In 2018 and 2019, European transport fuel demand growth will slow to an annual average of roughly 160,000 b/d. This slowdown is driven by a deceleration in diesel and jet fuel demand growth, particularly in Germany, where for the first time in a decade diesel demand will contract. Nevertheless, with demand for all three major transport fuels continuing to rise through 2019, and regional refinery throughput expected to slow, Europe’s distillate deficit will expand and gasoline surplus will narrow. These developments will be bullish for global product markets.
Progress on Russia’s oil tax reform hints at its likely impact on the future of refining. Most but not all refineries will be subsidized. Distillation capacity will level off after a prolonged period of expansion. Lastly, the new system will eliminate the incentive for investment in fuel oil destruction. However, the consequences for investment will be offset by market incentives stemming from new IMO regulations.
The 250,000 b/d increase in Russian production from May to July eclipses the growth hinted at by the Russian Energy Ministry. The opportunity to replace Iranian barrels undoubtedly is encouraging higher Russian output. In response, we now estimate annual Russian growth of 130,000 b/d in 2018 and 210,000 b/d in 2019. However, President Putin will eventually establish a new temporary production ceiling and resume coordination of production in the OPEC+ format.
Indian transportation fuel demand will maintain this year’s pace of growth of 160,000 b/d to reach 2.7 million b/d in 2019. Gasoline and diesel demand growth will both remain solid, though an acceleration is unlikely as the central bank starts to raise interest rates. With refining capacity staying flat, India’s exports of both fuels should fall in 2019.
Driven higher by expected increases in production in Libya, Africa’s crude production should rise by 100,000 b/d to 7.35 million b/d in 2019. This marks an acceleration of growth from this year, when crude production increased only 45,000 b/d.
Africa’s refinery throughput will grow by only 60,000 b/d this year to 2.2 million b/d and will remain flat next year. With crude production growth set to outstrip throughput, Africa’s exportable crude surplus will rise to 5.2 million b/d in 2019.
Subsidy reform in Egypt means that despite a growing economy, higher prices will leave gasoline demand flat this year, at 170,000 b/d. With no other large engine of growth in the region, North Africa’s total gasoline demand will also remain flat this year, at 400,000 b/d. Meanwhile, a modest increase in supply means the region’s import requirement will shrink slightly to 210,000 b/d.
Argus Media : March 6, 2017
Canadian crude supplies to the US Gulf coast could increase by 300,000-400,000 b/d by 2021, Energy Security Analysis president Sarah Emerson said during the Canadian Energy Research Institute’s oil and gas symposium.
Arab News : Feb 25, 2017
ESAI Energy President Sarah Emerson also warned that Trump’s ideas could be difficult to implement.
“All of that is working against the huge question about deficit, and some Republicans and all the Democrats would have to object,” she said during a speech at IP Week.
Rigzone : Feb 7, 2017
“Over the next several years, with oil prices at a level – say, $60 to $70 – there will be global competition to develop plentiful reserves” in places such as Iran, Iraq, Canada, Brazil, Mexico and the United States, said ESAI’s Sarah Emerson.