Seca seminar 2013 wilhelmsen maritime fuels - øivind munthe-kaas

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1 Avails of MGO, still tight? Øivind Munthe-Kaas, Wilhelmsen Marine Fuels as

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Transcript of Seca seminar 2013 wilhelmsen maritime fuels - øivind munthe-kaas

Page 1: 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

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02/01/2

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03/04/2

006

03/07/2

006

02/10/2

006

01/01/2

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02/04/2

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02/07/2

007

01/10/2

007

31/12/2

007

31/03/2

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30/06/2

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29/09/2

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29/12/2

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30/03/2

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29/06/2

009

28/09/2

009

28/12/2

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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

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013-400

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-100

0

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0

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Fuel & Gasoil crack (per MT)

Gasoil 0.1% FOB NWE crackRdam 3.5% fuel crackDiff (right axis)

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1/2012

19/01/2

012

04/02/2

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20/02/2

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07/03/2

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23/03/2

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08/04/2

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24/04/2

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10/05/2

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26/05/2

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11/06/2

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27/06/2

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13/07/2

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29/07/2

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14/08/2

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30/08/2

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15/09/2

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01/10/2

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17/10/2

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02/11/2

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18/11/2

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04/12/2

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20/12/2

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05/01/2

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21/01/2

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06/02/2

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22/02/2

013

10/03/2

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26/03/2

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11/04/2

013

27/04/2

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13/05/2

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29/05/2

013

14/06/2

013500

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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

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