Refined Oil products demand has increased by 2.0 mn barrels per day (B/D) and refined products demand is expected to zoom in non-OECD countries from 37.3 mn B/D in 2010 to 59.6 mn B?D in 2030.
Of the expected 22.3 million B/D increase, China alone is expected to account for 43% of this increase. The combination of Brazil, India, Russia and the broader Middle East will account for almost 30% of the increase, according to an analysis by Purvin & Gertz in their Global Petroleum Market Outlook 2011.
Key conclusions of this year's analysis include:
•Refined product demand increased by 2.0 million B/D in 2010 as most economies emerged from the 2009 recession. Demand growth was strongest in Asia, the Middle East and parts of Latin America. Our long term forecast for refined product demand growth has been updated to reflect the impact of higher long-term crude oil prices and more stringent conservation efforts. The challenge to supply energy to a growing global population of expanding financial means is huge.
•Product demand in non-OECD countries will grow rapidly from the current level of 37.3 million B/D in 2010 to 59.6 million B/D in 2030. Of the expected 22.3 million B/D increase, China alone is expected to account for 43% of this increase. The combination of Brazil, India, Russia and the broader Middle East will account for almost 30% of the increase.
•Diesel fuel will increase its share of total demand as demand for other fuels grows at a slower pace. Gasoline's share of demand has been relatively stable for the last 20 years, but is expected to drop in the OECD countries as higher vehicle efficiency standards propagate through the fleet. However, gasoline demand will still continue to grow in many developing countries.
•Residual fuel oil's share of demand will decline over the next 10 years as competition with natural gas intensifies in some regions and bunker fuel specifications favor a shift to marine diesel by 2015.
•Changes to established crude oil and product trade flows are expected to be seen in the coming years in order to accommodate a myriad of factors such as new crude oil streams, new refining capacity, and product demand shifts. Our forecast this year benefits from an in-depth analysis of crude oil production and trade that is fully detailed in a companion study: Global Crude Oil Market Outlook.
•Despite the large refined product demand increase seen in 2010, a significant oversupply situation currently exists. The requirement to blend increasing volumes of ethanol and biodiesel into products is further adding to the product oversupply situation in the Atlantic Basin. A few weaker refineries have already shut down and more closures are expected. However, the survivors in some markets will have to operate at significantly lower rates until after 2015 unless further capacity rationalization corrects the capacity imbalance.
•Light/heavy price differentials and returns on capital investment declined rapidly in early 2009 as the global economy slowed. A modest recovery in conversion returns was experienced in 2010, but conversion returns are expected to weaken because new capacity will continue to come on line in the next few years.
•Worldwide refinery investments to 2020 are expected to cost approximately $275 billion which represents 18% of 2010 replacement costs. Additional investments in the range of $145 billion are expected through 2030.
