Asian crude supplies & pricing: a new eraworldpetrocoal.in/download/WPCC-2019-PPT/Day-1/... · S....
Transcript of Asian crude supplies & pricing: a new eraworldpetrocoal.in/download/WPCC-2019-PPT/Day-1/... · S....
London
Houston
Moscow
Singapore
Dubai
New York
Beijing
Kiev
Tokyo
Astana
Shanghai
Rio de Janeiro
Washington DC
Riga
Calgary
Brussels
Cape Town
Mexico City
Berlin
San Francisco
Sydney
Market Reporting
Consulting
Events
Asian crude supplies & pricing: a new era
Alejandro BarbajosaDelhi, February 2019
Copyright © 2019 Argus Media group. All rights reserved.
• OPEC output cuts tightening heavy crude supplies across Asia
• Tighter Middle East markets support Dubai, Oman benchmarks
• Rising North American output & exports put pressure on Brent
• Atlantic basin crude upsetting Middle East crude flows to Asia
• Long-haul shipments raise relevance of delivered crude pricing
• IMO 2020 regulations may help re-balance sweet-sour spreads
New reality of Asian crude market requires new pricing
Asia-Pacific refining capacity: 33mn b/d, 34% of global
Copyright © 2019 Argus Media group. All rights reserved.
Eight countries with more than 1mn
b/d capacity in 2017:
Asia’s share of global oil demand has soared to 45%
Copyright © 2019 Argus Media group. All rights reserved.
Asia’s share of global oil output steady just above 40%
Copyright © 2019 Argus Media group. All rights reserved.
Asian refiners must import more Atlantic basin crude
Copyright © 2019 Argus Media group. All rights reserved.
Brent-Dubai tells refiners what quality/origin to buy
Copyright © 2019 Argus Media group. All rights reserved.
Lower Brent premium to Dubai indicates buy more Atlantic basin crude
Higher Brent premium to Dubai indicates buy less Atlantic basin crude
Sweet-sour crude differentials have been narrowing
Copyright © 2019 Argus Media group. All rights reserved.
Copyright © 2019 Argus Media group. All rights reserved.
Asia-Pacific takes more than 50% of US crude exports
Copyright © 2018 Argus Media group. All rights reserved.
Pipeline capacity set to outpace production by 2020
2018
• Sunrise 120kbd
2H 2019
• Cactus II 670kbd
• Gray Oak 800kbd
New Bayou Bridgepipeline planned from
Port Arthur to St James
Plains accelerates start of Sunrise to 4Q18, adds takeawaycapacity to Cushing
Plains accelerates Cactus II start to 3Q19; Gray Oak initial plannedcapacity up from 700kbd to 800kbd
ExxonMobil and Plains sign letter of intent in June 2018 to build 1mn b/d line Permian to Beaumont/Port Arthur
ETP/MPXL/Magellanand Delek plan 1mnb/d line to MEH and Nederland
More than 1.6mn b/d of new Permian pipeline capacity by 4Q19:
Permian tight on pipeline space through late 2019
Copyright © 2018 Argus Media group. All rights reserved.
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000Ja
n-1
2
May
-12
Sep
-12
Jan
-13
May
-13
Sep
-13
Jan
-14
May
-14
Sep
-14
Jan
-15
May
-15
Sep
-15
Jan
-16
May
-16
Sep
-16
Jan
-17
May
-17
Sep
-17
Jan
-18
May
-18
Sep
-18
Jan
-19
May
-19
Sep
-19
Jan
-20
May
-20
Sep
-20
Jan
-21
May
-21
Sep
-21
Jan
-22
May
-22
Sep
-22
Jan
-23
May
-23
Sep
-23
Argus estimates of Permian production vs take away capacity
Permian production *# Total Permian exit pipeline and refinery capacity (b/d)**
Pinch Point
Copyright © 2018 Argus Media group. All rights reserved.
WTI Houston (MEH) represents US crude exports price
India demand supported by state, private refiners
• India is regular importer of US medium sour grades
• Proximity of Asia’s second-largest crude consumer to Middle East may occasionally work against the economics of long-haul shipments from Americas because of a wide difference in freight costs
S. Korea becomes top Asian importer of US crude
• Brexit undermines South Korean demand for Forties, giving an edge to WTI among largest S. Korean refiners
• Forties may no longer benefit from preferential tariff treatment when it’s no longer considered an EU crude
• WTI also competes with Murban and ESPO in S. Korea
Copyright © 2019 Argus Media group. All rights reserved.
South Korea & India rapidly increase imports from US
No US crude known to unload in China in past six months
• China had topped Canada as world’s largest buyer of US crude
• Sinopec was focused on WTI for simpler plants in Guangdong
• ChinaOil and Shandong independent refiners focused on medium sour grades, including Mars & Southern Green Canyon
• Political uncertainty suppresses interest to resume purchases
WTI competing directly against Japan’s staple imports
• Japanese refiners typically see value in WTI only when it’s economical to replace Murban from UAE and other ME grades
• Japan’s largest refiner uses WTI Houston price to buy US crude
• Co-loads with Latin American crude (Mexican Maya most frequently) are also a sweetener for Japan to buy US crude
Copyright © 2019 Argus Media group. All rights reserved.
Japan wakes up to US supplies; China goes to sleep
US crude starting to replace Middle East grades in Asia
Copyright © 2019 Argus Media group. All rights reserved.
US crude challenges Japan’s imports from Middle East
Copyright © 2019 Argus Media group. All rights reserved.
Copyright © 2019 Argus Media group. All rights reserved.
Hub-and-spoke crude pricing: futures & physical diffs
Exchanges and price reporting agencies complement each other
Stay Connected
@ArgusMedia Argus-media
+Argusmediaplus argusmediavideo
Copyright notice Copyright © 2018 Argus Media group. All rights reserved. All intellectual property rights in this presentation and the information herein are the exclusive property of Argus and and/or its licensors and may only be used under licence from Argus. Without limiting the foregoing, you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of Argus.
Trademark notice ARGUS, the ARGUS logo, Argus publication titles, and Argus index names are trademarks of Argus Media Limited. For additional information, including details of our other trademarks, visit argusmedia.com/trademarks.
Alejandro BarbajosaVP, crude & LPG, Middle East & Asia-Pacific
+65 8223-6525
+81 (0) 70 1585-6525
Singapore & Tokyo
www.argusmedia.com
http://blog.argusmedia.com