Professional Documents
Culture Documents
Petroleum Economics
Petroleum Economics
19
FOB
price at
source
+ Transport
+ Insurance
+ Import duty
+ Loss
CIF
(delivered)
cost
FOB
price at
source
Benchmark
crude price
= +
Premium
Quality Adj
Mkt premium
Benchmark Crude
Dubai
Tapis
Related Crude
Oman, Arab Light
Tapis, Seria Light
1/
2/
Remark
1/ average Spot on delivery month by PLATT
2/ average Spot on delivery month by APPI
Thai Imported Crude Price Thai Imported Crude Price Thai Imported Crude Price
VOL VOL., ., KBD KBD
%ON IMPORTED %ON IMPORTED
TOTAL TOTAL
PRICING FORMULA PRICING FORMULA
IMPORTED CRUDE OIL IMPORTED CRUDE OIL : : 3,978.8 3,978.8 ML ML, , 834.2 834.2 KBD KBD ( (April April 04) 04)
@FAR EAST @FAR EAST(391.7 (391.7 ML ML,82.1 ,82.1KBD KBD) )
21.0 21.0
20.4 20.4
11.7 11.7
10.6 10.6
2.5 2.5
2.4 2.4
1.4 1.4
1.3 1.3
TAPIS TAPIS + + ADJ ADJ. . FACTORS FACTORS
TAPIS TAPIS + + ADJ ADJ. . FACTORS FACTORS
TAPIS TAPIS + + ADJ ADJ. . FACTORS FACTORS
TAPIS TAPIS + + ADJ ADJ. . FACTORS FACTORS
- - LABUAN LABUAN, , MALAYSIA MALAYSIA
- - DULANG DULANG, , MALAYSIA MALAYSIA
- - CHAMPION CHAMPION, , BRUNAI BRUNAI
- - SERIA LIGHT SERIA LIGHT, , BRUNAI BRUNAI
@ MIDDLE EAST @ MIDDLE EAST (3,423.1 (3,423.1 ML ML,717.7 ,717.7 KBD KBD) )
142.1 142.1
132.7 132.7
100.3 100.3
99.7 99.7
17.0 17.0
15.9 15.9
12.0 12.0
12.0 12.0
DUBAI DUBAI + + ADJ ADJ. . FACTORS FACTORS
BRENT BRENT + + ADJ ADJ. . FACTORS FACTORS
DUBAI DUBAI + + ADJ ADJ. . FACTORS FACTORS
( (OMAN OMAN + + DUBAI DUBAI)/ 2 )/ 2 + +
ADJ ADJ. . FACTORS FACTORS
- - OMAN OMAN, , OMAN OMAN
- - MASILA MASILA, , YEMEN YEMEN
- - MURBAN MURBAN, , UAE UAE
- - ARAB EXTRA LIGHT ARAB EXTRA LIGHT, ,
SAUDI ARABIA SAUDI ARABIA
21.2 21.2
17.4 17.4
40.8 40.8
33.5 33.5
TAPIS TAPIS + + ADJ ADJ. . FACTORS FACTORS
( (OMAN OMAN+ +MINAS MINAS+ +ADJUNA ADJUNA)/ 3 )/ 3
+ ADJ. FACTORS + ADJ. FACTORS
- - PATTANI PATTANI
- - PHET PHET
DOMESTIC CRUDE OIL DOMESTIC CRUDE OIL : : 247.4 247.4 ML ML, , 51.9 51.9 KBD KBD ( (April April 04) 04)
Thai Crude Price Thai Crude Price Thai Crude Price
SOURCE SOURCE : : MINISTRY OF ENERGY MINISTRY OF ENERGY ( (APRIL REPORT APRIL REPORT) )
20
Middle Eastern Crude Oil Pricing Middle Eastern Crude Oil Pricing
Netback Value Netback Value
21
Derived Demand of Crude Oil Derived Demand of Crude Oil
Petroleum Products Petroleum Products
Gasoline Gasoline - - 19.5 gallons 19.5 gallons
A Barrel of Crude Oil Provides:
Fuel Oil Fuel Oil - - 9.2 gallons 9.2 gallons
Jet Fuel Jet Fuel - - 4.1 gallons 4.1 gallons
Asphalt Asphalt - - 2.3 gallons 2.3 gallons
Kerosene Kerosene - - 0.2 gallons 0.2 gallons
Lubricants Lubricants - - 0.5 gallons 0.5 gallons
Petrochemicals, Petrochemicals,
other products other products - - 6.2 gallons 6.2 gallons
One Barrel = One Barrel =
42 gallons 42 gallons
American Petroleum Institute, 1999 American Petroleum Institute, 1999
22
Crude Crude- -Product Flow Diagram Product Flow Diagram
Oil Business Loop Oil Business Loop
23
Selected Crude Oils Distillation Yield Selected Crude Oils Distillation Yield
Net Back Value Net Back Value
24
Product Revenue @BKK
Crude Cost
Gross Refining Margin
US$/ BBL
X
Y
X - Y
X = (Ex- refinery price@BKK of product i) x (Yield of product i)
Y = (CIF crude cost@ SRC of crude i) x (Slate of crude i)
Gross Refining Margin (GRM) Gross Gross Refining Refining Margin Margin (GRM) (GRM)
Reserve Cost
Transhipment Cost to
BKK
Agreed Oil Loss
(SPore-Thailand)
Insurance Premium
Transportation Cost
(SPore-Sriracha @
Agreed Cargo Size)
Quality Adjustment to
Thai Specs
SPore Spot Price
= Deem Import Parity Concept (Lowest Cost) = Crude Cost Related
@ Singapore
= Agreed amount : Refiners vs Marketers
= Deem Import Parity Concept (Lowest Cost) = Crude Cost Related
@ Singapore
= Agreed amount : Refiners vs Marketers
Ex- refinery price@ BKK
(Mean of platt daily assessment)
Product Price Benchmark @ SPore
(3 Day around B/L)
Agreed Oil Loss (0.5%)
Insurance(0.084% C&F)
F
C
CIF
Import Duty
Ex Ex- -Refinery Pricing Pattern Refinery Pricing Pattern
25
-
Contract Petromin
C3/C4 (cp)
LPG
Typical Size
: Minimum 50,000 BBL/Cargo
Loading Location
: 5 Day period FOB SPore
Price Assessment
: Reflect the pricing of product for 15-30
Days ahead
Unleaded 95 Ron
(Mean of Platt =
MOP)
ULG 95
ULR 91
Gasohol 95
Gasohol 91
Basis (Daily Assessment)
Benchmark
Assessment
Products
Benchmark Market Product Pricing Benchmark Market Product Pricing
Typical Size
: 20,000 MT/Cargo
Loading Location
: 5 Day period FOB SPore
Price Assessment
: Reflect the pricing of product for 15-30
Days ahead
High Sulfur Fuel Oil
3.5%s (HSFO 3.5%s)
(Mean of Platt = MOP)
Fuel Oil
Typical Size
: 150,000 BBL/Cargo
Loading Location
: 5 Day period FOB SPore
Price Assessment
: Reflect the pricing of product for 15-30
Days ahead
Gasoil 0.5%s
(Mean of Platt = MOP)
Diesel
Diesel B5
Basis (Daily Assessment)
Benchmark
Assessment
Products
Benchmark Market Product Pricing Benchmark Market Product Pricing
26
GRM & MKM GRM & MKM
GRM = Spread between crude & products
MKM = Spread between retail price &
ex. Refinery price
GRM Example GRM Example
27
Crude
cost
(CIF)
Variable
cost
Utilities
Catalyst
Chemicals
etc.
Revenues
=
(Distillate yield) x
(distillate price)
(Fuel oil yield) x
(fuel oil price)
(Gasoline yield) x
(gasoline price)
(Other) x
(price)
GRM
Total
cost
Fixed
cost
Fixed cost
Salary & Wage
Outside Contractor
Turnaround & Inspection
Overhead
Depre./ Amortiz.
Financial expense
Net Profit
Refining Economics Refining Economics Refining Economics
Production Pattern of Thai Refineries Production Pattern of Thai Refineries
(PTIT, 2004) (PTIT, 2004)
28
Thailand Weighted Average GRM Thailand Weighted Average GRM
Thailand Supply/Demand Forecast Thailand Supply/Demand Forecast
KBD KBD
29
Thailand Demand & Supply Balance Thailand Demand & Supply Balance
Regional oil refining margins Regional oil refining margins
30
More Refining Capacity More Refining Capacity
World Oil Refining Additions
Planned and Announced New Capacity 2006-2012 (bpd)
2
0
0
,
0
0
0
1
,
6
3
9
,
0
0
0
1
,
6
4
9
,
5
0
0
1
,
7
9
0
,
0
0
0
3
,
6
0
0
,
0
0
0
5
,
1
5
5
,
0
0
0
1
,
5
4
6
,
0
0
0
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2006 2007 2008 2009 2010 2011 2012
31
MBD MBD
Asia Pacific Oil Refining Capacity & Demand Growth Asia Pacific Oil Refining Capacity & Demand Growth
0
5
10
15
20
25
30
35
2006 2007 2008 2009 2010 2011
Asic Pacific Capacity Additional Capacity Demand 1% Demand 2% Demand 3%
Source : Reuters, Platts, MS ,GS as of 07 Sep. 2007
Depends on Growth, the surplus might be in 2010 onwards.
Location of planned new refining capacity Location of planned new refining capacity
C h i n a
3 6 %
T a i w a n
6 %
M i d d l e E a s t
1 8 %
U S A
2 %
O t h e r
2 1 %
I n d i a
1 7 %
Most of planned new refining capacity is in strong demand growth locations.
Question-marks remain, however, over what percentage of projects will
actually be implemented
32
GRM Forecast GRM Forecast
$/BBL
Decreasing trend due to new regional refinery capacity
Petroleum Product Supply Affected By Numerous Factors Petroleum Product Supply Affected By Numerous Factors
Changing Product
Specifications
Changing Feed
Quality
Capacity Changes Petroleum Refined
Product Supply
Technology
Imports
33
Clean Fuel Parameters Clean Fuel Parameters
Gasoline
Sulfur
Aromatics
Olefins
Europe
Auto Oil Program
National regulations
Gasoline
Oxygenates
Additives
RVP
Sulfur
United States
Clean Air Act
Federal regulations
Gasoline
Sulfur
Aromatics
RVP
Oxygenates
Asia
National regulations
Diesel
Sulfur
Aromatics
Biofuel content
Diesel
Sulfur
Alternative fuels
Vehicle fleet changes
Diesel
Sulfur
Polyaromatics
Cetane, SG, distillation
Biofuel content
Alternative fuels
Vehicle fleet changes
Alternative fuels
Vehicle fleet changes
European specification changes European specification changes
Gasoline set to 50 ppm max sulfur from January 1, 2005
Aromatics limit in gasoline lowered to 35 max same date
Jet fuel sulfur tightened under Defstan 91/91 issue 5
Diesel moved to 50 ppm max sulfur from January 1, 2005
Diesel10 ppm max sulfur targeted across EU by 2009
Sulfur in gasoil to be reduced to 0.1% (1000 ppm) from 0.2% (2000 ppm)
from January 1, 2008
34
Fuel Specifications Tighten Fuel Specifications Tighten
2000
2000
50/10
50/10
2007
1000
2000
50/10
50/10
2008
1000 2000 2000 2000 Gasoil
2000 2000 3000 3000 Jet kero
10 50/10 50/10 350 Diesel
10 50/10 50/10 150 Gasoline
2009 2006 2005 2000 Product
The table shows maximum level of sulfur in parts per million (ppm)
allowed in fuels within the European Union in the period 2000-
2009. Fuel qualities are set to tighten substantially during this
period.
US specification changes US specification changes
Gasoline moved to 30 ppm maximum sulfur from January 1, 2005
This was phased in by allowing sulfur credits against progressively tighter
limits on average sulfur over year; sulfur credits accrued in one year allowed
as offset against next year, allowing a phased approach rather than big
bang
Corporate pool average reduced from 120 ppm in 2004 to 90 ppm in 2005
to 30 ppm in 2006; Maximum 300 ppm level for individual batches reduced
to 80 ppm from January 1, 2006
Oxygenates in gasoline in US have been replaced by ethanol after liability
waivers were removed
Sulfur limits in diesel also being tightened
Diesel scheduled for move to 15 ppm maximum sulfur from middle of 2006;
with various extensions allowed (temporary limit of 22 ppm through fall
2006)
No changes in bunker fuel qualities
35
Sulfur quality in diesel assessments Sulfur quality in diesel assessments
Increasing activity on physical for 0.25%S, 0.05%S and 0.005%S grades
0.5% Sulfur remains benchmark grade in Asia
Australian, NZ move to 50ppm supportive of 0.005%S swaps
market
Liquidity on 0.005% should increase as region migrates to lower
sulfur specifications
Sulfur Sulfur spreads spreads
36
Quality differentials Quality differentials