Outlook European Refining Industry

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Outlook for the European Refining Industry

The 1stICIS Refining & Petrochemical Interface Conference

Thursday 6thDecember 2012

London

Paolo Scafetta, Energy and Refining ICIS Consultant


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Agenda

Oil Demand

Refinery Industry Restructuring

Outlook European Refinery

Petrochemical Demand


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We guide executives of multinational and domestic enterprises through their

buying, selling, negotiating and planning decisions

All data in this presentation come from the suite of tools and databases owned and

managed by ICIS Consulting

About us

1950s through 2011 2012


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Agenda

Oil Demand





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European Oil DemandKey Factors

Major factors (three E)

Economy (weak economy lower demand)

Efficiency (higher engine efficiency lower demand)

Environmental policies (renewableslower demand)

Structurally, oil demand is decreasing, with the exception of middle distillates

Imbalance between supply and demand

Deficit for all oil products except for gasoline

Imports of gas oil (~13% of total gas oil demand)

Exports of gasoline (~40% of total gasoline demand)


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European Oil Demand (1995-2011)


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Gasoline vs Road Diesel Consumption(Million Tons)


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New Registration Passenger Cars EU15+EFTA


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USA

LAM

13.8

6.7

AF

2.7

2010 Surplus Deficit


(11.4)

(20.0)

(12.8)

(0.3)

Europe

(13.8)

(8.1)

(15.7)

(4.4)

(9.2)

(14.7)

Gasoline, 2010-2011European Key Trade Flows (Million tons)

ME

5.8

16.744.1

12.0

1.9

5.6

16.2

Rest of

NAM

6.3

20102011

49.7


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ME

F.USSR

4.8

13.5

INDIA

8.8

AF

7.2

1.3

NAM

10.2

19.9

(34.5)

37.4

6.7

(36.9

)

9.1(3

.

(16.9)

(21.4)

4.0

20.8

9.8

(22.2)

40.2

4.6

17.6

(14.3)

Gas Oil, 2010-2011European Key Trade Flows (Million tons)



27.8

31.5

6.0

(38.9)

7.5

1.1

LAM

2.61.9

6.2

Europe

7.2

20102011


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Agenda

Oil Demand





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2000 2005 2010 2015 2020

Utilization Rate (%) 82 84 77 79 80

* Number of refineries excluding dedicated Lube/Asphalt ones at 1stJanuary

European Refining vs Oil Demand


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UK Status

Grangemouth Ineos (50%), PetroChina (50%)2011

Stanlow Essar2011

Pembroke Valero2011

Teeside Storage2009

Coryton Shut down2012

Germany Status

Heide Kletch & Co2010

Gelsen.bue Rosneft (50%)2010

Harburg Shut down2012

Wilhelmshaven Storage [Hestya Energy2011]

Ingolstadt Gunvor2012

Karlsruhe Rosneft (12%)2011

Schwedt Rosneft (18.75%)2011

VOG/NE Rosneft (12.5%)2011

France Status

Fos Lavera Ineos (50%), PetroChina (50%)2011

Mardik Shut down2009

Reichstett Storage2011

Berre Idle for sale2012

Pt. Couronne For sale [Shell 2012 temporary deal]

Netherlands Status

Vlissingen Lukoil (45%)2009Belgium Status

Antwerp Gunvor2012

Switzerland Status

Cressier Vitol (50%), AtlasInvest (50%)2012

Italy Status

Cremona Storage2011

Roma Shut down2012

Priolo Lukoil (80%)2012

Trecate Total (12.67%)2010

Restructuring Europe Refining Industry (2009-2012)

FYU Status

Bosanski (Bosnia) Zarubezhne2009

Novi Sad (Serbia) Gazprom2009

Pancevo (Serbia) Gazprom2009

Romania Status

Pitesti Idle2011


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Agenda

Oil Demand





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Competitiveness

Regional industry weakness

Domestic oil market declining

Gasoline exports opportunity to the US may disappear

Aggressive build of new refineries in developing countries

Perspectives of European Refining Industry _follow


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Competitiveness - Global Refining CapacityGrowth Outlook

Bubble size: 2011 Refinery Capacity


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Competitiveness - Incremental Refining Capacity2011-2020

Incremental

Decrement

World Refining Capacity


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Refining Capacity Evolution in Key CountriesCompetitiveness - Nelson Complexity Index


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Perspectives of European Refining Industry _continued

European policy

Different taxation between gasoline and road diesel

Green fuels

Refinery industry restructuring continues

Closures of less profitable refineries

Investments to adjust products slate

New players: E&P companies and traders


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Legend: Crude= Topping; REF= Reformer SR/CC; FCC = Fluid catalytic cracking

VISB= Visbreaker + Thermal Cracking; ALK = Alkylation+Polymerization

ISO= Isomerization Light Naphtha;

COUNTRY COMPANY SITE Year CRUDE REF FCC VIS ALK ISO

FRANCE PETROPLUS PETIT COUR 2013 141 28 22 12

FRANCE LYON.BASELL BERRE 2012 126 19 19

GERMANY SHELL DEUT HARBURG 2012 104 20 17 14 4

ITALY RAFF. ROMA ROMA 2012 86 15 31 8

ITALY API FALCONARA 2013 78 14 56 7

ITALY ENI P.MARGHERA 2014 108 15 37 6

UK THAMES OIL CORYTON 2012 172 38 68 22 20

Total (mbd) 815 149 126 150 22 45

Selected European Refinery Closures (2012-2014)(thousand barrel per day)


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Selected New European Units (2012-2020)(thousand barrel per day)

Legend: Crude= Topping; Hydro D-M = Hydro-cracking distillate+mild;

Hydro R= Hydro-cracking residue COK= Coking;

VISB= Visbreaker+Thermal Cracking; REF BTX = Reformer to BTX

COUNTRY COMPANY SITE Year CRUDEHYDRO

D-M

HYDRO

RCOK VISB

REF

BTX

BULGARIA LUK-NEFTOC BURGAS 2015 84

GREECE HELL.PETR. ELEUSIS 2012 40 21

HUNGARY MOL SZASZHALOM 2015 28

ITALY ENI SANNAZZARO 2012 23

PORTUGAL PETROGAL SINES 2012 43

ROMANIA ROMPETR. RE. MIDIA 2012 32

ROMANIA PETROBRAZI PLOIESTI 2014 12

SERBIA NIS PANCEVO 2012 30

TURKEY SOC/TUR EN ALIAGA 2017 214 66 40 28

TURKEY TURKISH PE IZMIT 2015 50 52

Total (mbd) 214 289 107 113 12 28


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Outlook European Conversion Units


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EU 15 Excise Duties on Road Fuels

Source: European Commission 2012


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Agenda

Oil Demand





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European Petrochemical Demand

Ethylene demand slowly increases

Major contribution to production from naphtha and LPG

Propylene demand slowly increases

Perspective propylene from refineries stable

Aromatics demand slowly increases

Availability of reformate is not constrained


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2000 2005 2010 2015 2020

Feed Slate: Tot Gas (Mt) 3.8 4.4 5.2 5.1 5.5

Tot Liquids (Mt) 17.8 19.6 17.5 17.8 18.7

European Ethylene Production by Feedstocks


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2000 2005 2010 2015 2020

Feed from Refinery (%) 25 27 28 27 26

European Propylene Production by Feedstocks


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European Aromatics Production from Reformate


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Decline

Unbalanced S/D

EuropeanOil Demand

WeaknessRestructuring

EuropeanRefinery

Slow growth

Restructuring

Petrochemical

Demand

CONCLUSION


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THANK YOU.

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Outlook European Refining Industry

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