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2nd EGCFE Oil and Gas Meeting
APERC Oil Report 2019
11 April 2019Sendai, JapanDr. Ruengsak ThitiratsakulResearch Fellow, APERC
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DemandAPEC vs global oil demandAPEC oil demand outlook 2021
SupplyAPEC vs global oil supplyAPEC oil supply outlook 2021
Key factors influencing oil marketFalling crude prices continue?Brent-WTI spreadUS shale oil developmentOPEC VS non-OPEC production cut
Commercial issuesQuality standard harmonization of gasoline and dieselAPEC import dependence
Topics of Presentation
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Global oil consumption reached 4,557 million tonnes in 2016.
APEC accounted for 51% of global demand in 2016.
APEC vs global demand 2007-2016 APEC demand 2007-2016
APEC vs global oil demand
0
500
1,000
1,500
2,000
2,500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016China Japan USRussia Southeast Asia Other Asia Oceania
mtoe
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016APEC Rest of the World
mtoe
4
APEC demand by sector 2007-2016 USA demand by sector 2007-2016
APEC vs global oil demand by sectorUSA vs China
China demand by sector 2007-2016
APEC growth in past decade = 0.8% p.a. (rest global = 1.2% p.a.) led by China and SEA.
Transportation has been both the dominant and growing sector in APEC during 2007-2016.
APEC slowdown due to declining demand in USA (-1.4% p.a.) and Japan (-2.4% p.a.) while China demand is growing at 4.5% p.a.
0
500
1,000
1,500
2,000
2,500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Power generation Industry TransportationResidential & commercial Non-energy use Others
mtoe
0100200300400500600700800900
1000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Power generation Industry TransportationResidential & commercial Non-energy use Others
mtoe
0
100
200
300
400
500
600
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Power generation Industry TransportationResidential & commercial Non-energy use Others
mtoe
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China growth is projected to be largest in APEC (2% p.a. towards 2021) contributing to 25% share of APEC.
APEC oil demand will shift more to Asia in the coming years.
APEC oil demand outlook 2021APEC demand outlook 2016-2021APEC demand 2007-2016
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APEC vs global supply 2007-2016 APEC supply 2007-2016
APEC accounted for 41 % of the global oil supply
Global oil supply increased faster than demand to reach 4,377 Mt in 2016 (1.1% p.a.).
USA, Russia, and Canada accounted for 74% of APEC supply with significant contribution from US shale.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
APEC Rest of the world
Mt
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016China US CanadaMexico Russia Southeast AsiaOther Asia Oceania Other Americas
Mt
7
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2016 2021China US CanadaMexico Russia Southeast AsiaOther Asia Oceania Other Americas
Mt
APEC supplyGrowth +2.0% p.a.(1,997 mt @2021)
Supply center North America
APEC supply 2007-2016 APEC supply outlook 2016 vs 2021
APEC oil supply outlook 2021
APEC demandGrowth +0.8% p.a.(2,455 mt @2021)
Demand center Asia
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
China US CanadaMexico Russia Southeast AsiaOther Asia Oceania Other Americas
Mt
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Key factors influencing oil marketFalling crude pricesBrent-WTI spread
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Bearish oil market sentiment could continue in 2019
Oil price has fallen for the past few years driven by: -shale oil supply expansion-diminished oil demand from slowdown of economic growth-scepticism about compliance with production cut agreement by OPEC and non-OPEC (OPEC+)
0
20
40
60
80
100
120
140
160
1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 12
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Brent WTI Dubai
$/bbl
Crude oil prices, 2007-2018
Source: IEA (2018b) and IEA (2019)
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Brent-WTI has varied substantially since 2011
The unprecedented spread in 2011-2013 is largely explained by:
Factor suppressed WTI - a build-up of crude oil stocks in the USA due to shale revolution and limited takeaway capacity
Factor inflated Brent - Arab Spring
Brent-WTI spread once again has widened since 2017 because of:
a shortage of pipelines to carry oil out of the Permian basin in West Texas, the USA.
Brent-WTI spread, 2007-2018
-10
-5
0
5
10
15
20
25
30
1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 12
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
$/bbl
Source: IEA (2018b) and IEA (2019)
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Key factors influencing oil marketUS shale oil production
OPEC and non-OPEC production cut
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Total US crude production was 11.8 mbd in 2018, 87% of which was shale oil production.
EIA forecasted that US crude production would reach 13 mbd in 2020.
US energy balance has transformed into less import dependence due to shale oil boom.
US shale oil production
02004006008001,0001,2001,4001,6001,800
0
2
4
6
8
10
12
14
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 1012
2014 2015 2016 2017 2018
Tight oil Conventional Rig count (rhs)
Production (mb/d) Rig count
Crude production and rig count in the USA, 2014-2018
Sources: EIA (2018c), EIA (2018d), EIA (2019b) and Baker Hughes (2018).
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Joint production cuts by OPEC and non-OPEC producers (OPEC+) in January 2017 subsequently forced the crude prices up in March 2018.
OECD commercial stock was recorded below the five-year average.
Strong demand growth is increasingly questioned with remaining uncertainties: US sanctions on Iranian crude exports, USA-China trade war, and OPEC+ compliance rate
OPEC+ production cut
OECD commercial oil stocks, 2013-2018
2400
2600
2800
3000
3200
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Range 2013-17 Average 2013-17 2017 2018
mbbl
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Commercial issuesHarmonization of gasoline and diesel specs
APEC import dependence
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Utilising fuels with common standards in APEC will contribute to more dynamic product trades.
Harmonization of APEC oil specifications can alleviate:
– APEC oil trade optimization– Environmental emissions– APEC energy security
Different quality standards of gasoline and diesel have been adopted and traded in APEC economies; e.g., EURO III, EURO IV, EURO V, and EURO VI.
Gasoline and gas oil trade hampered by differences in their specifications.
Differences of gasoline/diesel specs hinder trade
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APEC import dependence
APEC crude import dependency has decreased from 35% to 30% for the past decade while it has been self-sufficient in oil products since 2014.
note: Import dependence = (net import + stock changes) / total supply
0%5%10%15%20%25%30%35%40%
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500
1,000
1,500
2,000
2,500
3,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Crude Production Net Import Import Dependency (rhs)
mtoe
-4%
-3%
-2%
-1%
0%
1%
2%
3%
-500
0
500
1,000
1,500
2,000
2,500
3,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Refinery Output Net Import Import Dependency (rhs)
mtoe
18%33%34%
37%47%
63%64%65%
78%97%98%99%100%100%100%100%
VietnamUnited States of America
IndonesiaPapua New Guinea
PeruAustraliaThailand
ChinaNew Zealand
PhilippinesChile
Republic of KoreaJapan
Chinese TaipeiHong Kong, China
Singapore
APEC import dependence by economy in 2016
Note: Economies not listed are net-exporters of oil: Brunei (-798%), Russia (-190%), Canada (-127%),Mexico (-34%) and Malaysia (-8%)Source: APEC (2018)
APEC crude import dependence, 2007-2016
APEC oil product import dependence, 2007-2016
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