 12 PROPRIETARY INFORMATION
Oil Demand Growth Rates
22 May 2012
Total Oil Equivalent 2010-2015 CAGR*
2015-2020 CAGR*
WORLD 1.4% 1.6%
Total Asia 2.4% 3.0%
China 3.1% 5.2%
Middle East 2.7% 2.8%
Europe -1.3% -0.2%
US 0.4% 0.0%
South America 2.6% 2.2%
13 PROPRIETARY INFORMATION
New Refining Capacity > US
– Rationalisation of less efficient assets – Additions of complex, flexible refineries
> Europe – Rationalisation of less efficient assets
• Where allowed by law > Latin America
– Additions lagging demand growth > Asia
– Additions still ‘booming’; pacing demand > Middle East
– Large capacity excess to demand coming onstream soon
22 May 2012 14 PROPRIETARY INFORMATION
Regional Refining Additions
22 May 2012
-600
-400
-200
0
200
400
600
800
1,000
1,200
1,400
US/Canada Latin America Europe FSU + Russia Africa Middle East Asia
000'
s b/
d
Crude Capacity Changes
2011 2012 2013 2014 2015 2016 2017
America's short-term contraction yet still growing overall Europe negative in the short-
term FSU/Africa modestly growing
Middle East/Asia booming
Source: KBC Energy Economics
15 PROPRIETARY INFORMATION
Atlantic Basin Capacity Shifts > Back from the abyss:
– Sunoco Philadephia, Petroplus Cressier, Petroplus Antwerp, COP Delta Trainer, Valero PetroChina Aruba
> Newly facing the abyss: – ERG Rome
> New on the block: – Imperial Dartmouth
> Still on the block / abyss: – BP Carson / Texas City; COP Alliance; Petroplus Coryton
/ Petit Couronne; LBI Berre
22 May 2012 16 PROPRIETARY INFORMATION
Non Traditional Buyers
> Traders (Vitol, Gunvor) > Private Equity (TPG, Klesch) > National Oil Companies (PetroChina) > Consumers (Delta)
22 May 2012 17 PROPRIETARY INFORMATION
New ‘Pivot’ Points
22 May 2012
Bubble size represents relative total net crude refining capacity added through 2017
18 PROPRIETARY INFORMATION
How Have Regional Pivots Changed? > In the ‘old’ days
– Europe supplied the US – Europe supplied Africa – Europe supplied Latin America
> In the new order – The US supplies Latin America – Europe supplies Africa dwindling – Asia supplies US West Coast – The Middle East supplies Europe – The Middle East supplies Africa
22 May 2012 19 PROPRIETARY INFORMATION
New World Order
22 May 2012 20 PROPRIETARY INFORMATION
Poll Question #2 > What do you think oil price will be (Brent) by
the end of this year? a) $75-$90 b) $90-$100 c) $100-110 d) $110-125
22 May 2012 21 PROPRIETARY INFORMATION
Conclusions > Regional supply/demand changes have started to change
the direction of product flows – US Atlantic and Northwest European supply centers are being
hollowed out – Middle East and West India are the new supply points
• Russia is coming on fast – Longer economic reach of more efficient production
> New supply points will pivot toward unmet demand and in new directions – Asia is becoming better balanced – Latin America still has unmet demand – Russia is building excess capacity
22 May 2012 22 PROPRIETARY INFORMATION
Conclusions cont’d > Asia – Pivoting inward centered on China and India
– Will set product swing between Pacific and Atlantic Basins – Unresolved Indian issue of domestic vs. export rules
> Middle East – West vs. Asia destination will be economically decided – National Oil Companies willing to make decisions based on domestic socio-
economic grounds > Europe – Still some exports to US East Coast but starting to wither
– Russian exports are key to long term survivability as supply center > US East Coast
– Has lost significant domestic supply capability – Will become the battleground for overseas supply
> US Gulf Coast – Exports to Latin America has been saving grace – Politics could curtail exports long term
22 May 2012 23 PROPRIETARY INFORMATION
A Quick Survey > Was this topic valuable?
– Yes – No
> Was the presentation clear? – Yes – No
> Would you be interested in future webinars? – Yes – No
22 May 2012
> How do you rate the webinar overall? – Excellent – Good – Fair – Poor
Please send any further questions and feedback to: [email protected]
24 PROPRIETARY INFORMATION
Closing > Questions? > Future webinar topics:
– Market conditions – Asset optimization – Investment support – Sustainable workforce development
> We welcome suggestions for future topics – please email [email protected]
> Next webinar information will go out shortly. > Thank you for joining us!
22 May 2012 25 PROPRIETARY INFORMATION
