Seca seminar 2013 wilhelmsen maritime fuels - øivind munthe-kaas
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Transcript of Seca seminar 2013 wilhelmsen maritime fuels - øivind munthe-kaas
Avails of MGO, still tight?Øivind Munthe-Kaas, Wilhelmsen Marine Fuels as
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Disclaimer
This presentation may contain forward-looking expectations which are subject to risk and uncertainties related to economic and market conditions in relevant markets, oil prices, currency exchange fluctuations etc. Wilh. Wilhelmsen Holding group and Wilh. Wilhelmsen group undertake no liability and make no representation or warranty for the information and expectations given in the presentation.
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WILHELMSEN MARINE FUELS (WMF)
o Part of the Wilh. Wilhelmsen group
o A bunker broker company
o Reputable with a good market standing
o Well established credit lines with all suppliers
o Offices in Oslo, London and Singapore. Highly qualified and expreienced
personnel
o Large volumes in key ports – 2012 vol. was 3.5 M tonnes
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2015 CHALLENGES-Outline
o The current situation in the distillate market in Europe
in general
o Nordic countries+Baltics
o Northwest Europe
o Mediterranean
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2015 CHALLENGES- DIESEL MARKET IN EUROPE
o Europe is short on diesel, net importer
(30-40 mill mt out of demand of 250 mill mt)
o Diesel is the largest oil product by demand in Europe, and is showing the
strongest growth globally
o Refineries are struggling to make profits, imports will increase as
percentage of total sales
o Russian refineries will upgrade, have the potential to increase supply
o Several South European refineries have boosted diesel output
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EUROPE’S INCREASING MGO DEFICIT
Source: ENI Refining outlook 2011
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2015 CHALLENGES- DIESEL MARKET IN EUROPE
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2015 CHALLENGES- DIESEL MARKET IN EUROPE
o Since 2008, 15 European refineries have closed with a capacity of 1.7 mbpd. Refinery runs have dropped to below 80% from 85% in 2006.
o A further 620 000 bpd of hydroskimming capacity could be closed until 2018.
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ON-ROAD SULPHUR CONTENT IN DIESEL- EXPECTED REGIONAL ON-ROAD DIESEL SULPHUR CONTENT IN PPM
Source: Hart’s WRFS and IFQC
80% of European middle distillate production is diesel fuel with sulphur content below 0.05%
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PRELIMINARY CONCLUSION AND RECOMMENDATION
The extra distillate demand generated by the 2015 changeover from fuel oil to distillates within the ECAs represents an increase of 5-7% of the total distillate demand in OECD Europe/North America. This addition is insignificant to the total market balance for distillates in the Atlantic basin.
However, as Europe is already short on distillates, the changeover will increase the tightness in distillate markets and lead to further price increases.
As North America is currently a net exporter of distillates the situation here is expected to be less tight. Furthermore it is estimated that North American refiners can increase their yield (% of output) of distillates by 4-5% percentage points without major investments.
Total demand in Europe and North America in Million b/d2000 2009 2015
Additional ECA demand for middle distillates* 0,6 Middle distillates 13,5 14,0 14,8 Light distillates 14,4 14,1 15,0 Fuel oil 3,5 2,3 1,8 Others 8,1 7,8 8,3 Total 25,9 24,3 25,1 * Assuming 100% changeover from Fuel oil to MGO in ECA'sSource: BP Statistical review of energy 2010, WPMF research 2010
2015 changeoverMT Barrels Bpd
North European ECA 22 000 000 139 700 000 382 740 North American ECA 15 000 000 95 250 000 260 959 Total volume change 643 699 Source: EPA, Purvin & Gertz
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2015 CHALLENGES- DIESEL MARKET IN EUROPE
o Russian refineries have the potential to boost diesel output.20 refineries are planning upgrades, this could boost diesel ouput by 12 mill mt.
o Most of the refineries are located in the ”European” part of Russia and would naturally send their exports westwards.
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MGO 0.1% AVAILS- NORDIC COUNTRIES
o Norway:
Current situation:
MGO readily available along the Norwegian coast, both 0.1% and 0.05%
sulphur. Statoil main supplier, sourced from Mongstad refinery.
o Mongstad and Slagen can produce around 6-7 mill mt of diesel per year,
consumption for the domestic car market is 3.5 mill mt. This leaves around
3 mill mt for the marine market. The marine market is estimated at around
1.4 mill mt.
o Both Denmark and Sweden are net exporters of distillates currently
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MGO 0.1% AVAILS- NORTHWEST EUROPE
o LNG is not seen as an option short-term. The majority of vsls operating in
ECA will run on MGO
Source: Lloyds register LNG fuelled deep sea shipping, Aug 2012
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MGO 0.1% AVAILS- MEDITERRANEAN
o MED: currently avails is good. Do not expect any particular avails problems
in 2015. High production of 10ppm gasoil (automotive diesel) which can be
used for Marine as well.
o Several refineries have upgraded the last years, increasing distillate
output.
o Saudi-Arabia is establishing export refineries along the Red Sea, these will
be important suppliers of distillates to the Med-region
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HFO-MGO Spread
Spread depends on several factors:
o Absolute oil price level
o Profits for distillates
o Fuel oil availability
o Economic growth
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GASOIL TRADES AT A PREMIUM TO BRENT, FUEL AT A DISCOUNT
03/01/2
005
04/04/2
005
04/07/2
005
03/10/2
005
02/01/2
006
03/04/2
006
03/07/2
006
02/10/2
006
01/01/2
007
02/04/2
007
02/07/2
007
01/10/2
007
31/12/2
007
31/03/2
008
30/06/2
008
29/09/2
008
29/12/2
008
30/03/2
009
29/06/2
009
28/09/2
009
28/12/2
009
29/03/2
010
28/06/2
010
27/09/2
010
27/12/2
010
28/03/2
011
27/06/2
011
26/09/2
011
26/12/2
011
26/03/2
012
25/06/2
012
24/09/2
012
24/12/2
012
25/03/2
013-400
-300
-200
-100
0
100
200
300
400
0
100
200
300
400
500
600
Fuel & Gasoil crack (per MT)
Gasoil 0.1% FOB NWE crackRdam 3.5% fuel crackDiff (right axis)
1703/0
1/2012
19/01/2
012
04/02/2
012
20/02/2
012
07/03/2
012
23/03/2
012
08/04/2
012
24/04/2
012
10/05/2
012
26/05/2
012
11/06/2
012
27/06/2
012
13/07/2
012
29/07/2
012
14/08/2
012
30/08/2
012
15/09/2
012
01/10/2
012
17/10/2
012
02/11/2
012
18/11/2
012
04/12/2
012
20/12/2
012
05/01/2
013
21/01/2
013
06/02/2
013
22/02/2
013
10/03/2
013
26/03/2
013
11/04/2
013
27/04/2
013
13/05/2
013
29/05/2
013
14/06/2
013500
600
700
800
900
1000
1100
1200
220
240
260
280
300
320
340
360
380
400
380 vs MGO (Rdam, Great Belt) 2012 - YTD
Rotterdam 380Rotterdam MGOGreat Belt 380Great Belt MGORdam Spread FO vs OG
380CST VS MGO (ROTTERDAM, GREAT BELT 2012 - YTD
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2015 CHALLENGES- DIESEL MARKET IN EUROPE
Source: Exxonmobil long term energy outlook