asian crude supplies & pricing: a new eraworldpetrocoal.in/download/wpcc-2019-ppt/day-1/... ·...

London

Houston

Moscow

Singapore

Dubai

New York

Beijing

Kiev

Tokyo

Astana

Shanghai

Rio de Janeiro

Washington DC

Riga

Calgary

Brussels

Cape Town

Mexico City

Berlin

San Francisco

Sydney

Market Reporting

Consulting

Events

Asian crude supplies & pricing: a new era

Alejandro BarbajosaDelhi, February 2019

Copyright © 2019 Argus Media group. All rights reserved.

• OPEC output cuts tightening heavy crude supplies across Asia

• Tighter Middle East markets support Dubai, Oman benchmarks

• Rising North American output & exports put pressure on Brent

• Atlantic basin crude upsetting Middle East crude flows to Asia

• Long-haul shipments raise relevance of delivered crude pricing

• IMO 2020 regulations may help re-balance sweet-sour spreads

New reality of Asian crude market requires new pricing

Asia-Pacific refining capacity: 33mn b/d, 34% of global


Eight countries with more than 1mn

b/d capacity in 2017:

Asia’s share of global oil demand has soared to 45%


Asia’s share of global oil output steady just above 40%


Asian refiners must import more Atlantic basin crude


Brent-Dubai tells refiners what quality/origin to buy


Lower Brent premium to Dubai indicates buy more Atlantic basin crude

Higher Brent premium to Dubai indicates buy less Atlantic basin crude

Sweet-sour crude differentials have been narrowing



Asia-Pacific takes more than 50% of US crude exports


Pipeline capacity set to outpace production by 2020

2018

• Sunrise 120kbd

2H 2019

• Cactus II 670kbd

• Gray Oak 800kbd

New Bayou Bridgepipeline planned from

Port Arthur to St James

Plains accelerates start of Sunrise to 4Q18, adds takeawaycapacity to Cushing

Plains accelerates Cactus II start to 3Q19; Gray Oak initial plannedcapacity up from 700kbd to 800kbd

ExxonMobil and Plains sign letter of intent in June 2018 to build 1mn b/d line Permian to Beaumont/Port Arthur

ETP/MPXL/Magellanand Delek plan 1mnb/d line to MEH and Nederland

More than 1.6mn b/d of new Permian pipeline capacity by 4Q19:

Permian tight on pipeline space through late 2019


-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000Ja

n-1

2

May

-12

Sep

-12

Jan

-13

May

-13

Sep

-13

Jan

-14

May

-14

Sep

-14

Jan

-15

May

-15

Sep

-15

Jan

-16

May

-16

Sep

-16

Jan

-17

May

-17

Sep

-17

Jan

-18

May

-18

Sep

-18

Jan

-19

May

-19

Sep

-19

Jan

-20

May

-20

Sep

-20

Jan

-21

May

-21

Sep

-21

Jan

-22

May

-22

Sep

-22

Jan

-23

May

-23

Sep

-23

Argus estimates of Permian production vs take away capacity

Permian production *# Total Permian exit pipeline and refinery capacity (b/d)**

Pinch Point


WTI Houston (MEH) represents US crude exports price

India demand supported by state, private refiners

• India is regular importer of US medium sour grades

• Proximity of Asia’s second-largest crude consumer to Middle East may occasionally work against the economics of long-haul shipments from Americas because of a wide difference in freight costs

S. Korea becomes top Asian importer of US crude

• Brexit undermines South Korean demand for Forties, giving an edge to WTI among largest S. Korean refiners

• Forties may no longer benefit from preferential tariff treatment when it’s no longer considered an EU crude

• WTI also competes with Murban and ESPO in S. Korea


South Korea & India rapidly increase imports from US

No US crude known to unload in China in past six months

• China had topped Canada as world’s largest buyer of US crude

• Sinopec was focused on WTI for simpler plants in Guangdong

• ChinaOil and Shandong independent refiners focused on medium sour grades, including Mars & Southern Green Canyon

• Political uncertainty suppresses interest to resume purchases

WTI competing directly against Japan’s staple imports

• Japanese refiners typically see value in WTI only when it’s economical to replace Murban from UAE and other ME grades

• Japan’s largest refiner uses WTI Houston price to buy US crude

• Co-loads with Latin American crude (Mexican Maya most frequently) are also a sweetener for Japan to buy US crude


Japan wakes up to US supplies; China goes to sleep

US crude starting to replace Middle East grades in Asia


US crude challenges Japan’s imports from Middle East



Hub-and-spoke crude pricing: futures & physical diffs

Exchanges and price reporting agencies complement each other

Stay Connected

@ArgusMedia Argus-media

+Argusmediaplus argusmediavideo

Copyright notice Copyright © 2018 Argus Media group. All rights reserved. All intellectual property rights in this presentation and the information herein are the exclusive property of Argus and and/or its licensors and may only be used under licence from Argus. Without limiting the foregoing, you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of Argus.

Trademark notice ARGUS, the ARGUS logo, Argus publication titles, and Argus index names are trademarks of Argus Media Limited. For additional information, including details of our other trademarks, visit argusmedia.com/trademarks.

Alejandro BarbajosaVP, crude & LPG, Middle East & Asia-Pacific

[email protected]

+65 8223-6525

+81 (0) 70 1585-6525

Singapore & Tokyo

www.argusmedia.com

http://blog.argusmedia.com

asian crude supplies & pricing: a new eraworldpetrocoal.in/download/wpcc-2019-ppt/day-1/... ·...

Documents