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Oil Supply-Demand Imbalances and Trade Flows for Turkey and the Atlantic Basin and Implications for Oil Terminal Business
Istanbul, October 2009
Ben Holt Vice President Wood Mackenzie
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Turkey’s Oil Products Position
1
2
Crude Oil Transit and Refining
Agenda
International Oil Products Trade Flows
Implications for Turkey 4
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Turkey- Key Oil Transit Country
Turkish Straits near capacity for oil tanker transit
Growing volumes via BTC Pipeline
Potential further by-pass pipeline eg Samsun-Ceyhan
Refineries at Mediterranean end of by-pass lines under consideration?
Crude and product exports from Iraq to increase?
Black Sea and Caspian Oil Map Black Sea and Caspian Oil Map
Source: Wood Mackenzie
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Russian crude oil refining and exports to increase by 2015, but with much greater flexibility in export routes
Net Russian crude exports to increase from 272 Mt in 2008 to 300 Mt in 2015
Russian refinery crude intake to increase from 220 Mt to 230 Mt over the same period
Incremental pipeline crude export capacity (BPS2 30 Mta, ESPO 80 Mta) will exceed increased exports, allowing
"Focus on higher netback routes
"Flexibility to vary exports between markets
Russia’s Crude Production, Refining and Exports Russia’s Crude Production, Refining and Exports
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100
200
300
400
500
600
2000 2001 2002 2003 2004 2005 2006 2007 2008 2010 2015
Source: Wood Mackenzie
Mt
Net Crude Exports Crude Refined
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Caspian crude oil output growth should provide further transit opportunities for Turkey
Kazakh crude production to exceed 3.1 Mbd by 2020
Azeri production to rise to over 1.2 Mbd
Turkmen output also to rise, to 300 kbd by 2020
Iraqi output to double vs 2008, to 4.8 Mbd by 2020
Syrian crude output may decline
New refining projects mooted in Iraq, Syria
0.0
0.5
1.0
1.5
2.0
2.5
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3.5
2008 2010 2012 2014 2016 2018 2020
Source:Wood Mackenzie
Millio
n b
dKazakhstan
Azerbaijan
Turkmenistan
Caspian Crude Oil Production Forecast to 2020
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GDP growth rate is constant, PPP-weighted Source: IEA, EIA, IMF, National Statistics, Wood Mackenzie
High oil prices and then the financial crisis have brought a large downturn in global oil demand…
Mb
/d
-2
-1.5
-1
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1995
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2011
2012
2013
2014
2015 -3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
Demand Growth GDP Growth
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…. which, with new refining capacity being built, is leading to large overcapacity in refining over the next five years
Absent exceptional factors, it will be challenging to justify new refineries in the Med eg at Ceyhan
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Mbd
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Mbd
Demand (LHS) Refining Capacity (LHS) Spare Capacity (RHS)
Source: BP Stats Review, Wood Mackenzie
Forecast
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Turkey’s Oil Products Position
1
2
Crude Oil Transit and Refining
Agenda
International Oil Products Trade Flows
Implications for Turkey 4
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-7
-6
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-1
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LPG Naphtha Gasoline Jet/Kero Diesel/Gasoil Fuel Oil
Other
products
Source: Wood Mackenzie
Millio
n T
onne
s
2000 2005 2006 2007 2008
Diesel has been the key growth oil product in Turkey and net imports have grown rapidly in recent years
Large net LPG imports, recently stable
Naphtha and especially growing Gasoline surplus consistent with the European trend
Significant and increasing deficit in gasoil and diesel
Surplus of heavy fuel oil, can partly support the bunker market
Turkey Oil Product Balances, 2000-2008
Surplus
Deficit
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After recovery from current downturn, gasoil/diesel demand will grow further
We expect gasoil/diesel demand to grow 3% pa on average from 2010 to 2020, slowing later
Gasoline demand starts to increase especially later in next decade
LPG demand to grow once again
Jet kerosene demand grows steadily
02468
101214161820
LPG
Naphth
a
Gas
oline
Jet/O
ther
Ker
osene
Diese
l/Gas
oil
Fuel O
il
Oth
er P
roduc
ts
Source: Wood Mackenzie
Millio
n T
on
ne
s
2000 2005 2008 2010 2015 2020
Turkey Oil Product Demand, 2000-2020
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Turkey’s Oil Products Position
1
2
Crude Oil Transit and Refining
Agenda
International Oil Products Trade Flows
Implications for Turkey 4
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A large swing is ongoing in refined product yield towards diesel in the Med
0%
10%
20%
30%
40%
50%
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90%
100%
2005 2008 2010 2015 2020 2025
Re
finer
y Y
ield
s
LPG
Naphtha
Gasoline
Jet/Kero
Diesel
Gasoil
LSFO
HSFO
Other products
RFL
Source Wood Mackenzie
Med regional refinery investments in hydrocracking and coking lead to large swing in yields – between 2008 and 2015, diesel yield grows by 5% and HSFO yield falls by 8%
This allows refiners to keep up with regional diesel demand growth
Mediterranean Overall Refinery Product Yields
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Mediterranean Oil Product Balances to 2020
Diesel deficit and Naphtha surplus stabilise after 2010
Gasoline surplus falls after 2015
HS Fuel Oil position dependent on bunker market developments
Mediterranean Oil Product Balances to 2020
-30
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LPG Naphtha Gasoline Jet/Kero Diesel Gasoil LSFO HSFO
Bala
nces, M
t .
2000 2005 2008 2010 2015 2020
Surplus
Deficit
Source Wood Mackenzie
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Russia’ s product exports are significant to Turkey
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LPG Naphtha Gasoline Jet/Kero Diesel/Gasoil Fuel Oil
Ba
lances, M
t .
2000 2005 2008 2010 2015 2020 2025
Surplus
Source Wood Mackenzie
Forecast Russia Net Product Balances
We see naphtha/gasoline exports rising by 4 Mta, gasoil/diesel by +13 Mta and fuel oil falling by 19 Mta by 2015
Exports of LPG and condensate from upstream sources (not included here) are likely to grow on lower flaring
Product exports decline later with increasing domestic demand, unless further new refining capacity is added
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Significant new and expanded capacity to be built in the Middle East: in competition with Russia in export refining; NOC’s likely to run at capacity
Yanbu Saudi Aramco/ CoP 400 kbd, 2015
Ras Laffan Qatar Petroleum 146 kbd, 2009
Jubail Saudi Aramco/Total 400 kbd, 2014
Bandar Abbas NIOC 120 kbd, 2013 120 kbd, 2014 120 kbd, 2015
Jamnagar II Reliance 580 kbd, Operational
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2005 ME capacity Projects ME Demand
Karachi Indus Refinery Ltd 90 kbd, 20011
Source: Wood Mackenzie
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Outlook for gasoline trade flows
Key net trade 2010 (kbd)
Source: Wood Mackenzie
Asia
FSU
New net trade 2015 (kbd)
Europe
North America
Latin America Africa
Gasoline flows from Europe to North
America are forecast to increase
Indian Ocean rim refiners will try to push gasoline into
North America
Growing surplus of gasoline in FSU as refiners invest in improving octane
levels
Middle East
The deficit in North America is expected to grow, despite weak demand, as refiners reduce utilisation and shift yields towards middle distillates. Asia Pacific becomes deficit by 2015, from current surplus
Greater Europe/FSU will maintain a large surplus and continue to export to North America and SS Africa
Middle East becomes surplus by 2015
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Outlook for diesel/gasoil trade flows
Source: Wood Mackenzie
US exports of diesel to US exports of diesel to Europe remain high in Europe remain high in
the short termthe short term, , but but amount falls post amount falls post 20102010
European imports of European imports of dieseldiesel//gasoil from Middle gasoil from Middle
East could increaseEast could increase
Russia will continue to Russia will continue to export dieselexport diesel//gasoil to gasoil to
EuropeEurope
Middle East Middle East dieseldiesel//gasoil exports gasoil exports to Asia will increase to Asia will increase later in the forecast later in the forecast
periodperiod
Growing demand and reduced refinery utilisation will result in a widening deficit in Greater Europe, with the FSU remaining the most important source of European imports.
The surplus in North America falls post 2010 as demand growth picks up.
Exports from the Middle East will grow between 2010 and 2015 as new refineries come on stream, while the surplus in Asia falls in this time period due to strong growth in demand.
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Turkey’s Oil Products Position
1
2
Crude Oil Transit and Refining
Agenda
International Oil Products Trade Flows
Implications for Turkey 4
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Implications for Turkey’s Oil Infrastructure
Samsun-Ceyhan pipeline offers one route for growing Caspian and Russian crude volumes to the Med and global export markets
Economics for new refining, for example at Ceyhan, may be challenging in the near term
The Turkish products market will be increasingly deficit in middle distillates and LPG in the medium term, despite planned upgrading at existing Tupras refineries
Russian and Indian Ocean Rim export refiners and traders are likely to be looking for terminal capacity to access the Turkish market
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áBen Holt
Vice President, Downstream Oil Consulting
Wood Mackenzie Limited
1 Finsbury Square
London EC2A 1AE
T: +44 203 060 0467
Contact
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Wood Mackenzie
Kintore House 74-77 Queen Street Edinburgh EH2 4NS
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Wood Mackenzie has been providing its unique range of research products and consulting services to the Energy industry for over 30 years. Wood Mackenzie provides forward-looking commercial insight that enables clients to make better business decisions. For more information visit: www.woodmac.com
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