dynamic challenges and opportunities in the global oil and
TRANSCRIPT
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Dynamic Challenges and Opportunities InThe Global Oil and Gas Industries
Presented at:The 32nd JCCP International Symposium
By
Dr. Fereidun Fesharaki
Chairman
January, 2014Tokyo, Japan
www.FGEnergy.com
Five Key Oil Demand Growth Centers
2
(Year-on-year Oil Demand Growth, kb/d)
0100200300400500
2013 2014 2015
China
0100200300400500
2013 2014 2015
India
0100200300400500
2013 2014 2015
Middle East
0100200300400500
2013 2014 2015
Africa0100200300400500
2013 2014 2015
Latin America
5
1
2
34
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Three Centers of Oil Demand Loss
3
(Total Oil Demand, kb/d)
17
18
19
20
21
2007 2009 2011 2013 2015
US
13
14
15
16
17
2007 2009 2011 2013 2015
Europe
2
3
4
5
6
2007 2009 2011 2013 2015
Japan
www.FGEnergy.com
Long-Term Brent Oil Price Outlook
4
Ceiling - US$120/bbl
Floor - US$80/bbl
0
20
40
60
80
100
120
140
160U
S$/b
bl
2012 are actuals. Forecasts in $2013.
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More Crude to be Diverted from West to East,2011-2020
5
Total: 5 mmb/ddiverted from West
to East
Source: FGE Crude Trade Study
Increasing Trade
Decreasing Trade
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-2
0
2
4
6
2009-2011 2011-2015 2016-2020
Lt-Sr
Lt-Swt
Med-Swt
Med-Sr
Hvy-Swt
Hvy-Sr
Crude Quality Lightens to 2015, Then Static to 2020Incremental Crude Production by Quality (mmb/d)
+1.8 Light Swt
+0.9 Med-Swt
-0.7 Light Sr
+1.0 Med-Sr
+1.0 Heavy-Sr
+3.5 Light Swt
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• +0.8 mmb/d heavy• +0.6 mmb/d light
• +2.8 mmb/d lightcrude (net)
• +0.5 medium(LatAm)
• +0.5 heavy
• +1.9 light• +2 mmb/d med/heavy sour
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Major Refining Projects in the Middle East
Jizan: 400 kb/d - 2019Saudi AramcoDomestic + Exports
Yanbu: 400 kb/d - 2016Saudi Aramco/SinopecDomestic + Exports
Ruwais: 417 kb/d - 2015ADNOCDomestic + Exports
Ras Laffan II: 146 kb/d - 2016QP (84%), Total (10%), plus othersDomestic + Exports
Sohar: 72 kb/d - 2016ORPICDomestic + Exports
Duqm: 230 kb/d - 2020OOC (50%) and IPIC (50%)Domestic + Exports
Al-Zour: 615 kb/d - 2021KPCDomestic + Exports
Karbala: 140 kb/d - 2019Iraq NOCDomestic
Kirkuk: 150 kb/d - 2021Midland RefiningDomestic + Exports
Maysan: 150 kb/d - 2020MRCDomestic
Sitra: 225 kb/d - 2020BAPCODomestic + Exports
Nasiriyah: 300 kb/d - 2020Iraq NOCDomestic + Exports
Fujairah: 250 kb/d - 2020IPICDomestic + Exports
Jubail: 400 kb/d - 2013Saudi Aramco/TotalDomestic + Exports
Key: Firm/likely by 2020 Not included in September 2013 product balances
7
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Japan Leads Refinery Closures in Asia
8
0
200
400
600
800
1,000
1,200
1,400
1,600
Closures (2009 - 2012) Confirmed Closures Potential Closures
Others Australia China Japan
kb/d Refinery Closures in Asia, 2009-2020
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Who is Building East of Suez?...Why?
9
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Chinese NOCs Chinese NOCs withCrudes Suppliers
Indian NOCs ME NOCs ME NOCs with IOCs Others (Net)
Total Net Refining Capacity Additions in East of Suez, 2013-20208,175 kb/d
kb/d
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Even with Closures, Global Refinery CapacityAdditions Overwhelm Demand Growth
10
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3,000
kb/d
Global CDU Capacity vs Refined Products Demand Growth
Incremental CDU Capacity Incremental Refined Products Demand
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Refinery Margin Outlook
11
Singapore margins based on actual crude (Dubai) and product prices up to October 2013 and forecasts in $2013 thereafter
($4)
($2)
$0
$2
$4
$6
$8
$10
$12
$14U
S$/b
bl
Hydroskimming Residual catalytic cracking Hydrocracking
www.FGEnergy.comSpot/Short-Term Buying has Risen Substantially
0%
5%
10%
15%
20%
25%
0
5
10
15
20
25
30
35
40
45
2006 2007 2008 2009 2010 2011 2012
mm
t
Middle East
China, India & Thailand
Taiwan
South Korea
Japan
Share of Spot/Short-Term (RHS)
Note: Spot/short-term trade here is represented as a % of total East of Suez trade
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AustralasiaUnder Construction: 68.1 mmtpa
Planned: 3.2 mmtpa
AustralasiaUnder Construction: 68.1 mmtpa
Planned: 3.2 mmtpa
New LNG Supplies = Big Bonanza?
CanadaAnnounced: 119 mmtpa
CanadaAnnounced: 119 mmtpa
USUnder Construction: 16 mmtpa
Announced: > 200 mmtpa*
USUnder Construction: 16 mmtpa
Announced: > 200 mmtpa*
*Capacity per DOE authorization to FTA countries, in addition tocapacities under construction.
MozambiqueAnnounced: 20 mmtpa
MozambiqueAnnounced: 20 mmtpa
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Status of US LNG Export ProjectsLatest Developments/Agreements Announced:
Sabine Pass
5.5 mmtpa (T1-4) 3.5 mmtpa (T2) 3.5 mmtpa (T4)3.5 mmtpa (T3)* 2 mmtpa (T5) 1.75 mmtpa (T5) 2 mmtpa (T2-4)^
Cameron LNG Dominion Cove
Freeport LNG
4.4 mmtpa (T1)Jointly lift the volumes.
4.4 mmtpa (T2)Entire volume ofTrain 2
^Up to 2 mmtpa of LNG produced but not committed to third parties.*0.7 mmtpa sold to Total Gas & power
4 mmtpa (T1)* 4 mmtpa (T3)4 mmtpa (T2)*
*Mitsubishi & Mitsui will sell 0.8 mmtpa each to Japan’s TEPCO;other similar arrangements could follow.
Commercial Development Agreements
2.3 mmtpa (T1)* 2.3 mmtpa (T2)
Terminal Service Agreements
*Sumitomo has in turn announced agreement to sell LNG toTokyo Gas and Kansai Electric.
20-year tolling agreements
Sales Purchase Agreements (SPAs)
2.2 mmtpaeach (T3)
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FGE’s US LNG Export Outlook Suggests Tighter USMarket
-
10
20
30
40
50
60
70
80
90
100
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
mm
tpa
Sabine Pass T1-T4
Freeport T1-2
Cameron T1-3
Dominion Cove Point
Elba Island
Golden PassEIA Forecast of US Incremental Production
(Base Year: 2012)
Corpus Christi T1-2
• Around 70-75 mmtpa of LNG capacity likely to come online by 2025…well beyond EIA assumptions ofLNG exports in the early 2020s
• Fundamental disconnect to be resolved by price increase
• We expect Henry Hub to rise to about US$7/mmBtu by 2025
plus2 bcf/dexports
toMexico
15
www.FGEnergy.com
Forward Views:Henry Hub vs Oil-Linked Indexation
10
12
14
16
18
US$
/mm
Btu
Oil-Linked Prices
HH-Linked Prices
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