What’s next for Oil? · What’s next for Oil? High-level Meeting, EU Refining Forum – 25 April...
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What’s next for Oil? High-level Meeting, EU Refining Forum – 25 April 2018 Keisuke SADAMORI, Director, Energy Markets and Security, IEA
Transcript of What’s next for Oil? · What’s next for Oil? High-level Meeting, EU Refining Forum – 25 April...
What’s next for Oil? High-level Meeting, EU Refining Forum – 25 April 2018
Keisuke SADAMORI, Director, Energy Markets and Security, IEA
© IEA 2018
Robust global oil demand growth to 2023
China and India account for almost half of world oil demand growth
World oil demand growth (y-o-y change)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2017 2018 2019 2020 2021 2022 2023
mb/d
Rest of the world
India
China
© IEA 2018
Petrochemicals drive global oil demand growth to 2023
Petrochemical feedstocks (ethane and naphtha) responsible for 25% of global oil demand growth
Feedstock requirements for new steam crackers
0
100
200
300
400
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700
US China Russia Others
kb/d
Naphtha
Ethane
© IEA 2018
Booming non-OPEC supply growth reshapes world oil market…
…more than covers demand growth for next three years. By 2023, non-OPEC supply grows by 5.2 mb/d.
OPEC oil capacity rises only 1.2 mb/d due to Venezuelan collapse and limited increases elsewhere.
Changes in global oil supply capacity 2017-2023
-1.0
0.0
1.0
2.0
3.0
4.0
US
Bra
zil
Ca
na
da
Ira
q
Iran
Norw
ay
Colo
mbia
Ind
on
esia
Chin
a
Mexic
o
Ang
ola
Ve
ne
zu
ela
mb/d
© IEA 2018
0
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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
mb/d
LTO
Gulf ofMexico
NGLs
Alaska
Other
Higher oil prices unleash second wave of US supply
Total output reaches 17 mb/d by 2023 – and could be even higher if prices rise.
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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
mb/d
LTO
Gulf ofMexico
NGLs
Alaska
Other
© IEA 2018
China net crude oil imports double the US in 2023
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2
4
6
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10
2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023
mb/d
US
China
India
Indian imports, too, surpass the US in 2023 as shale growth reduces US import dependence.
Net crude oil imports
© IEA 2018
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
2010 2011 2012 2013 2014 2015 2016 2017
mb/d
OPEC
Non-OPEC
Oil industry needs to replace one North Sea each year
Ageing oil fields lose more than 3 mb/d per year despite slowing decline rates.
Output loss from post-peak conventional crude oil fields
© IEA 2018
US oil finds new markets
Refiners in Asia and Europe look for suitable crude oil to produce petrochemical feedstocks and
low-sulphur fuels
US LTO first wave
US LTO second wave
Low-sulphur,
low residue
feedstocks Low-sulphur
and petchem
feedstocks
© IEA 2018
Middle East wants to refine more oil
Middle East accounts for 30% of global refining capacity growth.
International downstream expansion becomes a strategic objective for the region’s NOCs.
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0.5
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2005-11 2011-17 2017-23
mb/d Refining capacity additions
China India Middle East
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0.5
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2.0
2.5
3.0
2005-11 2011-17 2017-23
mb/d Middle East capacity expansion
Upstream Refining
© IEA 2018
Challenges remain for European refiners despite recent optimism
Recent high utlisation rates have been partly possible thanks to refinery closures.
60%
65%
70%
75%
80%
85%
90%
-2.0
-1.5
-1.0
-0.5
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2006 2008 2010 2012 2014 2016
mb/d European refinery utilisation rate
OECD Europe capacity change Utilisation rates
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47
2005 2007 2009 2011 2013 2015 2017
mb/d Atlantic Basin refining throughput
© IEA 2018
OECD stocks surplus close to 5-year average
End-February, OECD stocks were 30 mb above the five-year average. Could be zero/- in April/May.
0
100
200
300
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Jan 16 Jan 17 Jan 18
mb OECD Stocks Vs 5-Year Average
Oil Products Crude + NGL + Feedstocks
© IEA 2018
Market tightens in 2018
Risks to outlook include: Venezuelan supply fall; weaker oil demand on trade slowdown
-2.0
-1.0
0.0
1.0
2.0
3.0
90
92
94
96
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100
102
4Q14 4Q15 4Q16 4Q17 4Q18
mb/dmb/dDemand/Supply Balance until 4Q18
Total Stock Ch. & Misc Demand Supply*
*Note: For scenario purposes, OPEC/non-OPEC cuts remain constant.
© IEA 2018
Conclusions
• Robust world oil demand growth to 2023 – petrochemicals key driver.
• Non-OPEC output growth exceeds demand increase through 2020.
• US, Brazil, Canada, Norway dominate growth. New infrastructure
investments relieve US export bottlenecks.
• US crude finds new markets as refiners seek light, low-sulphur crude
to meet petrochemical demand and IMO specifications.
• More upstream investment needed today to meet future demand
and offset 3 mb/d of declines from mature oil fields each year.
• Market could have reached balance. Call on OPEC likely to be above
the current OPEC production level for the rest of 2018.
• As spare capacity cushion shrinks, supply security concerns remain
critical.
© IEA 2018
