European refining capacity and margin view - Platts · European refining capacity and margin view Arsenije Dusanic ... ‘‘project’’, ... Hydrocracking Coking

30 January 2014

European refining capacity and margin view

Arsenije Dusanic

JBC Energy GmbH

January 2014

Research - Energy Studies - Consulting - Training

For Platts Middle Distillates Conference

30 January 2014 Slide 2

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30 January 2014

European Refining Landscape

Slide 3

100 Harburg Shell-->Nynas

93 HeideShell-->Klesch

160 Dunkirk dismantling

117 Teesside terminal

Sale of Refinery [b/d]

Shutdown [b/d]

Capacity Downsizing [b/d]

220 Total Lindsey ?

80 Gothenburg Shell-->St1

70 OMV Pitestishutdown/terminal

85 Reichstett terminal

Russian Company Acquired Stake [b/d]

360 ERG Priolo 100% Lukoil

150 Vlissingen45% Lukoil

480 Ruhr Oel 50% Rosneft

150 NIS 56% Gazprom Neft

320 Mozyr 43% Slavneft

120 Burgas50 Ploiesti

Lukoil

160 Lisichansk TNK-BP

90 Cremona terminal

Asian Company Acquired Stake [b/d]

210 Lavera 50% PetroChina

210 Grangemouth 50% PetroChina

130 Murphy Milford Havenfor Sale

270 Shell Stanlow--> Essar Oil

210 Chevron Pembroke--> Valero

260 WilhelmshavenHestya Energy

terminal

105 Berre shut down

921,000

1,670,000

166,000

1,419,100

480,000

107 Antwerp --> Gunvor

162 Petit Couronne: shut down

68 Cressier --> Varo Holding

110 Ingolstadt--> Gunvor

163 Corytonterminal

240 (-86) Gonfreville

80 Bosanski Brod Zarubezhneft

250 Hellenic Petroleum 35% stake sell announced

85 Roma shut down 78 Falconara

halted

80 Venice bio fuels refinery

330 (-80) Fawley

Capacity Currently for Sale [b/d] 683,000

300 Saras Sarroch 21% Rosneft

55 Mantova terminal

Source: JBC Energy

170 INA 49% stake sell proposed

Europe: Refinery Industry Consolidation since 2009 ('000 b/d)

260 Bayernoil --> Varo Holding

30 January 2014


Slide 4

0%

5%

10%

15%

20%

25%

30%

Reformer/CDU

US Average

European Average

Reformer/CDU Ratio for Closed European Refineries [%]

Source: JBC Energy, O&G Journal

*) Teesside refinery was not equipped with a reforming unit

Land locked Coastal

30 January 2014


Slide 5

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

-20 0 20 40 60 80 100 120

European Refining Industry [%; points]

High market concentration / Low gasoline exposure

Ukraine

UK

Germany

Netherlands

Italy

Romania

High market concentration / High gasoline exposure

Low market concentration / High gasoline exposure

Low market concentration / Low gasoline exposure

Market Concentration (Herfindahl Index) [points]

Ga

so

lin

e S

up

ply

Sh

are

[%

]

Portugal

Spain

France

30 January 2014


Slide 6

40%

50%

60%

70%

80%

90%

100%

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Additional shutdowns per year in 80% scenario

Shutdowns in 80% scenario (cumulative)

Actual net-capacity shutdowns

80% scenario - right scale

Historical and expected utilisation rate - right scale

Cumulative shutdowns of 2.0 million b/d by 2018

European Refining Industry ['000 b/d; %]



-600

-400

-200

0

200

400

600

800

1,000

1,200

Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13

Other non-OECD Other Non-OECD Asia

India China

OECD Asia Oceania Europe

Non-OECD Americas OECD Americas

Total

12 Month Moving Avg. Global Product Import Change (y-o-y) Indicator ['000 b/d]

Source: IEA, of f icial statistics, JODI, JBC Energy calculations



-4.00

-2.00

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

22.00

Sep-13 Oct-13 Nov-13 Dec-13 Jan-14

USGC Crude Basket Cracking Margin

Standard (100%) LLS Cracking Margin


NWE Crude Basket Cracking Margin

Standard (100%) Brent Cracking Margin

Source: JBC Energy calculations using H-Comet, Platts and McQuilling


Asian Crude Basket Cracking Margin

Standard (100%) Dubai Cracking Margin

Global Cracking Margins [$/bbl]



8.60

9.00

9.40

9.80

10.20

10.60

11.00

11.40

11.80

Jan Apr Jul Oct

Source: Euroilstock, IEA

EU-15 & Norway Crude Intake [million b/d]EU-15 & Norway Crude Intake & Refined Products Stocks [million b/d, mbbls]

580

600

620

640

660

680

700

Jan Apr Jul Oct

Avg 08-12 2009

2010 2011

2012 2013

30 January 2014


Slide 10

-300

-250

-200

-150

-100

-50

0

50

100

150

Refinery Feedstock

Crude Intake

OECD European Refining Sector Dynamics (Jan-Oct 13 vs Jan-Oct 12) ['000 b/d]

-600

-500

-400

-300

-200

-100

0

100

200

300

OECD Europe

-60

-40

-20

0

20

40

60

80Both Intakes Rising

Source: IEA

Switching Towards Refining Feedstock


Extraregional Competition

-30.0

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14

Bakken ex-Clearbrook WTI LLS Eagle Ford Mars

Source: PlattsSource:

Source: Platts

US Crudes vs. Dated Brent [$/bbl]



0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13

Europe Central & South America Canada & Mexico Other Markets

US Gas Oil/Diesel Exports by Destination ['000 b/d]

Source: EIA

Total gas oil/diesel includes distillates, biomass and other renewable diesel.



4.40

4.60

4.80

5.00

5.20

5.40

5.60

5.80

6.00

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2009 2010 2011 2012 Average 2009-2012 2013

Russian Refinery Throughput [million b/d]

Source: Russia Ministry of Energy

30 January 2014


Slide 14

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

50

100

150

200

250

300

350

400

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

DesulphurisationHydrocrackingCokingCat crackingConversion capacity as % of CDU capacity - right scale

-150

-100

-50

0

50

100

150

200

2010 - 2013 2014 - 2018

Russian Gas Oil Export Changes

Russia Diesel Export Changes

Russian Conversion Capacity Additions and Gas Oi/Diesel Exports ['000 b/d; %]

30 January 2014


Slide 15

0

100

200

300

400

500

600

700

800

900

2011 2012 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13

Annual Total Slavneft

TAIF Rosneft (inc. TNK-BP)

Gazprom Neft Lukoil

Bashneft

Russian 10ppm Diesel Output ['000 b/d]

Source: Argus Media



0

100

200

300

400

500

600

700

800

900

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2009 2010 2011 2012 2013 5-year average '08-12

Indian Diesel Exports ['000 bpd]

Source: Indian Ministry of Petroleum, Thomson Reuters

30 January 2014


Slide 17

0

100

200

300

400

500

600

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Other Asia South KoreaIndia AfricaCentral &South America North AmericaMiddle East FSU East + Belarus + LatviaMed NWE

NWE Gas Oil/Diesel Imports (12 months moving avg) ['000 b/d]

Source: IEA

30 January 2014


Slide 18

0

200

400

600

800

1,000

1,200

1,400

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Other Asia South Korea

India Africa

Central &South America North America

Middle East FSU East + Belarus + Latvia

Med NWE

OECD Med Gas Oil/Diesel Imports (12 months moving average) ['000 b/d]

Source: IEA



Yanbu 2015400,000 b/d

Jizan 2018400,000 b/d

Jubail 2013400,000 b/d

Ruwais 2015410,000 b/d

Ras Laffan 2016150,000 b/d

Other Iraq (2017-2022)740,000 b/d

Hormoz 2019300,000 b/d

Expected Additions

Further Announced Additions

2 million b/d

1.04 million b/d

Erbil 201785,000 b/d

Bagdad 201670,000 b/d

Basrah 2016 70,000 b/d

Selected Middle East Refinery Additions 2013-2022 [b/d]

30 January 2014


Slide 20

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

LPG Naphtha Gasoline Kero/Jet Gas Oil Residual/Fuel Oil

Middle East - Balance of Selected Products and Refinery Additions [million b/d]

JubailSaudi Arabia

YanbuSaudi Arabia

RuwaisUEA Jizan

Saudi Arabia

30 January 2014

Margin Outlook

Slide 21

0.00

100.00

200.00

300.00

Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14

Premium Unl 10ppm FOB Barges

Naphtha CIF Cargoes

NW Europe Selected Product Cracks (vs Dtd. Brent) [$ per tonne]

0.00

100.00

200.00

300.00

Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14

Jet CIF Cargoes ULSD CIF Cargoes Gas Oil 0.1 CIF Cargoes

Figures from February 2014 are JBC Energy estimatesSource: JBC Energy, Platts

30 January 2014

Margin Outlook

Slide 22

-1,200

-1,000

-800

-600

-400

-200

0

200

400

600

800

1,000

1,200

1,400

2010

2014

2018

-1,200

-1,000

-800

-600

-400

-200

0

200

400

600

800

1,000

1,200

1,400

2010

2014

2018

Gasoline and Gas Oil/Diesel Balances by Regions ['000 b/d]

GasolineGas oil/diesel


Margin Outlook

0

200

400

600

800

1,000

1,200

1,400

Gasoline

Gasoline

Top 10 Gasoline and Gas Oil/Diesel Exporters in 2014 ['000 b/d]

0

200

400

600

800

1,000

1,200

1,400

Gas Oil/Diesel

30 January 2014

Margin Outlook

Gasoline Diesel

High seasonality of demand Flattening seasonality due to loss of

heating oil demand

Strong interest and volatility of

managed money

Relatively limited interest of managed

money

Strong external influence from (higher-

margin) petchem sector dynamics

Highly limited yield shifts in the diesel

pool

18% of demand covered by

international trade

26% of demand covered by

international trade

Heterogeneous product specs Largely same specs

Less clarity on stocks quality

breakdown

Clearer stocks composition

Use limited to transportation sector More widespread use

Slide 24


Thank You!

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European refining capacity and margin view - Platts · European refining capacity and margin view Arsenije Dusanic ... ‘‘project’’, ... Hydrocracking Coking