Shifting Trade Winds and Impact on the Demand for Shipping
Platts Bunker Fuel Conference
Houston, Texas
24 June 2014
Trusted commercial intelligencewww.woodmac.com
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2
1970s: Wood Mackenzie developed into top-rated institutional broker, with particular emphasis on high quality research and recognised in financial centres across UK, Europe and US
History of Wood Mackenzie 1844 to 2014
1970
1973
1980
2001
20032004
2007: Creation of coal team via acquisitions of Hill & Associates and Barlow Jonker
2008: Creation of metals team via acquisition of Brook Hunt
2013: Developing of Petro-Chem Research
2001: Management & employee buy-out from Deutsche Bank backed by the Bank of Scotland
20122014
2003: Development of Regional Gas & Power Services
1973: North Sea Service, Wood Mackenzies first industry research offering was launched
1980s: Commenced provision of consulting services
2004: Initial investment in LNG and Macro Oils Research
2012: Refinancing deal, involving Hellman & Friedman acquiring the majority equity stake in the business alongside Charterhouse Capital Partners Ltd
20072008
NorthSea
NorthSeaWM HQ in Edinburgh
EXCHANGEPLACE 2
1844: Wood Mackenzie
founded asEdinburgh-basedstock-broking firm
30 employees10 employees ~1,000 employees
1970 20141980 1990 2000
20 employees 150 employees
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3
Europe 1.8%
Economic and energy demand shifts towards Asia
GDP average annual growth rate (2014 2025)
USA 2.7% Japan
0.8%China 7.2%
Russia 3.1%
Brazil 3.3%
India 6.4%
< 1%
1 - 2%
2 - 4%
4 - 6%
Source: Wood Mackenzie
GDP Growth (2014-2025 annualized)
> 6%
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So US product exports continue to grow
-2,000
-1,000
0
1,000
2,000
3,000
4,000
2000 2005 2010 2015 2020
Ba
lan
ce
s (
kb
/d)
LPG Naphtha Gasoline Jet/Kerosene Diesel/Gasoil Fuel Oil
Deficit
Surplus
US Product Balances
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5
Middle East NOCs are building large, complex new refineries which will compete successfully in Europe
European Mid-Cycle NCM
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
12.00
2018 NCM 2012 NCM*
$/bbl
Second Quartile Third Quartile Fourth Quartile
Jubail (SATORP)
First Quartile
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Gasoline trade volumes fall, as the North American and Middle East deficits reduce
-50-40-30-20-10
010203040
-50-40-30-20-10
010203040
-50-40-30-20-10
010203040
-50-40-30-20-10
010203040
-50-40-30-20-10
010203040
-50-40-30-20-10
010203040
Key net trade 2013 (mtpa)
Gasoline tradeGasoline trade
Key net trade 2020 (mtpa)
Gasoline flows to the ME from Asia reverse as new refining capacity in the ME meets with strong gasoline demand in Asia
Europe
Latin America
FSU
Middle East
Asia
North America
Africa
The Middle East deficit falls, thereby prompting lower imports from Europe and higher exports to Africa and Asia
North American exports to Latin America and Africa rise
Source: IEA; GTIS; Wood Mackenzie
Total in 2020 = 60 Mt (17% of total clean product trade)
-10 Mt (-2.1% CAGR) versus 2013
To N. America
2013 balance
2020 balance
Arrow width proportional to trade volume
Balances do not total zero please see Balancing the World Methodology
North American imports from Europe fall
-50-40-30-20-10
010203040
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The Middle East emerges as a key diesel/gasoil exporter
-100
-80
-60
-40
-20
0
20
40
-100
-80
-60
-40
-20
0
20
40
-100
-80
-60
-40
-20
0
20
40
-100
-80
-60
-40
-20
0
20
40
-100
-80
-60
-40
-20
0
20
40
-100
-80
-60
-40
-20
0
20
40
-100
-80
-60
-40
-20
0
20
40
Key net trade 2013 (mtpa)
Diesel/Gasoil tradeDiesel/Gasoil trade
Key net trade 2020 (mtpa)
US exports of diesel to Europe increase
Latin America
FSUEurope
Africa
Asia
North America
Middle East
Russian exports to Europe are expected to remain high
European imports from Middle East are expected to increase hugely
Source: IEA; GTIS; Wood MackenzieTotal in 2020 = 186 Mt (52% of total clean product trade
+45 Mt (+4.0% CAGR) versus 2013
To L. America
2013 balance
2020 balance
Arrow width proportional to trade volume
Balances do not total zero please see Balancing the World Methodology
To N. America
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-100 0 100 200 300 400
Latin America
Europe
Africa
FSU
Middle East
Asia Pacific
North America
Imp
ort
er
Latin America Europe Africa FSU Middle East Asia Pacific North America
Exporter
2013 - 2020 Change in CPP Tanker Demand, billion tonne.miles
From 2013 to 2020 the emergence of Europe as a major product importer drives CPP tanker demand
Lower gasoline importsIncreased imports of most products as demand grows
Growth in diesel and jet fuel imports
Decline in gasoline imports from Europe due to refining investments
Source: Wood Mackenzie
New capacity, decreases need for clean product imports
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9
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2005 2006 2007 2008 2009 2010 2013 2020
Bill
ion
s o
f to
nn
e-m
iles .
Growing clean product trade drives increasing tanker demand
Inter-Regional Clean Oil Tanker Demand, billion tonne.miles
Source: IEA; GTIS; Wood Mackenzie
CAGR +3.0%
CAGR +4.1%
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Disclaimer
This report has been prepared for Platts Bunker Fuel Conference attendees by Wood
Mackenzie Limited. The report is intended solely for the benefit of Platts attendees and
its contents and conclusions are confidential and may not be disclosed to any other
persons or companies without Wood Mackenzies prior written permission.
The information upon which this report is based from our own experience, knowledge
and databases. The opinions expressed in this report are those of Wood Mackenzie.
They have been arrived at following careful consideration and enquiry but we do not
guarantee their fairness, completeness or accuracy. The opinions, as of this date, are
subject to change. We do not accept any liability for your reliance upon them.
Strictly Private & Confidential
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Harold Skip York
Skip York is a Principal Analyst in Wood Mackenzies Oils Research Team responsible for cross-segment integration of petroleum market and infrastructure issues for North America. With over 20 years of worldwide experience across the energy value chain, he has deep expertise in petroleum market economics and price-setting mechanisms including valuing non-fungible crudes across a number markets, NGLs, and leveraging technologies for competitive advantage.
Specializes in strategy, transaction support, asset valuation, and commercial optimization. Recently he has been focusing on the implications of logistic constraints on market-clearing dynamics and prices for Canadian heavy crude oil and NGL production growth from unconventional plays.
Prior to joining Wood Mackenzie, Skip worked for ExxonMobil in a variety of strategic planning assignments. He held roles as the global expert on joint venture negotiation best practices, managing new business development downstream opportunities in Asia Pacific, and leading research teams on studies of the economic impact of large-scale oil investments on the economy of Russia. He also has consulted for clients at McKinsey & Company and Charles River Associates.
Skip holds a PhD Economics from the University of Virginia, as well as, a Masters of Science and Bachelor of Science also in Economics from the University of Wyoming.
Principal Analyst Oils Research
T +1 713 470 1667
Europe +44 131 243 4400Americas +1 713 470 1600Asia Pacific +65 6518 0800
Email [email protected] www.woodmac.com
Wood Mackenzie* is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insight theyneed to make better strategic decisions. For more information visit: www.woodmac.com
*WOOD MACKENZIE is a Registered Trade Mark of Wood Mackenzie Limited
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