Gulf to continue gasoline import until 2013

Mar 11, 2009 01:00 AM

The Gulf will remain a net importer of gasoline till 2013, an energy advisor has said. Low refining capacity in the region forced it to import gasoline ranging in between 100,000 bpd and 200,000 bpd, Washington-based PFC Energy has said. Most Gulf states will also remain importer of diesel and fuel oil, it added.
"The lack of significant capacity expansions in the Gulf states' refineries (outside capacity creep), means that supply has not been able to keep up with both domestic and export demand growth," Raja Kiwan, an analyst with PFC Energy said.

"Even though gasoline has been a principal driver of appetite for oil products, the absence of fluid catalytic crackers (FCC) and catalytic reformers the refining units that supply has just managed to keep up with the domestic demand."
"The result has been that the region has turned into a net importer, a position that will remain largely unchanged till 2013," Kiwan added.

In the GCC, PFC Energy identified Dubai and Saudi Arabia as the two places where demand for gasoline has swelled in the past three years. PFC Energy said small Gulf states with small markets manage to continue exporting oil.
"Only those states with the smallest markets -- Qatar, Oman and Bahrain -- continue to export regular volumes, which we estimate will average at around 60 mm bpd (60,000 bpd) this year," Kiwan said. "The overall trade balances (of gasoline) remains firmly negative at around 130 mm bpd."

Interestingly, demand for all these refined products kept surging in the region when oil traded at its peak. Data presented by PFC Energy showed that the gasoline import to the region surged when the oil price shot beyond $ 140 a barrel (it reached $ 147 a barrel before collapsing) in July the last year.
In July 2008, the region imported about 280 mm bpd gasoline. Import of gasoline to the region remained well above 250 mm bpd till the end of the last year, before plummeting sharply in January 2009 to sub 200 mm bpd a levels. This month the Gulf will import around 200 mm bpd of gasoline, data showed.

PFC Energy also reported a negative diesel balance for the region. Surprising as it may seem, Saudi Arabia, which is the highest exporter of crude oil in the world, recently signed an agreement with India's Reliance Industries for importing 7.4 mm barrels of diesel.
The oil kingpin also signed two separate agreements with Japan's Itochu and Kuwait to import diesel and sulphur gas oil. Qatar, the "Saudi Arabia of gas", has been importing diesel for the past four years, the report said.

Fuel oil is the other hydrocarbon demand for which has surged in the Gulf, PFC Energy reiterated. Lack of regional pipelines and the growth of industries and real estate have been enhancing the demand for fuel oil, PFC Energy said.
"The absence of regional gas pipelines -- with the exception of Dolphin -- and the focus on LNG and petrochemicals projects means that fuel oil has to pick up incremental demand where gas has been lacking," PFC Energy said. Consumption of fuel oil in the Gulf peaked in July 2008 and is expected to surge again in July this year, it added.

"These developments have taken place at the same time as the national companies have moved forward with conversion capacity to their refineries targeting the production of middle distillates and lower distillates. The impact on fuel trade balances resulting from this structural demand shift have been striking not because of significant increases in imports, but because of how rapidly the imports have diminished," PFC Energy said.
Several new sources of supply are expected to surface throughout 2009, which will partially rebalance the regional markets, "but (it) will be insufficient to move the Gulf to a positive position," the energy advisor said.

PetroRabigh, the joint venture refining and petrochemicals complex between Saudi Aramco and Sumitomo Chemical, is expected to be commissioned in the second quarter of 2009 from which 60 mm bpd of gasoline will be produced for the local market.
Higher utilisation of a Jebel Ali-based refining unit will also reduce UAE's need for import from 30 mm bpd to 10-15 mm bpd, PFC Energy said.

Source / Emirates Business
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