FACTS: Middle East trade transformation underway

Marilyn Radler
Senior Editor-Economics

HOUSTON, July 15 -- The Middle East will play an increasingly important role in the world oil market as it emerges as a new export force, according to a new report from a prominent energy consulting firm.

In its July energy brief, FACTS Global Energy says that in the Middle East, bumper oil revenues, strong domestic demand growth, an influx of foreign investment, and the launch of a Middle East sour crude futures contract have the oil market evolving rapidly.

The region plays a role as a major crude supplier with spare capacity and is exporting increasing volumes of oil products as its refining capacity grows. As a result, product-trade patterns in the Middle East will see significant changes, according to the report.

Capacity, demand
The Middle East is projected to add 3.45 million b/d of crude oil production capacity during 2007-12. With actual production expected to increase 2.8 million b/d over the period, FACTS estimates that spare production capacity in the Middle East will rise to 3.2 million b/d by 2012, up from 2.5 million b/d in 2007.

Meanwhile, production of natural gas liquids (NGL) and condensates in the Middle East will rise by about 2 million b/d in the same time frame.

Demand for oil products in the Middle East will grow 7.5% during 2006-10, and 4.3%/year in 2010-20, according to FACTS.

Some key trends driving petroleum-product demand in the region include growing petrochemical activity, strong transportation fuel demand, and rising fuel-oil consumption for power generation.

Middle East oil demand is forecast to grow 2.9 million b/d during 2007-15.

Refining, trade
Meanwhile, Middle East refining capacity is projected to grow by 3.3 million b/d in 2008-15, the FACTS report says, with major projects taking place in Saudi Arabia, Iran, and Qatar. More than 70% of these capacity additions will be export-oriented.

In total, exports of petroleum products from the Middle East will increase to nearly 4.4 million b/d by 2015, up from 2.8 million b/d in 2007.

Currently a net importer of motor gasoline, the region will transform into a major gasoline exporter. With the completion of refining projects in Iran, net exports of gasoline from the Middle East will average 250,000 b/d by 2012, FACTS estimates.

Exports of fuel oil from the Middle East will decline in the near term due to an emphasis on a lighter product slate, and the region will need to import more fuel oil on a net basis in 2012. But fuel-oil exports will resume towards 2015, after key topping refinery projects are completed in Saudi Arabia and Kuwait, according to the report.

FACTS also forecasts an increase in nonrefinery LPG exports from the Middle East as production rises, but strong petrochemical feedstock demand in the region will limit export growth.

The region will continue to be a net exporter of middle distillates. Exports of jet fuel and diesel will increase to more than 1.3 million b/d in 2015, vs. 800,000 b/d last year.

Finally, the FACTS report says that with new gas-to-liquids plants and greater hydrodesulfurization capacity in the region, product quality improvement is underway in most Middle East countries. The region will gradually shift from high-sulfur products to low-sulfur and medium-sulfur products both for domestic use and for exports.


Related Articles

EPA leads investigation of crude discharge at BP Whiting refinery

03/26/2014 The US Environmental Protection Agency took formal charge of investigation and cleanup efforts after an undetermined amount of crude oil spilled in...

TonenGeneral slashes crude capacity at Chiba refinery

03/26/2014 TonenGeneral Sekiyu KK said it plans to cut crude oil processing capacity at its 175,000-b/d Chiba refinery Keiyo, Japan, to comply with a 2010 ord...

Idemitsu Kosan restarts ethylene unit, permanently idles crude unit

03/26/2014 Idemitsu Kosan Co. Ltd. has restarted operations at its Tokuyama petrochemical complex in Japan after an earthquake off the island of Kyushu result...

Neste Oil advances power plant revamp at Porvoo refinery

03/26/2014 The environmental impact assessment report on a project to modernize the power plant at Neste Oil’s 205,000-b/d Porvoo, Finland, refinery has been ...

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected