2nd EGCFE Oil and Gas Meeting APERC Oil Report 2019Oil+Report+2019_Sendai_201904… · Key factors...

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2 nd EGCFE Oil and Gas Meeting APERC Oil Report 2019 11 April 2019 Sendai, Japan Dr. Ruengsak Thitiratsakul Research Fellow, APERC

Transcript of 2nd EGCFE Oil and Gas Meeting APERC Oil Report 2019Oil+Report+2019_Sendai_201904… · Key factors...

Page 1: 2nd EGCFE Oil and Gas Meeting APERC Oil Report 2019Oil+Report+2019_Sendai_201904… · Key factors influencing oil market. Falling crude prices continue? Brent-WTI spread. US shale

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2nd EGCFE Oil and Gas Meeting

APERC Oil Report 2019

11 April 2019Sendai, JapanDr. Ruengsak ThitiratsakulResearch Fellow, APERC

hisami.obayashi
タイプライターテキスト
Session 1 - 2
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DemandAPEC vs global oil demandAPEC oil demand outlook 2021

SupplyAPEC vs global oil supplyAPEC oil supply outlook 2021

Key factors influencing oil marketFalling crude prices continue?Brent-WTI spreadUS shale oil developmentOPEC VS non-OPEC production cut

Commercial issuesQuality standard harmonization of gasoline and dieselAPEC import dependence

Topics of Presentation

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Global oil consumption reached 4,557 million tonnes in 2016.

APEC accounted for 51% of global demand in 2016.

APEC vs global demand 2007-2016 APEC demand 2007-2016

APEC vs global oil demand

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016APEC Rest of the World

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APEC demand by sector 2007-2016 USA demand by sector 2007-2016

APEC vs global oil demand by sectorUSA vs China

China demand by sector 2007-2016

APEC growth in past decade = 0.8% p.a. (rest global = 1.2% p.a.) led by China and SEA.

Transportation has been both the dominant and growing sector in APEC during 2007-2016.

APEC slowdown due to declining demand in USA (-1.4% p.a.) and Japan (-2.4% p.a.) while China demand is growing at 4.5% p.a.

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Power generation Industry TransportationResidential & commercial Non-energy use Others

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China growth is projected to be largest in APEC (2% p.a. towards 2021) contributing to 25% share of APEC.

APEC oil demand will shift more to Asia in the coming years.

APEC oil demand outlook 2021APEC demand outlook 2016-2021APEC demand 2007-2016

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APEC vs global supply 2007-2016 APEC supply 2007-2016

APEC accounted for 41 % of the global oil supply

Global oil supply increased faster than demand to reach 4,377 Mt in 2016 (1.1% p.a.).

USA, Russia, and Canada accounted for 74% of APEC supply with significant contribution from US shale.

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APEC supplyGrowth +2.0% p.a.(1,997 mt @2021)

Supply center North America

APEC supply 2007-2016 APEC supply outlook 2016 vs 2021

APEC oil supply outlook 2021

APEC demandGrowth +0.8% p.a.(2,455 mt @2021)

Demand center Asia

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Key factors influencing oil marketFalling crude pricesBrent-WTI spread

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Bearish oil market sentiment could continue in 2019

Oil price has fallen for the past few years driven by: -shale oil supply expansion-diminished oil demand from slowdown of economic growth-scepticism about compliance with production cut agreement by OPEC and non-OPEC (OPEC+)

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Brent WTI Dubai

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Crude oil prices, 2007-2018

Source: IEA (2018b) and IEA (2019)

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Brent-WTI has varied substantially since 2011

The unprecedented spread in 2011-2013 is largely explained by:

Factor suppressed WTI - a build-up of crude oil stocks in the USA due to shale revolution and limited takeaway capacity

Factor inflated Brent - Arab Spring

Brent-WTI spread once again has widened since 2017 because of:

a shortage of pipelines to carry oil out of the Permian basin in West Texas, the USA.

Brent-WTI spread, 2007-2018

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Key factors influencing oil marketUS shale oil production

OPEC and non-OPEC production cut

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Total US crude production was 11.8 mbd in 2018, 87% of which was shale oil production.

EIA forecasted that US crude production would reach 13 mbd in 2020.

US energy balance has transformed into less import dependence due to shale oil boom.

US shale oil production

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Tight oil Conventional Rig count (rhs)

Production (mb/d) Rig count

Crude production and rig count in the USA, 2014-2018

Sources: EIA (2018c), EIA (2018d), EIA (2019b) and Baker Hughes (2018).

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Joint production cuts by OPEC and non-OPEC producers (OPEC+) in January 2017 subsequently forced the crude prices up in March 2018.

OECD commercial stock was recorded below the five-year average.

Strong demand growth is increasingly questioned with remaining uncertainties: US sanctions on Iranian crude exports, USA-China trade war, and OPEC+ compliance rate

OPEC+ production cut

OECD commercial oil stocks, 2013-2018

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Commercial issuesHarmonization of gasoline and diesel specs

APEC import dependence

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Utilising fuels with common standards in APEC will contribute to more dynamic product trades.

Harmonization of APEC oil specifications can alleviate:

– APEC oil trade optimization– Environmental emissions– APEC energy security

Different quality standards of gasoline and diesel have been adopted and traded in APEC economies; e.g., EURO III, EURO IV, EURO V, and EURO VI.

Gasoline and gas oil trade hampered by differences in their specifications.

Differences of gasoline/diesel specs hinder trade

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APEC import dependence

APEC crude import dependency has decreased from 35% to 30% for the past decade while it has been self-sufficient in oil products since 2014.

note: Import dependence = (net import + stock changes) / total supply

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Refinery Output Net Import Import Dependency (rhs)

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VietnamUnited States of America

IndonesiaPapua New Guinea

PeruAustraliaThailand

ChinaNew Zealand

PhilippinesChile

Republic of KoreaJapan

Chinese TaipeiHong Kong, China

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APEC import dependence by economy in 2016

Note: Economies not listed are net-exporters of oil: Brunei (-798%), Russia (-190%), Canada (-127%),Mexico (-34%) and Malaysia (-8%)Source: APEC (2018)

APEC crude import dependence, 2007-2016

APEC oil product import dependence, 2007-2016

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Thank You for Your Attentionhttp://aperc.ieej.or.jp/