Feb 22 2012 |
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Oil refining to outstrip demand
JEDDAH - Net global refining capacity is expected to grow by 8.7mbpd by 2016, with the non-OECD countries accounting for all new growth, Didier Houssin, director, energy markets and security at the International Energy Agency (IEA) said at an energy conference in London Monday. The capacity increase will outstrip global demand growth of around 2mbpd, he noted, adding that all net additions will take place in the non-OECD countries.He said oil demand in the US and Europe is expected to fall by 0.3 percent and 0.3mbpd, respectively.
US light oil is expected to grow from the 620,000bpd seen in 2011 to 1.7mbpd in 2016.
Iraqi oil production is expected to increase by just 250,000bpd in 2012, due to "continuing export constraints" but is predicted to grow to 4.4mbpd in 2016. Houssin noteds that it actually declined by 40,000bpd in January to 2.65mbpd.
Oil demand from Japan's power sector could provide some upside potential with the "distinct possibility of no nuclear power generation after April" in the country. This could increase Japan's oil demand by 465,000bpd compared with a normal nuclear profile. The IEA said the sector could consume 320,000bpd of additional oil in 2012, up from the 280,000bpd seen in 2011.
OPEC "effective" spare capacity is currently at 2.82mbpd, with Saudi Arabia accounting for an estimated 2.03mbpd, Houssin said.
Saudi Arabia supplied 9.85mbpd in January and Houssin said he has been told by Saudi Oil minister Ali Al-Naimi that Saudi Arabia could quickly ramp up output to 11.4-11.8mbpd if required.
On the whole, the market has been slightly undersupplied and is tightening, Houssin said. The IEA expects the oil market to roughly be in balance by the spring, before tightening further in the second half of 2012. "A backwarded market does not encourage stock building," he added.
Houssin further said clean middle distillates could be a route to resisting competitive pressure.
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