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ALVARO MAZARRASA 27th May, 2013,Lisbon
Refining in the Iberian Peninsula- Challenges and Opportunities
Oil Conference by Diário Económico & Apetro
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Integrated downstream oil companies which market oil products in Spain with refining capacity in the EU.
Its main objective is to defend its Associates’ general interests.
AOP follow up legislation, advise and co-operation with Spanish Central Administration and regional governments, europeans institutions and oil industry in general.
AOP:
THE SPANISH OIL DOWNSTREAM INDUSTRY ASSOCIATION
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INDEX
1. Refining in Iberia:
• The harware
• Logistics
• Recent investments
2. Challenges
• Internal demand drop
• Competition from refineries in USA, Asia, Middle East & Russia
• Over regulation burden in the EU. High taxation environment
3. Opportunities
• Delivering products that are needed
• Strategic location for exports
• Flexible & cost competitive crude diet
• Innovation
4. Conclusions
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IBERIAN REFINERIES, LOCATION
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= 30,000 Bbl/día
La Coruña
Bilbao 85% Repsol
Tarragona
Castellón
Puertollano
San Roque
La Rábida
Santa Cruz de Tenerife
Cartagena
Sines
Matosinhos
Asesa 50%Repsol/50%Cepsa
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IBERIAN REFINING CAPACITY, 2013
FCC Equiv.
Mt/y Proccesing Units
Capacity
Mt/y
Capacity
Kbbl/day
Cartagena 11.0 220,000 8.4 Atm. Dest. 76.8 1,536
A Coruña 6.0 120,000 4.0 Vacuum Dest. 30.52 540
Puertollano 7.5 150,000 4.9 Vacuum Lubs. Dest. 2.77 50
Tarragona 9.0 180,000 3.9 FCC 10.41 197
Bilbao 11.0 220,000 7.0 Hydrocracking 9.20 176
Tenerife 4.6 92,000 0.6 Visbreaking 8.82 153
San Roque 12.0 240,000 2.6 Coquer 8.70 150
La Rábida 9.2 184,000 4.6 Reforming 9.10 214
Castellón 5.4 108,000 3.6 HDS/HDT 51.56 1,087
Asesa 1.1 22,000
TOTAL 76.8 1,536,000 39.6
SPAIN
PORTUGAL
Refinery Atmos. Desti.
Mt/year
Atmos. Desti.
Bbl/d
Nelson Complexity
Index
Matosinhos 5.5 110,000 10.7
Sines 11.0 220,000 7.7
TOTAL 16.5 330,000 8.7
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EFFICIENT AND VERY FLEXIBLE SUPPLY SYSTEM FOR THE LOCAL MARKET & FOR EXPORT. SECURITY OF SUPPLY IS GUARANTEED
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La Coruña Bilbao
Tarragona
Castellón
Puertollano
San Roque
La Rábida
Santa Cruz de Tenerife
Cartagena
Sines
Matosinhos
Finished & Intermediate products
Crude & products
CLH pipelines (4,000 km) Repsol pipeline Intermediate
products Shipping
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DIESELIZATION OF EU DEMAND, EVOLUTION OF THE MIDDLE DISTILLATE/GASOLINE DEMAND RATIO, THE RATIO IS EVEN HIGHER IN PORTUGAL AND SPAIN
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0
1
2
3
4
5
6
7
0
50
100
150
200
250
300
350
400
450
500
2000 2005 2010 2015 2020 2025 2030
Middles distillates demand Gasoline demand
MD/Gasoline demand
Sources: CONCAWE (WoodMackenzie), DGEG Portugal, CORES and AOP
Total demand for Gasoline & MDs in EU27+2 (Mt/a)
Total demand for Gasoline & MDs in Spain (Mt/a)
Total demand for Gasoline & MDs in Portugal (MT/a)
-1,0
1,0
3,0
5,0
7,0
9,0
0
20
40
60
2005 2010 2020*
Gasoline demand Middles distillates demand
MD/Gasoline demand
-1,0
1,0
3,0
5,0
7,0
9,0
0
2
4
6
8
10
2005 2010 2020*
Gasoline demand Middles distillates demand
MD/Gasoline demand
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8
LPG
GASOLINES
KEROSENE
GAS OIL
FUEL OIL
OTHERS *
19% 16% 14%
25%
17% 14%
33% 46% 53%
6% 8%
9% 13%
10% 7%
5% 4% 2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2010 2020
GROWING MIDDLE DISTILLATES WEIGHT IN THE DEMAND, HEAVIER AND LIGHT PRODUCTS WILL CONTINUE LOOSING GROUND
IBERIAN DEMAND STRUCTURE
54% 38%
Sources: APETROL, CORES and AOP
LIGHT
MEDIUM
HEAVY
* Others include heavy (coke, asphalt, lubes) and light (naphthas & petrochenistries raw material)
62%
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POOLE POSITION FOR IBERIAN REFINERS IN ADAPTING TO MARKET DEMAND REQUIREMENTS, ENVIRONMENTAL IMPROVEMENTS AND ENERGY EFFICIENCY
Security of supply, employment & gross added value has improved.
Positive contribution to current account balance
Cleanest products
Transformation of fuel-oil & heavy
gas oil into diesel
Growth in the capacity of crude
processing
Improved energy efficiency
• Atmospheric and vacuum destillation units at La Rábida,
Cartagena, San Roque, Matosinhos & Sines
• Cokers at Castellón, Cartagena and Bilbao
• Hydrocrackers at Huelva, Cartagena and Sines
• Hydrogen plants and HDS
• New CHP (cogeneration) units at Bilbao, Castellón, Huelva
and Matosinhos
More than 8,100 millions € investment in the period 2008-2012
9.5 millions of ton aditional middle destillates production
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5.2
5.7
Before After theexpansion
+ 0.5 Mm3/year
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6.0 6.2
0123456789
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Before After theexpansion
2.7
6.4
0123456789
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Before After theexpansion
º
Bilbao
MIDDLE DISTILLATES PRODUCTION GROWTH, SPAIN
La Rábida
+ 3.7 Mm3/year
S. Roque
+ 0.2 Mm3/year
2.0 2.4
0123456789
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Before After theexpansion
Castellón
+ 0.4 Mm3/year
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0123456789
101112131415161718192021222324252627282930
Before After theexpansion
SPAIN
+ 10 Mm3/year (~8 Mt/y)
Source: AOP
2.0
7.3
Before After theexpansion
Cartagena
+ 5.3 Mm3/año
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2.0 2.3
Before After theexpansion
+ 0.3 Mm3/year
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Matosinhos
MIDDLE DISTILLATES PRODUCTION GROWTH, PORTUGAL
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8.9
0
1
2
3
4
5
6
7
8
9
10
Before After theexpansion
PORTUGAL
+ 1.9 Mm3/year (~1.5 Mt/y)
Source: Galp
5.0 6.6
Before After theexpansion
Sines
+ 1.6 Mm3/año
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-12%-10%-8%-6%-4%-2%0%2%
0
5000
10000
15000
20000
2007 2008 2009 2010 2011 2012
Total Productos Petrolíferos % Variación
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OIL PRODUCTS CONSUMPTION BADLY AFFECTED BY THE ECONOMIC CRISIS IN BOTH COUNTRIES
-10%-8%-6%-4%-2%0%2%4%
01000020000300004000050000600007000080000
2007 2008 2009 2010 2011 2012
Total Productos Petrolíferos % Variación
Sources: DGEG Portugal, CORES and AOP
-29%
Spain (kt)
-21%
Portugal (kt)
Total demand evolution
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EU WILL BE EXPOSED TO A STRONG COMPETITION FROM REFINERIES BASED IN USA (GC), ASIA, MIDDLE EAST & RUSSIA
USA:
• Decline in gasoline demand is leading to a reduction of imports from Western Europe.
• Overcapacity, cheap energy cost (20 % of refinery cost vs 60 % in Europe) has reversed the
closure of East Coast refineries.
• Gulf Coast: deep conversion refineries, heavier crudes and shale oil (Bakken & Eagle Ford) are
substituting more expensive light/sweet crudes. Exports to Europe, Latin America and West
Africa.
ASIA & MIDDLE EAST:
• India mega hubs exporting oil products, fiscal advantages.
• Saudi Arabia will reduce by 50 % their gasoline imports in one year. UAE, Kuwait, Qatar, Oman
also expanding refineries.
RUSSIA:
• VGO exports due to dissapear, upgrading refineries will be able to export finished products.
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LEGISLATIVE REGULATION IN EUROPE, COMPLEX AND BURDENSOME. PARLIAMENT, COMMISSION & COUNCIL NO CLOSE ENOUGH TO THE INDUSTRY, DIFFICULT AND EXPENSIVE TO FOLLOW UP THE PROCESS
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EXAMPLE: SOIL, WATER and WASTE LEGISLATIVE EVIRONMENT. INVESTORS ARE HEROES
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THREE DIRECTIVES WILL HAVE A SUBSTANCIAL IMPACT ON OUR INDUSTRY , WE REQUEST THE SUPPORT OF THE PORTUGUESE AND SPANISH GOVERNMENT TO DEFEND NATIONAL INTEREST
FQD, Art. 7 A:
• DG CLIMA is intending to descriminate crude by its relative emisions of CO2, that would penalize heavier
crudes and badly affect the competitiveness of our business without any gain to global CO2 emissions.
• Our impact analisis , we estimate an income loss for spanish refiners of 460 millions € per year in case that
non conventional oils will be discriminated. In order to avoid that loss we should blend more biofuels that
are more expensive that mineral fuels.
EID:
• Our estimates for Spain is that the total investment in order to reduce emmissions will be in the range of
500 million € in the next years.
• Industry is defending the bubble concept in order to optimize investments and grant operation flexibility.
MARINE FUEL D:
• Marine Fuel Oil will have to have less than 0.5 % Sulphur content by 2020. Again, the EU has gone further
than what it was agreed at the IMO. It is questionable product availability which may affect security of
supply to shipping.
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IN THE MEDIUM TERM OIL PRODUCTS WILL BE ESSENTIAL FOR TRANSPORT REQUIREMENTS AND AS FEEDSTOCK FOR THE PETROCHEMICAL INDUSTRY
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Source: BP Energy Outlook 2030
OIL SHARE IN SECTOR TRANSPORT DEMAND BY FUEL
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ESTRATEGIC LOCATION FOR EXPORTS TO NORTH AND LATIN AMERICA, AFRICA, NWE, EAST MEDITERRANEAN
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STRUCTURAL CHANGE IN 2012: FROM BEING NET PRODUCT IMPORTERS THE INTERNAL DEMAND DROP HAS OBLIGED IBERIAN REFINERS TO EXPORT. POSITIVE CONTRIBUTION TO CURRENT ACCOUNT BALANCE
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355 84
2300
6696
3233 3837
16505
300
3379
176
6192
1438
5595
17080
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
LPG Gasolines Querosenes Gas Oil Fuel Oil Otherproducts
Total
Imports Exports
Balance, net exports:
1,303 kt
Source: CORES
Thousands tonnes
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SPANISH EXPORTS BY DESTINY (thousand mt)
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Europa 10,929 (64%)
América 2,621 (15%)
África 2,858 (17%)
Asia 672 (4%)
Source: CORES
17%
9%
7% 7% 5%
55%
France
Portugal
Netherlands
Italy
Belgium
Others
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WELL DIVERSIFIED CRUDE SUPPLY, IBERIAN REFINERS ARE ABLE TO PROCESS HEAVY AND SOURER CRUDES WHICH GIVES THEM A COMPETITIVE EDGE
Lybia 8%
Saudi Arabia 13%
Russia 14%
Mexico 15%
Nigeria 14%
Irak 8%
Venezuela 4%
Others 24%
Source: CORES
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0
10
20
30
40
50
60
Opec Non Opec
%
OIL IMPORT SOURCES, SPAIN 2012
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Innovation is playing an important role in our industry. Technological research centres for
investigating new processes, new sources and alternative fuels. Upstream (Deep water,
unconventional crude and gas, CCS), GTL, BTL, HVO and other biofuels.
Advanced Biofuels are being investigated, when viable economically they will be developed at
a industrial scale . The process of UCO through hydrogenation to get biodiesel in our refineries
is already a reality, most sustainable. Hydrotreated Vegetable Oil (HVO) biodiesel is the best
biofuel quality wise, produced and blended by refiners.
Our industry is able to attract skilled scientists and engineers that are working for the future
and trying to find the best energy solutions.
OIL INDUSTRY IS CONTINUOSLY INNOVATING, VERY DINAMIC, WE HAVE BECOME AN ENERGY INDUSTRY
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Portugal & Spain, like the rest of the countries, are going to depend on oil products for transport
and as petrochemical industry feedstocks for several years.
Refining is a strategic industry in order to make possible an easy transition toward a low carbon
economy. This transition is going to be gradual and long, our industry will play a key role.
Efficient and competitive production in Iberia of oil products is essential to guarantee the security
of supply. Investments have been made to adapt local production to market demand, improve
energy efficiency and environmental standards.
Refining industry contributes to the added value of the oil marketing and petrochemical
industries, its suppliers and contractors, engineering firms and the service activities linked with
them. High quality employment generator.
Oil industry is committed to decrease its carbon foot print, and is proved by the progressive
blending of biofuels, the energy efficiency and reduction of CO2 emissions in their processes and
the production of cleanest fuels.
CONCLUSIONS
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