Purvin & Gertz recently released its global petroleum
market outlook for 2011. The study provides an analysis of
global and regional markets for crude oil and refined products
within a framework of world energy demand and economic activity
through 2030. The conclusion of the report is that a global
economic recovery is well underway, but there are new areas of
uncertainty to consider. Political turmoil in the Middle East
and North Africa has appeared in the first few months of 2011
and has caused some oil supply disruptions. A massive
earthquake and tsunami devastated northeastern Japan,
inflicting painful loss of life and serious damage to nuclear
power capacity and other energy infrastructure such as
refineries and LNG receiving terminals. These negative factors
are counterbalanced somewhat by the return of economic growth
in many of the worlds economies and by accelerating crude
oil supply in countries outside of OPEC.
Key conclusions of this years analysis include:
Refined product demand increased by 2 million
bpd in 2010 as most economies emerged from the 2009 recession.
Demand growth was strongest in Asia, the Middle East and parts
of Latin America. The companys long-term forecast for
refined product-demand growth has been updated to reflect the
impact of higher long-term crude oil prices and more stringent
conservation efforts. The challenge to supply energy to a
growing global population of expanding financial means is
Product demand in non-OECD countries will grow
rapidly from the current level of 37.3 million bpd in 2010 to
59.6 million bpd in 2030. Of the expected 22.3 million-bpd
increase, China alone is expected to account for 43% of this
increase. The combination of Brazil, India, Russia and the broader Middle
East will account for almost 30% of the increase.
Diesel fuel will increase its share of total
demand as demand for other fuels grows at a slower pace.
Gasolines share of demand has been relatively stable for
the last 20 years, but is expected to drop in the OECD
countries as higher vehicle efficiency standards propagate
through the fleet. However, gasoline demand will still continue
to grow in many developing countries.
Residual fuel oils share of demand will
decline over the next 10 years as competition with natural gas
intensifies in some regions and bunker fuel specifications
favor a shift to marine diesel by 2015.
Despite the large refined product demand
increase seen in 2010, a significant oversupply situation
currently exists. The requirement to blend increasing volumes
of ethanol and biodiesel into products
is further adding to the product oversupply situation in the
Atlantic Basin. A few weaker refineries have already shut down
and more closures are expected. However, the survivors in some
markets will have to operate at significantly lower rates until
after 2015 unless further capacity rationalization corrects the
Light/heavy price differentials and returns on
capital investment declined rapidly in early 2009 as the global
economy slowed. A modest recovery in conversion returns was
experienced in 2010, but conversion returns are expected to
weaken because new capacity will continue to come online in the
next few years.
Worldwide refinery investments to 2020 are
expected to cost approximately $275 billion which represents
18% of 2010 replacement costs. Additional investments in the
range of $145 billion are expected through 2030.