french refining in a changing energy market - … · french refining in a changing energy market...

Platts Conference September 19-20, 2013

French refining in a changing energy market


1 The French Petroleum Market

2 The Challenges Ahead and Perspectives


Exploration

& Production Raffinage Distribution

Nb : Vermilion et Lundin : 90 % de la

production française,

Membres actifs

L’UFIP : THE FRENCH OIL INDUSTRY TRADE ASSOCIATION

Petrorep


A steadily decreasing demand for oil products

Million de tonnes

65

70

75

80

85

90

95

100

105

110

115

120

2012 : carburants automobiles = 52 % de la demande totale

2012 / 2011 : -2,6 %

Source : CPDP

Mt


An increasing imbalance between gasoline and diesel


Biocarburants incorporated in France and in Europe: Key figures

Comparison: current situation in France and Europe Future goals:

Directive 2009 /28/CE (RED) :

10% LHV by 2020.

France : 7% LHV since 2010 .

(separate target for gasoline and diesel ).

Current situation (2012):

Current situation 2012:

• Biofuels contents targets : 7% PCI

• Incorporation rate reached : 6.83% PCI

- diesel: 7.04% PCI i.e 7.27 % volume

- essence: 5.82% PCI i.e 8.57 % volume


A drastic reduction of refining capacity in France over the last 2 years:

from 12 to 8 refineries

ESSO : 18,2 Mt/an

Port Jérôme / Gravenchon 11,7

Fos sur mer 6,5

PETROINEOS : 9,8 Mt/an

Lavéra 9,8

LYONDELLBASELL : 5,5 Mt/an

Berre 5,5

PETROPLUS : 11,0 Mt/an

Petit Couronne (2010) 7,0

Reichstett (2010) 4.0

TOTAL : 47.8/an

Gonfreville (after 2012) 12,3

Dunkerque 6,7

Donges 11,0

Provence 7,5 Feyzin 5,4

Grandpuits 4,9

Coupled with Petrochemical plant Source :UFIP

Fermeture en 2010

Fermeture en 2010

Global capacity (31/12/09) 92, 3 Mt/y

Global capacity (21/12/12) 81.6 Mt/y

With Berre and PC shut down 69.1 Mt/y -25%


Strong supply imbalance : High imports of diesel and exports of

gasoline

Source : CPDP

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

MT/

an

Net Exports of gasoline and net Imports of (diesel +heating oil )

exports essence imports gazole+fod


A continued gasoline imbalance in spite a steady production decrease

0

2

4

6

8

10

12

14

16

18

20

1978 1987 1990 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Production Demande

Planned reduction of gasoline

production :

-1 Mt at Gonfreville in 2013


Diesel in France: A steady increase of consumption

0

5

10

15

20

25

30

35

40

1978 1987 1990 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Production Demande

Planned increase of diesel

production : 0.5Mt at

Gonfreville in 2013


Highly volatile refining margins and a very challenging year 2013

12

16 17 17

12

29

21

11

22

30

35

26

32

39

15

21

14

34

27

18 18

40

25

43 43 41

63

53

29

14 17

32

19

24

18

24

17 16

1

0

10

20

30

40

50

60

70

€/t

Average on the period

1995 / 2012 : 22,27 €/t 2013 Annual average : 20.88€/t

Source: DGEC et Reuters


French refining Competitiveness: Impacts of EU and French legislation

EU LEGISLATION

ETS (CO2 emissions quota, assumption: CO2 at 30 €/t) 120 M€/y of crude

IED (emissions by using the best available techniques) 20 to 130 M€/site*

*depending on EU final decisions

Fuels Directive : potential impact of crude differentiation : 2-3 $/bbl 684 to 1021 M€/y

FRENCH TECHNICAL LEGISLATION

PPRT (industrial risks prevention, after AZF) 5 à 70 M€/site

Modernisation (aging installations)

Timing of turn arounds : ~ 6M€/y

FRENCH FISCAL LEGISLATION

French pavillon mandate 1M€/boat

Other taxes : IFER, CET, C3S

« Exceptional taxation » on stocks (refiners and marketers): 550 M€ in 2012

Carbon tax

FISCAL ADVANTAGE FOR DIESEL

Additional gasoline exports 50 M€/y

Estimated Impacts on refining margins in euros, per refinery, or ou per ton of crude throughput.


A growing government awareness of the situation of refining

« Audit sur la législation environnementale applicable aux raffineries » (CGEDD report - Legrand/ Guignard/2012) emphasizes :

• The direct exposure to international competitiveness of the French and European refineries .

• « That the administration should always question itself regarding the necessity and proportionality of the procedures implemented »

• The cost in terms of regulatory uncertainty and instability created by the pending decisions on French legislation PPRT ( risk preventions).

• The necessity to introduce a calendar flexibility on turn arounds

« Rapport de l’Inspection générale des Finances- Ravignon» confirms that:

• Refining margins are volatile and return on investment is limited.

ETS and IED Directives increase the burden on the sector.

• Net distribution margin is around 1ct€/l.

Notice: France intervened to support the bubble principle in the BREF refining document».


Upstream: a oil and gas production in France

French production in 2012

Crude Oil 0,8 Mt (consumption= 79,1 Mt*)

Natural Gas 0,76 MMm3 (consumption= 41,3 MMm3)

.


LA PRODUCTION D’HYDROCARBURES EN FRANCE

Consommation de produits pétroliers en 2012 : 75,3 Mt

Production de pétrole brut en 2012 : 0,8 Mt (1% des besoins)

Consommation de gaz en 2012 : 41 Gm3

Production de gaz en 2012 : 0,8 Gm3 (2% des besoins)

Source : CPDP • Une soixantaine de gisements développés (Bassin Parisien, Aquitaine)

• Une quarantaine de compagnies actives, dont 30 uniquement en exploration, et 25 au stade de

demande de permis de recherche

• 1500 emplois directs, 3 fois plus d’emplois induits

0

1

2

3

4

5

6

7

8

9

Evolution de la production française de gaz naturel Gm3

0

0.5

1

1.5

2

2.5

3

3.5

4

Evolution de la production française de pétrole Mt


The challenges ahead and perspectives

Energy transition: which role for oil ?

2

1

How to preserve refining competitiveness ?

3 Continued need for capacity adjustment in Europe

4 Shale oil & gaz in France or not shale oil &gaz ?


HOW MUCH OIL IN FRANCE IN 2030 ? THIS ? …

0

20

40

60

80

100

120

140

160

180

2010 2030

Renouvelables

Nucléaire

Gaz

Pétrole

Charbon

Millions de tep

39%

21%

20%

149

- 11%

Source : Scénario DGEC

2011 (énergie finale)

12%

21% 17%

17%

46%

167

Demande de pétrole : -33%

Demande de gaz : -17%


OR THAT ?...


0

50

100

150

200

250

300

2010 2020 2030 2040 2050 2010 2020 2030 2040 2050 2010 2020 2030 2040 2050 2010 2020 2030 2040 2050

Trajectoire DEC Trajectoire DIV Trajectoire EFF Trajectoire SOB

Mte

p p

rim

aire

Biomasse (Mtep)

Renouvelables horsbiomasse (Mtep)

Nucléaire (Mtep)

Gaz (Mtep)

Pétrole (Mtep)

Charbon (Mtep)

ENERGY SCENARIOS BY 2050 CNDTE (VERSION MAI 2013)

How to preserve refining competitiveness :

Improve energy efficiency :

energy represents 60% of

refining costs

Safeguard access to low cost

energy (US Shale gas,

electricity prices, etc)

Improve the cost efficiency

of legislation

A strong cost advantage for

non EU refiners

Manufacturing cost in 2015


Overcapacity in Europe and continued adjustment

Entry of new market players, especially India.


Refining Challenges in 2013

Refining capacity vs consumption in Europe (28) in 2012

*Source: BP statistical review 2012

*les chiffres indiqués correspondent à la capacité de raffinage 2012 exprimée en Mt/an


A continued need for capacity adjustment

European overcapacity and continued adjustment


Shale oil&gas or not shale oil&gas in France?


In conclusion

A constant need for oil products, even though a steady

decline of demand

A growing awareness of the importance of a refining

industry as a key value added and basis for industry

The recognition of the need for all energies and safe

access to oil products

A continued pressure for adaptation to the market .


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