current oil market developments and the impact of ... · current oil market developments and the...

Current oil market developments and the

impact of alternative fuels

October15, 2009

Johannes Benigni Johannes Benigni

JBC Energy GmbHJBC Energy GmbH

October 15, 2009October 15, 2009

Research Research -- Energy Studies Energy Studies -- Consulting Consulting -- TrainingTraining

ÖGEW Herbstveranstaltung 2009

Disclaimer

All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements (including t hose depicted in graphical form) are statements of future expectations that are based on JBC Energy’s current expectations and assumptions and involve known and unknown risks and uncertainties that coul d cause actual results, performance or events to di ffer materially from those expressed or implied in these statements. Forward-looking statements include, am ong other things statements expressing JBC Energy’s exp ectations, beliefs, estimates, forecasts, projectio ns and assumptions. These forward-looking statements a re identified by their use of terms and phrases suc h as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estima te’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘ objectives’’, ‘‘outlook’’,‘‘probably’’, ‘‘project’’, ‘‘will’’, “forecast”, “pred ict”, “think”, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goal s’’, ‘‘should’’ and similar terms and phrases. All forward-looking stat ements contained in this speech/presentation are expressly qualified in their entirety by the cautio nary statements contained or referred to in this se ction.

October15, 2009 Slide 2

expressly qualified in their entirety by the cautio nary statements contained or referred to in this se ction. Readers/audience should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of this presen tation. Neither JBC Energy nor any of its subsidiar ies undertake any obligation to publicly update or revi se any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materia lly from those stated, implied or inferred from the forward- looking statements contained in this speech/present ation. Any persons acting on information contained in this presentation does so solely at their own risk. JBC Energy is not responsible for the accuracy of data collected from external sources and will not be hel d liable for any errors or omissions in facts or analysis co ntained in this presentation.

Overview

�Oil price and crude markets

� Impact of Biofuels


�Transportation Fuel Trends

�Conclusions

Oil Price & Crude Markets

0.2

0.4

0.6

0.8

1.0

Correlation of ICE Brent and the Euro-Dollar FX Rat e [30-day Moving Average]


-1.0

-0.8

-0.6

-0.4

-0.2

0.0

Jan00

Jul00

Jan01

Jul01

Jan02

Jul02

Jan03

Jul03

Jan04

Jul04

Jan05

Jul05

Jan06

Jul06

Jan07

Jul07

Jan08

Jul08

Jan09

Jul09

Source: ECB,ICE, JBC Energy


0.2

0.4

0.6

0.8

1.0

Correlation of ICE Brent and DowJones Industrial Av erage [30-day Moving Average]


-1.0

-0.8

-0.6

-0.4

-0.2

0.0

Jan00

Jul00

Jan01

Jul01

Jan02

Jul02

Jan03

Jul03

Jan04

Jul04

Jan05

Jul05

Jan06

Jul06

Jan07

Jul07

Jan08

Jul08

Jan09

Jul09

Source: Dow Jones,ICE, JBC Energy

100.00

120.00

140.00

160.00

180.00

1,000

1,200

1,400

1,600

1,800Non-CommercialsCommercials & Non-ReportablesWTI

NYMEX WTI & Market Composition [$/bbl, '000 positio ns]


Regulation requirement?


0.00

20.00

40.00

60.00

80.00

100.00

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

200

400

600

800

1,000

Source: CFTC

Major Crude Oil Pipeline Routes

Planned pipeline

Legend

Baltic Pipeline System

+15%

RUSSIA

Primorsk

Existing crude pipelinePlanned crude pipeline

Legend:

ESPO-1 (600,000 b/d) due Dec 2009:

* 300,000 b/d pipeline & rail to Asia-Pacific

* 300,000 b/d pipe to China

BPS-2 (600,000 b/d) due in Q3 2012, →750,000 b/d in 2014

Ust Luga

Expected Utilisation Schedule

Deadline

600,000 b/d 2010-20121 mln b/d 20161.6 mln b/d 2025

ESPO



CPC

BPS-2

Kozmino

DruzhbaESPO Skovordino

Baku

Ceyhan

Burgas-Alexandroupolis

Taishet

CPCOdessa-Brody

Samsun-Ceyhan300,000 b/d spur to China by late 2010

Source: JBC EnergyBTC

Samsun

expansion: 960,000 b/d by mid-2013 & 1.34 million b/d by mid-2014.

expansion: 1.2 →1.6 mln b/d by 2010

1 →1.4 mln b/d 2012

EAOTC plan:

180,000→ 800,000 b/d

by 2012

700,000 b/d (→1.6 mln b/d) by 2012-13

300,000 b/d port due in Dec 2009

ESPO-2 (1 mln b/d) due in 2014

3.0

4.0

5.0

6.0

Opec Available Spare Capacity [mbpd]

Avg. spare capacity 1960-2007

Avg. Downward Revision of IEA on non-Opec supply growth = 950,000 b/d



-2.0

-1.0

0.0

1.0

2.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Opec's Available Spare Capacity

Spare Capacity - IEA Non-Opec Supply Downward Revis ion Scenario

Spare Capacity - Stronger Than Expected Demand Reco very Scenario

Demand Growth of 2 mbpd in 2010 & avg. demand growth of 1.9 mbpd in 2011-2013 (in contrast to 1.4 mbpd in our base case)

15.0

17.5

20.0

22.5

25.0

27.5

15.0

17.5

20.0

22.5

25.0

27.5

Europe & North America Biofuels Component

Rest of the World

Oil Demand in Europe + North America & the Rest of the World [mbpd]

17.4

14.5

20.2

14.3

16.3 16.3

17.7

19.6

22.9

Impact of Biofuels


0.0

2.5

5.0

7.5

10.0

12.5

15.0

2008 2014 2020 2008 2014 2020 2008 2014 20200.0

2.5

5.0

7.5

10.0

12.5

15.0

Light Distillates(LPG, Naphtha, Gasoline)

Middle Distillates(Jet/Kero, Gas Oil) Fuel Oil & Other Products

12.213.5

14.516.7

14.3

8.47.6 7.4

14.9 14.8 14.8

20

25

Gasoline including biofuels Petroleum-gasoline only

Petroleum-diesel only Diesel including biofuels

Global Transport Fuel Demand & Biofuel Impact [mill ion b/d]

Total gasoline demand rises slightly but falls by 2030, fall less

pronounced by including biofuels

Diesel demand rises steadily

Impact of Biofuels


10

15

2005 2010 2015 2020 2025 2030

Diesel demand rises steadily including biofuels

Impact of Biofuels

0.4

0.5

0.6

0.7

4%

5%

6%

7%

Middle East, Africa & FSU EastOECD AsiaC & S AmericaNorth AmericaNon-OECD AsiaEuropeShare of World Diesel Demand (right scale)

World Biodiesel Demand [million b/d]

2009: Biodiesel makes up

2015: Biodiesel makes up 3.2% of world diesel demand


0.0

0.1

0.2

0.3

0.4

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150%

1%

2%

3%

4%2009: Biodiesel makes up 1.8% of world diesel demand

Europe dominates consumption, but Americas and non-OECD-Asia catching up

1.5

2.0

2.5

6%

8%

10%OECD AsiaMiddle East & Africa & FSU EastEuropeNon-OECD AsiaC & S AmericaNorth AmericaShare of World Gasoline Demand - right scale

World Ethanol Demand [million b/d]

2009: Ethanol makes up 5.6% of world gasoline demand

2015: Ethanol makes up 7.9% of world gasoline demand

Impact of Biofuels


0.0

0.5

1.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

0%

2%

4%

240

280

320

360

400

440

6%

7%

8%

9%

10%

11%

Ethanol volume

Biodiesel volume

Share of biofuels in gasoline consumption - right s cale

Share of biofuels in diesel consumption - right sca le

EU-27 Share of Biofuels in Transport Sector ['000 b /d, %]

2020 Mandate: 10% share of alternatives (either biofuels,

hydrogen or electricity) in road

Impact of Biofuels


0

40

80

120

160

200

240

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

0%

1%

2%

3%

4%

5%

6%hydrogen or electricity) in road transportation

25

30

35

40

45

1.5

1.8

2.1

2.4

2.7

Other Advanced Biofuel

Cellulosic Ethanol

1st Generation Biodiesel

1st Generation Ethanol

JBC Energy Demand Expectation

Mandate Incl Equivalence Weightings

Components of US Renewable Fuel Mandate [billion ga llons; million b/d]

Right axis shows equivalent values in million b/d

Green line shows assumed

Impact of Biofuels


0

5

10

15

20

25

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

0.0

0.3

0.6

0.9

1.2

1.5

Source: Renewable Fuels Ass, JBC Energy

Corn ethanol is capped at 15 billion gallons

Green line shows assumed volume required if preference

weightings for non-corn ethanol remain

280

320

360

400

0

40

80

120

US NY Ethanol vs. RBOB -right-scale

NY RBOB Premium

Ethanol NYH 5-15 days

NYH Ethanol Price & RBOB Price [cents/gallon]

Impact of Biofuels


80

120

160

200

240

Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09

-200

-160

-120

-80

-40

Source: Platts

The discount of ethanol to RBOB increases the incentive for refiners to blend more than

targeted.

40.0

50.0

60.0

Germany (BTL diesel)

Spain

Japan

Canada

China

US

US mandated demand

Estimates for Minimum Second Generation Biofuel Pro duction Capacity ['000 b/d]

Ethanol

Impact of Biofuels


0.0

10.0

20.0

30.0

2007 2008 2009 2010 2011 2012

Capacity projections are based on our assessment of targets

announced only by Chinese, US and German companies

Transportation Fuel Trends

7.5

8.0

8.5

9.0

9.5

Components of US Gasoline Demand 2008-2020 [mbpd]

Additional

Change in the fleet structure (gasoline vs.

diesel)Hybrids, LPG,

CNG, Full


5.0

5.5

6.0

6.5

7.0

7.5

2008 2020

2008 Refinery Based

Gasoline Demand

8.29 million b/d

Additional Demand for Bioethanol

- 262,000 b/d*

*: energy adjusted

Change in Passenger

Kilometers and Travel Mode + 990,000 b/d

- 353,000 b/dCNG, Full Electric

- 460,000 b/d

Efficiency Gain- 2.51 mbpd

2020 Refinery Based

Gasoline Demand

5.70 million b/d


3.50

3.75

4.00

Components of EU-27 Transportation Diesel Demand 20 08-2020 [mbpd]

Additional

Change in Tonne

Hybrids, LPG, CNG, Full Electric- 39,000 b/d

Change in the fleet structure (gasoline vs. diesel)-2,000 b/d

Efficiency Gain in


2.50

2.75

3.00

3.25

2008 2020

2008 Refinery Based Diesel

Demand3.796 mbpd

Additional Demand for

Biodiesel - 215,000

b/d*

*: energy adjusted

Change in Passenger Kilometers and Travel

Mode + 50,000 b/d

Tonne Kilometers and Freight

Mode+ 230,000 b/d

Efficiency Gain in Goods

Vehicles and Busses- 208,000 b/d

Gain in Passenger

Cars- 210,000 b/d

2020 Refinery Based Diesel

Demand3.402 mbpd


2.0

2.1

2.2

2.3

2.4

Components of EU-27 Gasoline Demand 2008-2020 [mbpd ]

Additional Demand for Bioethanol

Change in Passenger

Change in the fleet structure (gasoline vs.

diesel)- 3,000 b/d

Hybrids, LPG, CNG, Full Electric

- 77,000 b/d


1.5

1.6

1.7

1.8

1.9

2.0

2008 2020

2008 Refinery Based

Gasoline Demand

2.23 million b/d

Bioethanol - 49,000 b/d*

*: energy adjusted

Passenger Kilometers and

Travel Mode + 114,000 b/d

- 77,000 b/d

Efficiency Gain- 527,000 b/d

2020 Refinery Based

Gasoline Demand

1.69 million b/d

Major European Gasoline and Gas Oil/Diesel Flows (2 008-2013-2018) ['000 b/d]

110 116 70

Middle East

North America

436 470 440

174 221 191

117

754 660 390

Europe



Only trade flows higher than 50,000 b/d are

displayed.

Source: JBC Energy estimates

200820132018

200820132018

GasOil Gasoline

-1000

-500

0

500

1000

1500

2008 2013 2018

Europe Gasoline&Gas Oil/Diesel Balance ['000 b/d]

102

90

184

205

250

Africa

0.4

0.8

1.2

1.6

2.0

2.4

81%

84%

87%

90%

93%

96%

Total Products LPG Naphtha

Gasoline Kero/Jet Gas Oil

Residual/Fuel Oil Other Products Refinery Utilisation - r. s.

European Oil Balance by Product & Refinery Utilisat ion [mbpd, %]



-2.4

-2.0

-1.6

-1.2

-0.8

-0.4

0.0

2004 2006 2008 2010 2012 2014 2016 2018 202060%

63%

66%

69%

72%

75%

78%

� No causality in correlation between Oil-USD-Equity, expected to loosen again as perceptions on further economic development diverge & oil fundamentals com e back

� Investors stay long commodities as inflation hedge

� Economic recovery is not fully transparent (Baltic Dry

Conclusions 1/2


� Economic recovery is not fully transparent (Baltic Dry Index, US Homes on sale,...)

� Russian supply to Europe expected to decline amid r ising uncertainty

� Resource tightness expected to come back in 2012-20 14

� Middle Distillate Inventory Surplus to Dominate Ref ining Economics

Conclusions 2/2

� In the Middle East a substantial volume of new refi ning capacity is due around 2014/15

� Biofuels likely to play a small but significant rol e in the future

� Declining transportation fuel demand compounded by increased biofuel blending, putting Atlantic Basin refiners


increased biofuel blending, putting Atlantic Basin refiners under severe pressure

� Significant momentum behind developing next generat ion biofuels

� European refining capacity will have to shrink in l ine with domestic demand

� Strategic stakeholders increase their influence

Thank You!


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