Regional Pivot Pointsin Global RefiningWebinar Presented by Karl Bartholomew          22 May 2012    © 2012 KBC Advanced T...
Agenda> Old World order> New dynamics> New World order—changing ‘pivot’ points> Conclusions    22 May 2012   PROPRIETARY I...
Old World Order   22 May 2012    PROPRIETARY INFORMATION   3
Diesel / Gasoil Exports From-To             400             350                                                           ...
Gasoline Exports From-To             700                                    Source: KBC Energy Economics             600  ...
New Dynamics> Key drivers of transport fuel demand are economic activity, population  age and growth rate, and relative st...
Outlook Depends on the EconomyGDP Growth Rates                     2010-2015             2015-2020         PPP, Constant D...
Current State of Economy> US economy sluggish – 2.1%> Eurozone almost in recession 0.1%  –   Portugal -2.2%  –   Italy -1....
Effective Fed Funds Rate              Recession   6%   4%   2%   0%         86   87   88     89   90   91   92   93   94  ...
ECRI Weekly Leading Index         30.0%         25.0%         20.0%         15.0%         10.0%                           ...
China> 2Q 2012 GDP forecasted at 7.5%   – Lowest since 2009   – However, in line with government target> Lending slowed do...
Poll Question #1> What is global oil demand?  a)   88.6 million b/d  b)   89.5 million b/d  c)   91.2 million b/d  d)   85...
Oil Demand Growth Rates Total Oil Equivalent       2010-2015             2015-2020                                CAGR*   ...
New Refining Capacity> US   – Rationalisation of less efficient assets   – Additions of complex, flexible refineries> Euro...
Regional Refining Additions                                                    Crude Capacity Changes                     ...
Atlantic Basin Capacity Shifts> Back from the abyss:   – Sunoco Philadephia, Petroplus Cressier, Petroplus     Antwerp, CO...
Non Traditional Buyers> Traders (Vitol, Gunvor)> Private Equity (TPG, Klesch)> National Oil Companies (PetroChina)> Consum...
New ‘Pivot’ Points                 Bubble size represents relative total net crude refining                             ca...
How Have Regional Pivots Changed?> In the ‘old’ days    – Europe supplied the US    – Europe supplied Africa    – Europe s...
New World Order   22 May 2012   PROPRIETARY INFORMATION   20
Poll Question #2> What do you think oil price will be (Brent) by  the end of this year?  a)   $75-$90  b)   $90-$100  c)  ...
Conclusions> Regional supply/demand changes have started to change  the direction of product flows   – US Atlantic and Nor...
Conclusions cont’d> Asia – Pivoting inward centered on China and India    – Will set product swing between Pacific and Atl...
A Quick Survey> Was this topic valuable?             > How do you rate the   – Yes                                 webinar...
Closing> Questions?> Future webinar topics:   –   Market conditions   –   Asset optimization   –   Investment support   – ...
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KBC IoE Webinar - Regional Pivot Points in Global Refining

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This 45-minute webinar discovers how new dynamics are shifting the trade routes and affecting global and regional refined product supplies. The world's regional pivots have changed -- view now to learn more.

Webinar presented by: Karl Bartholomew - Former president and managing director of Pace Consultants, Inc. (now Jacobs Consultancy, Inc.), Mr. Bartholomew is a widely-recognized expert in the economics of technical planning, management, and valuation of refining, petrochemicals, raw materials, and natural gas operations.

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KBC IoE Webinar - Regional Pivot Points in Global Refining

  1. 1. Regional Pivot Pointsin Global RefiningWebinar Presented by Karl Bartholomew 22 May 2012 © 2012 KBC Advanced Technologies plc. All Rights Reserved.
  2. 2. Agenda> Old World order> New dynamics> New World order—changing ‘pivot’ points> Conclusions 22 May 2012 PROPRIETARY INFORMATION 2
  3. 3. Old World Order 22 May 2012 PROPRIETARY INFORMATION 3
  4. 4. Diesel / Gasoil Exports From-To 400 350 North America Source: KBC Energy Economics moving more ultra- 300 low to Europe and Latin America 250 Europe moving 000s b/d 200 lower quality to Asia retaining others distillate to meet 150 local demand 100 50 0 Europe Latin North Africa Latin Middle East North Europe Latin America America America America America Asia Europe North America 2005 2006 2007 2008 2009 2010 2011 22 May 2012 PROPRIETARY INFORMATION 4
  5. 5. Gasoline Exports From-To 700 Source: KBC Energy Economics 600 North America 500 Europe moving lower quality to moving Asia others and less to the Middle more to 400 retaining East and North America Latin 000s b/d gasoline America to meet 300 local demand 200 100 0 North America Africa Latin America Middle East North America Latin America Asia Europe North America 2005 2006 2007 2008 2009 2010 2011 22 May 2012 PROPRIETARY INFORMATION 5
  6. 6. New Dynamics> Key drivers of transport fuel demand are economic activity, population age and growth rate, and relative standards of living – Asia/Latin America Booming – Africa/Middle East Growing – US/Europe Contracting> Trade flows will reflect market realities – Excess global supply will flow to local demand – Trade routes are changing—new paradigms are being created> New ‘pivot’ points that reflect excess regional supply are emerging – Surplus capacity depending on the region – Post crisis demand growth and contraction 22 May 2012 PROPRIETARY INFORMATION 6
  7. 7. Outlook Depends on the EconomyGDP Growth Rates 2010-2015 2015-2020 PPP, Constant Dollars CAGR* CAGR*WORLD 5.0% 5.5% Total Asia 7.8% 8.0% China 10.9% 10.5% Middle East 5.5% 5.6% Europe 1.9% 2.5% US 3.0% 3.7% South America 5.1% 4.7% 22 May 2012 PROPRIETARY INFORMATION 7
  8. 8. Current State of Economy> US economy sluggish – 2.1%> Eurozone almost in recession 0.1% – Portugal -2.2% – Italy -1.3% – Greece -6.2% – Spain -0.4% – France – 0.3% – Germany – 1.2% – United Kingdom - 0.0% 22 May 2012 PROPRIETARY INFORMATION 8
  9. 9. Effective Fed Funds Rate Recession 6% 4% 2% 0% 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 -2% -4% -6% 22 May 2012 PROPRIETARY INFORMATION 9
  10. 10. ECRI Weekly Leading Index 30.0% 25.0% 20.0% 15.0% 10.0% -4.5% May 2012 5.0% 0.0% (5.0%) (10.0%) (15.0%) (20.0%) Recessions (25.0%) 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Below 0% for extended period signals recession 22 May 2012 PROPRIETARY INFORMATION 10
  11. 11. China> 2Q 2012 GDP forecasted at 7.5% – Lowest since 2009 – However, in line with government target> Lending slowed down Chart source: Wall Street Journal, May 16th 22 May 2012 PROPRIETARY INFORMATION 11
  12. 12. Poll Question #1> What is global oil demand? a) 88.6 million b/d b) 89.5 million b/d c) 91.2 million b/d d) 85.5 million b/d 22 May 2012 PROPRIETARY INFORMATION 12
  13. 13. Oil Demand Growth Rates Total Oil Equivalent 2010-2015 2015-2020 CAGR* CAGR* WORLD 1.4% 1.6% Total Asia 2.4% 3.0% China 3.1% 5.2% Middle East 2.7% 2.8% Europe -1.3% -0.2% US 0.4% 0.0% South America 2.6% 2.2% 22 May 2012 PROPRIETARY INFORMATION 13
  14. 14. New Refining Capacity> US – Rationalisation of less efficient assets – Additions of complex, flexible refineries> Europe – Rationalisation of less efficient assets • Where allowed by law> Latin America – Additions lagging demand growth> Asia – Additions still ‘booming’; pacing demand> Middle East – Large capacity excess to demand coming onstream soon 22 May 2012 PROPRIETARY INFORMATION 14
  15. 15. Regional Refining Additions Crude Capacity Changes Middle 1,400 East/Asia 1,200 booming 1,000 Americas short- 800 term contraction yet still growing overall Europe negative in the short- 600 term000s b/d FSU/Africa modestly growing 400 200 0 -200 -400 -600 US/Canada Latin America Europe FSU + Russia Africa Middle East Asia Source: KBC Energy Economics 2011 2012 2013 2014 2015 2016 2017 22 May 2012 PROPRIETARY INFORMATION 15
  16. 16. Atlantic Basin Capacity Shifts> Back from the abyss: – Sunoco Philadephia, Petroplus Cressier, Petroplus Antwerp, COP Delta Trainer, Valero PetroChina Aruba> Newly facing the abyss: – ERG Rome> New on the block: – Imperial Dartmouth> Still on the block / abyss: – BP Carson / Texas City; COP Alliance; Petroplus Coryton / Petit Couronne; LBI Berre 22 May 2012 PROPRIETARY INFORMATION 16
  17. 17. Non Traditional Buyers> Traders (Vitol, Gunvor)> Private Equity (TPG, Klesch)> National Oil Companies (PetroChina)> Consumers (Delta) 22 May 2012 PROPRIETARY INFORMATION 17
  18. 18. New ‘Pivot’ Points Bubble size represents relative total net crude refining capacity added through 2017 22 May 2012 PROPRIETARY INFORMATION 18
  19. 19. How Have Regional Pivots Changed?> In the ‘old’ days – Europe supplied the US – Europe supplied Africa – Europe supplied Latin America> In the new order – The US supplies Latin America – Europe supplies Africa dwindling – Asia supplies US West Coast – The Middle East supplies Europe – The Middle East supplies Africa 22 May 2012 PROPRIETARY INFORMATION 19
  20. 20. New World Order 22 May 2012 PROPRIETARY INFORMATION 20
  21. 21. Poll Question #2> What do you think oil price will be (Brent) by the end of this year? a) $75-$90 b) $90-$100 c) $100-110 d) $110-125 22 May 2012 PROPRIETARY INFORMATION 21
  22. 22. Conclusions> Regional supply/demand changes have started to change the direction of product flows – US Atlantic and Northwest European supply centers are being hollowed out – Middle East and West India are the new supply points • Russia is coming on fast – Longer economic reach of more efficient production> New supply points will pivot toward unmet demand and in new directions – Asia is becoming better balanced – Latin America still has unmet demand – Russia is building excess capacity 22 May 2012 PROPRIETARY INFORMATION 22
  23. 23. Conclusions cont’d> Asia – Pivoting inward centered on China and India – Will set product swing between Pacific and Atlantic Basins – Unresolved Indian issue of domestic vs. export rules> Middle East – West vs. Asia destination will be economically decided – National Oil Companies willing to make decisions based on domestic socio- economic grounds> Europe – Still some exports to US East Coast but starting to wither – Russian exports are key to long term survivability as supply center> US East Coast – Has lost significant domestic supply capability – Will become the battleground for overseas supply> US Gulf Coast – Exports to Latin America has been saving grace – Politics could curtail exports long term 22 May 2012 PROPRIETARY INFORMATION 23
  24. 24. A Quick Survey> Was this topic valuable? > How do you rate the – Yes webinar overall? – No – Excellent> Was the presentation – Good clear? – Fair – Yes – Poor – No> Would you be interested Please send any further questions and feedback to: in future webinars? kbc-marketing@kbcat.com – Yes – No 22 May 2012 PROPRIETARY INFORMATION 24
  25. 25. Closing> Questions?> Future webinar topics: – Market conditions – Asset optimization – Investment support – Sustainable workforce development> We welcome suggestions for future topics – please email kbc-marketing@kbcat.com> Next webinar information will go out shortly.> Thank you for joining us! 22 May 2012 PROPRIETARY INFORMATION 25

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