Non-US Projects to Boost Global LPG Supply

Oil & Gas Journal:

Australia and Russia together will add more than 100,000 b/d of LPG supply in the coming months, according to ESAI Energy’s Global NGL Outlook. Given that US export infrastructure will limit US LPG exports this winter when global demand is strongest, higher exports from Australia and Russia will provide an important alternative source of supply to China, Asia, and Europe.

LPG to Stumble

In the second half of 2018, European crude imports will fall by over 400,000 b/d year-on-year in response to slowing regional throughput. In 2019, imports will rebound slightly to an average of 9.9 million b/d, but the origin of these inflows will shift significantly as U.S. and Russian volumes replace Middle Eastern and African crudes.
This month we have begun publishing regional data from our global crude trade flows modeling including history back to January 2016 and forecast through December 2019 (see accompanying excel dataset). In 2019, with shale production decelerating, we expect crude exports to rise to an average of 2.2 million b/d after registering an annual average in 2018 of 1.8 million b/d.

Upgrading Capacity Expands Quickly through 2019

In the second half of 2018, European crude imports will fall by over 400,000 b/d year-on-year in response to slowing regional throughput. In 2019, imports will rebound slightly to an average of 9.9 million b/d, but the origin of these inflows will shift significantly as U.S. and Russian volumes replace Middle Eastern and African crudes.
This month we have begun publishing regional data from our global crude trade flows modeling including history back to January 2016 and forecast through December 2019 (see accompanying excel dataset). In 2019, with shale production decelerating, we expect crude exports to rise to an average of 2.2 million b/d after registering an annual average in 2018 of 1.8 million b/d.

Imports from U.S. and Russia Surge in 2019

In the second half of 2018, European crude imports will fall by over 400,000 b/d year-on-year in response to slowing regional throughput. In 2019, imports will rebound slightly to an average of 9.9 million b/d, but the origin of these inflows will shift significantly as U.S. and Russian volumes replace Middle Eastern and African crudes.
This month we have begun publishing regional data from our global crude trade flows modeling including history back to January 2016 and forecast through December 2019 (see accompanying excel dataset). In 2019, with shale production decelerating, we expect crude exports to rise to an average of 2.2 million b/d after registering an annual average in 2018 of 1.8 million b/d.

Europe’s Role in Transport Markets Shrinking

Hellenic Shipping News:

Over the next year, Europe will import less gasoil while exporting smaller volumes of gasoline, according to ESAI Energy’s latest Global Fuels Outlook. In this publication, ESAI Energy analyst Ian Page points out that “this reduction in European diesel imports and gasoline exports will have a major impact on global trade flows in 2019.”

Plenty of Crude Overshadowed by Iran

The supply demand fundamentals are weaker due to sluggish Chinese demand growth and ample sources of additional crude oil supply. These factors would normally weaken crude prices. Yet, we expect some price strength in the next 18 months as the partial loss of Iranian exports shakes the market. Increases in refining capacity and preparations for the IMO change will lift crude demand next year, also providing support to prices.

This month we have begun publishing regional data from our global crude trade flows modeling including history back to January 2016 and forecast through December 2019 (see accompanying excel dataset). In 2019, with shale production decelerating, we expect crude exports to rise to an average of 2.2 million b/d after registering an annual average in 2018 of 1.8 million b/d.

Iran Customers Explore their Options

Iran has begun insuring its own cargos bound for India and China. This will facilitate crude imports once U.S. sanctions hit in November. Rupee- and renminbi-riyal payment mechanisms are also on the table for New Delhi and Beijing. We expect India and China to continue to take almost 1.0 million b/d of crude oil from Iran under the sanctions, down from about 1.3 million b/d. We expect a larger reduction by Iran’s other customers, and still believe the overall impact will be a reduction in Iranian exports of about 1.1 million b/d,

Permian Production Decelerates, Waiting for Pipelines

Hellenic Shipping News:

The Permian Basin’s rapid production growth is showing signs of deceleration, according to ESAI Energy’s recent North America Watch. An evaluation of shale producers finds that while Permian basin operating costs in the second quarter have fallen about 6 percent on average from this time last year, overall full-cycle breakeven costs are roughly 30 percent higher, due to increased capital spending. ESAI Energy analyst, Elisabeth Murphy, explains, “Acreage consolidation is key for achieving scale, and will be critical to some producers’ bottom lines, but it comes at a cost. Permian acreage can be expensive”.

Frac Spread: With Great LPG Supply Comes Great Exportability

Oil and Gas Investor:

The U.S. and Canada will produce about 3 million barrels per day (MMbbl/d) of LPG this year, a 200,000 bbl/d increase over 2017, with ESAI Energy LLC expecting considerable growth in 2019.

All told, output should rise by about 400,000 bbl/d from 2017 to 2019, said Andrew Reed, principal of ESAI Energy, during an Aug. 15 webinar. Of that 3 million bbl/d of production, exports of 1.1 million bbl/d are split between the Atlantic Basin and Asian markets.