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AM-13-63 Successful Export Centres – Potential Lessons for USGC

Alan Gelder, Wood Mackenzie, London, UK

Format:
Electronic (digital download/no shipping)

Associate Member, International Member, Petrochemical Member, Refining Member - $0.00
Government, NonMember - $35.00

Description:

The United States is now a net exporter of oil products, with the majority of this surplus being supplied from Gulf Coast refineries to adjacent markets of the Caribbean and Latin America. These exports have arisen by a decline in domestic oil product demand, whilst refinery runs have remained high due to advantaged domestic crude oil and natural gas feedstocks. Wood Mackenzie's outlook is that the factors that support oil product exports are sustainable, as: • Domestic tight oil supplies are projected to continue to grow • These supplies need to be processed by US refiners, as we expect the export ban to remain as the US does not achieve oil independence during this decade. • Natural gas prices, a key refinery feedstock, are projected to remain low The US Gulf Coast (USGC) is hence becoming a key regional export centre. The advantaged feedstock position of USGC refiners dramatically increases their competitive position relative to international peers, such that the "natural supply envelope" of gasoline exports is significantly extended. Initial balances indicate that the USGC refiners should consider targeting Asian markets for their gasoline exports. An analysis of global oil product pricing and trading hubs identifies that high quality logistics, storage and blending facilities are needed to support export success. This is particularly relevant to serve markets in Asia, a region which has a wide diversity of product quality specifications and trade balances. The Middle East is currently the key export centre for supplying the Asian region, but the distance to market, diversity of product quality specifications and approach to trading has promoted the export of naphtha rather than gasoline. The implications for USGC refiners are that export infrastructure for long haul trade is required, along with global trading activities to enable the optimal placement of these volumes. The opportunity cost of simplifying light distillate exports to long haul naphtha trade rather than gasoline is of the order of US$3 billion per year, which should provide sufficient commercial incentive for the lessons of history not to be repeated.

Product Details:

Product ID: AM-13-63
Publication Year: 2013