Houston, March 24, 2010
Purvin & Gertz announces the release of the Global Petroleum Market Outlook 2010. The study provides an in-depth analysis of global and regional markets for crude oil and refined products within a framework of world energy demand and economic activity through 2030. Supply forecasts are based on expected production levels of crude oil, natural gas, alternative fuels, and refining facilities in each country. The study considers the operating/commercial constraints of existing facilities, as well as capacity and start-up dates for new refining projects, in forecasting overall supply. Demand for refined products is analyzed and forecast in the context of emerging trends in biofuels, alternative fuels, vehicle preferences, and government mandates. The prospects for future world market developments are examined and the likely impact on crude oil trade, refined product trade and pricing are assessed.
Key conclusions of this year’s analysis include:
• The global economic slowdown of 2009 caused product demand to fall by about 1.1 million B/D, the most significant drop in recent history. The long term forecast for refined product demand growth has been tempered (versus prior forecasts) to reflect the impact of the current economic slowdown, higher long-term crude oil prices and more stringent conservation efforts.
• Refined product demand in OECD countries is expected to grow slowly and remain below the 2005 peak level. Shortly after 2015, demand in the Non-OECD countries is expected to surpass demand in the OECD countries. Demand in non-OECD countries will grow rapidly from the current level of 36.0 million B/D in 2009 to 56.8 million B/D in 2030. Of the expected 20.8 million B/D increase, China alone is expected to account for over 43% of this increase, or 9.1 million B/D.
• Diesel will continue to increase its share of total demand as demand for other fuels grows at a slower pace. Gasoline’s 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.
• Residual fuel oil’s share of demand will continue to 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.
• Significant new refinery capacity additions combined with a dramatic fall in demand for refined products has created a significant near-term oversupply. The supply situation is being further eroded by the requirement to blend increasing volumes of ethanol and biodiesel into products, thereby reducing crude oil requirements. A few weaker refineries will likely shut down but the survivors will have to operate at significantly lower rates until after 2015, unless capacity rationalization corrects the balance sooner.
• Light/heavy price differentials and returns on capital investment declined rapidly in early 2009 as the global economy slowed. As additional conversion capacity comes on line and residue availability shrinks, light/heavy differentials and conversion returns will remain weak even as the economy improves.
• Worldwide refinery investments to 2015 are expected to cost approximately $205 billion which represents about 14% of 2009 replacement costs. Additional investments in the range of $110 billion are expected through 2025.
About Purvin & Gertz
Purvin & Gertz is an independent energy consulting firm providing technical, commercial and strategic advice. Purvin & Gertz specializes in servicing clients involved in the production, processing, transportation and marketing of oil, natural gas and gas liquids, and petroleum products. Headquartered in Houston, the firm consists of an international network of offices in Buenos Aires, Calgary, Dubai, Long Beach, London, Moscow and Singapore. Purvin & Gertz is an employee-owned consulting company, independent of any parent company, engineering firm, equipment manufacturer or process licensor. Please visit our website at www.purvingertz.com for more information. For expert comment, contact Tom Manning or Alfred Luaces by phone at +1 713 331-4000.