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TRANSCRIPT
© OECD/IEA 2014 © OECD/IEA 2014
Presentation
at the Bank of Canada
Ottawa, 21 July 2014
Antoine Halff
© OECD/IEA 2014
The oil market at a junction
• Balances loosen up on paper but must be seen in perspective • The unconventional supply revolution enters a new stage - matures
into an increasingly global phenomenon, not just a US success story
• Political and social change in the MENA raises OPEC supply risk, partly offsetting the impact of higher non-OPEC supply
• The economic recovery buoys demand, but the dynamics of demand growth undergo a structural shift - efficiency gains and fuel switching increasingly balance income and population impacts
• Asia is by far the largest magnet for global crude exports as North America grows into a net oil exporter
• The refining industry faces a new round of restructuring and a potential glut of light products
© OECD/IEA 2014
Oil demand nears 100 mb/d by 2019, but peak oil demand growth is in sight
Average 1.3%/yr growth on improving macroeconomic backdrop Growth gains momentum in some regions Overall growth slows on fuel switching and efficiency gains
Global oil demand 2001-07 2007-13
2013-19
2001-07 1 102 1.3%2007-13 727 0.8%2013-19 1 272 1.3% Source: IEA, Medium-Term Oil Market Report 2014
This map is w ithout prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
Average global demand growth(kb/d)
28
-327
-30 39 82 100
71
-91
70
127262 307
58 101170
Americas
Africa
Middle East
Europe FSU
779
700655
Asia/Pacific
© OECD/IEA 2014
Oil’s place in the energy mix is changing
With a few exceptions, oil is being pushed out of the power generation and residential sectors
More than 5 ½ in every 10 barrels of oil are used for transport, including 4 for road transport
Non-energy use of oil – petrochemicals – rising steeply
54.6%
54.8%
55.0%
55.2%
55.4%
55.6%
0
10
20
30
40
50
60
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
mb/d
Shipping
Jet
Rail
Road diesel
Gasoline
Transport (rhs)
Relative share of transport use is global oil demand
© OECD/IEA 2014
Oil supply growth is bifurcated - robust in non-OPEC, facing headwinds in OPEC
Total oil supply capacity grows by 9 mb/d to 105 mb/d Exceptionally strong non-OPEC growth, but slowing later in the
forecast period
-0.5
0.0
0.5
1.0
1.5
2.0
2013 2014 2015 2016 2017 2018 2019
mb/d
OPEC Crude capacity OPEC NGLsGlobal Biofuels Non-OPEC (excl. Biofuels)World
Global oil supply capacity growth
© OECD/IEA 2014
MENA turmoil, weak investment climate weigh on OPEC capacity growth
OPEC capacity seen growing by 2.1 mb/d to 37.1 mb/d in 2019 Iraq to supply 60% of growth Worsening political stability and security issues add major
downside risk in Iraq, Libya, others
Incremental OPEC crude production capacity 2013-19 (mb/d)
OPEC crude production capacity
32
33
34
35
36
37
38
2013 2014 2015 2016 2017 2018 2019
mb/d
Current data May 2013 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4
1
IraqUAEAngolaVenezuelaEcuadorSaudi ArabiaIranQatarLibyaNigeriaAlgeriaKuwait
© OECD/IEA 2014
Iraq faces multi-pronged challenges in pursuit of targets
Iraq capacity seen rising by 40% or 1.3 mb/d to 4.5 mb/d by 2019 Rising sectarian strife raises downside risks but there are other
problems too Weak institutions have led to delays in contract awards for
infrastructure plans that anchor projects
Iraq crude production capacity growth
0
1 000
2 000
3 000
4 000
5 000
2010 2012 2014 2016 2018
mb/d
Southern area Central and northern KRG
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2013 2014 2015 2016 2017 2018 2019
mb/d
Current data May 2013
Iraq crude oil production by region
© OECD/IEA 2014
The unconventional revolution comes of age
N. America continues to lead non-OECD supply growth But growth slows in N. America and diversifies later in the period
Annual non-OPEC supply growth
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2003 2005 2007 2009 2011 2013 2015 2017
mb/d
PG and biofuelsOther Asia
China
Middle EastAfrica
Latin AmericaFSU
OECD Pacif icOECD EuropeOECD AmericasTotal
© OECD/IEA 2014
NGLs, field condensate account for growing share of global supply
NGL capacity grows jumps 18% to 10.7 mb/d in 2019 OPEC NGLs rise by 13% to 7.12 mb/d, fuelled by quest for natural
gas for utilities, water desalination and industry Iran accounts for ~40% of OPEC NGL growth, followed by Libya,
Saudi Arabia, UAE and Qatar
0
2
4
6
8
10
12
2013 2014 2015 2016 2017 2018 2019
mb/d
Pentanes
LPG
Ethane
World NGLs production
5.25
5.50
5.75
6.00
6.25
6.50
6.75
7.00
7.25
2013 2014 2015 2016 2017 2018 2019
mb/d
Current data May 2013
OPEC NGLs production
© OECD/IEA 2014
In crude trade, all roads lead to Asia
Asia imports surge 16% to more than 22 mb – 65% of the int’l crude market – as N. America swings to net oil exporter
Crude Exports in 2019 and Growth in 2013-19 for Key Trade Routes1
(million barrels per day)
0.2 0.3(0) 2.0 (0.2)
(-0.6) 4.1(-0.6)
0.1(-0.7)
3.11.2 (0.3)
1.0 (+0.1)-0.6
2.21.8 (+0.8)(-0.6)
1.1(+0.3)
Red number in brackets denotes growth in period 2013-19 1.21Excludes Intra-Regional Trade (+0.6)2 Includes Chile3 Includes Israel
5.2(+0.3)
Other Asia
China
OECD Europe
1.6(-0.2)
1.3 (+0.6)OECD Asia
Oceania3
0.5 (-0.0)
0.7(+0.4)
3.6 (-0.5)
OECDAmericas2
© OECD/IEA 2014
Refinery capacity growth sets stage for new round of consolidation
Almost all growth come from non-OECD, including half from Asia Plans are getting scaled back in the face of rising over-capacity To bring utilization rates up to levels of 2006-2008 (when margins
were good), nearly 5 mb/d of capacity would have to be eliminated through plant closures, delays or cancellations
CDU Expansions 2013-2019 by Region Refinery utilization rates
70.0%
75.0%
80.0%
85.0%
90.0%
1Q06 1Q09 1Q12 1Q15 1Q18
World OECD Non-OECD
© OECD/IEA 2014
Europe faces growing import dependence for middle distillates…
Europe’s middle distillate deficit balloons to 1.6 mb/d by 2019 Increased supplies coming from Middle East, N. America, Russia
Product Supply Balances - Gasoil/KeroseneRegional Balances in 2013 and 20191
Thousand barrels per day
897 1167
FSU
-1057 -1592
Europe
9841377
OECD Americas
-559 -548
Latin America
3581094
Middle East
1280801
Asia
-657 -998
Africa
Refinery production and supplies from other sources vs. end-user demand. Regional total does not add to zero due to feedstock trade and differences in product classifications.
1. Positive number indicates net-export potential, negative number net-import requirement
© OECD/IEA 2014
…while North America faces a gasoline glut
North America faces excess light distillate supply of 1.3 mb/d in 2019 – a by-product in search of outlets
Product Supply Balances - Gasoline/NaphthaRegional Balances in 2013 and 20191
Thousand barrels per day
469 528FSU
718652
Europe
-205
1320OECD Americas
154 138
Latin America
7021023
Middle East
-974 -1490
Asia
-143-332
Africa
Refinery Production and supplies from other sources vs. end-user demand. regional total do not add to zero due to feedstock trade and differences in product classifications.
Positive number indicates net-export potential, negative number indicate net-import requirement
© OECD/IEA 2014
On paper, oil market balance eases, but risks and challenges abound
Nominal spare OPEC capacity to rise from 2013 But high risk remains
- 1
0
1
2
3
4
5
6
7
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
mb/d
Implied spare capacity
Effective OPEC sparecapacity
World demand growth
World supply capacitygrowth
Medium-term oil market balance
