Energy and commodity price benchmarking and market insights

Transcription

1 Energy and commodity price benchmarking and market insights London, Houston, Washington, New York, Portland, Calgary, Santiago, Bogota, Rio de Janeiro, Singapore, Beijing, Tokyo, Sydney, Dubai, Moscow, Astana, Kiev, Porto and Johannesburg Market Reporting Consulting Events

2 Chuck Venezia VP Petrochemicals Energy/Petrochemical Industry Overview Argus DeWitt Houston, TX Market Reporting Consulting Events

3 Agenda Introduction to Argus and Argus DeWitt Crude Oil and Natural Gas Global Overview US Markets Natural Gas and NGL Processing LNG Markets Europe/SA Projects Ethylene US Supply and Demand Global Economics Refining US Market

4 Argus is a leading provider of business intelligence, price assessments and market data for the global energy and commodity industries Argus provides knowledge and information on the global crude oil, petroleum products, gas, coal, electricity, biofuels, biomass, emissions, petrochemicals, fertilizer and transportation industries. Global Reach Headquartered in London, it has offices in Moscow, Washington, Houston, Calgary, Singapore, Tokyo, Beijing, Rio de Janeiro New York, Kiev, Sydney, Astana, Portland, Johannesburg and Dubai, as well as employees in other key locations including Germany, France, Nigeria, South Africa, Venezuela, Argentina and Chile. Argus was founded in 1970 and is an independent, privately held company. Today it offers over 120 products and services to a global client base.

5 Argus corporate governance Follow strict corporate ethics policies Enforce a compliance program with regular internal and external audits Argus passes annual external audits showing complete compliance with IOSCO s Principles for Price Reporting Agencies Publicly available Global Compliance Policy, Code of Conduct Copyright 2014 Argus Media Ltd. All rights reserved.

6 Methodologies are publicly available Publish public methodologies that describe Index calculation methods Assessment methods Conflict of interest management Review of methodology Exclusion parameters Dispute resolution process Copyright 2014 Argus Media Ltd. All rights reserved.

7 Services from Argus Dewitt Comprehensive commercial analysis of global olefins, aromatics, methanol & MTBE markets Accurate price assessments in each territory 24-month rolling outlook forecasts Regular reports Annual global supply demand balance review country by country basis. On-line portal access to supply/demand; capacity; pricing and economic analysis Copyright 2013Argus Media Ltd. All rights reserved.

8 Energy Markets Market Reporting Consulting Events

9 USD/BBL Argus Crude Outlook: Stronger in 2016/ Brent Crude Forecast - Argus Base Brent High Brent Low Brent

10 Gas relationship: Crude/gas ratio steady as crude fell WTI ($/bl) Crude/gas ratio

11 Result of shale: US imports lowest since 1995

12 China now world s largest net importer

13 Natural Gas and LPG Dynamics Market Reporting Consulting Events

14 BOE, $/BBL Shale gas impact on US ethane and propane 160 Crude oil Natural gas Ethane Propane Butane Ethane discount increases as supply increases Propane export limits tested Ethane cracking limits tested rejection ethane at natural gas parity Crude Collapses

15 Ethane Rejection , Kbl/day US Ethane Rejection to Natural Gas, Bbl/day PADD 4 PADD 3 PADD 2 PADD 1 Source: EIA Data w/ Argus DeWitt Ethane supplies for steam cracking adequate As natural gas production grows, more ethane will be available

16 Methanol Market Dynamics Market Reporting Consulting Events

17 Global Methanol Industry Demand Million Metric Tons Excludes CTO/CTP AAGR 7% 42% 60 6% Traditional - GDP Energy MTO/MTP

18 Global Methanol Industry Supply Million Metric Tons Excludes CTO/CTP 43% 47% 11% 4% S. America EU/Russia ME/Africa Asia w/o China N. America China

19 US Methanol Industry Capacity Additions 2012: OCI 730 Kt Mid year 2013: Lyondell/Basell 780 Kt December 2015: Pampa Fuels LLC 65 Kt Q1 OCI Debottleneck 185 Kt Q1 2015: Methanex Geismar 1 1,000 Kt Jan Celanese/Mitsui 1,300 Kt Q3/Q4 2016: Methanex Geismar 2 1,000 Kt Mid year 2018: OCI 1,600 Kt Maybe late 17 South LA Methanol 1,600 Kt Mid year Big Lake Fuels 1,400 Kt Mid Year Yuhuang Chemical 1,600 Kt Focused effort 2019: Valero 1,600 Kt Still in review

20 LNG Markets Market Reporting Consulting Events

21 Mexico, Central and South America Gas Demand Production 2013 = 23 Bcf/d 2025E = 33 Bcf/d Consumption 2013 = 24 Bcf/d 2025E = 32 Bcf/d LNG Import Capacity 2013 = ~5 Bcf/d 2025E = ~8 Bcf/d Sources: IEA (2014), BP, Cheniere, Argus

22 Projected Global LNG Demand : 438 mtpa by 2025 Europe Asia Americas Middle East/N. Africa Demand: forecast to increase by 200 mtpa by 2025 Source: Cheniere, Argus

23 LNG Buyer Economics based on Cheniere SPL Plant $8.00 LNG Margins V. Brent Crude Price, $/Mmbtu $6.00 $4.00 $2.00 Asia Europe Americas $0.00 ($2.00) Chart based on $3.00/mmbtu HH natural gas price Using Cheniere Supply and Purchasing Agreement terms Lower crude price and thus LNG, squeezes margins

24 Ethylene Market Dynamics Market Reporting Consulting Events

25 US ethane very competitive with ROW at $100/bbl 1400 Estimated Ethylene Cash Costs, $/mt North Sea Dated Crude ~ $100/bbl Investment driver US Ethane ME Ethane EU Naph Asian Naph

26 US Ethylene Capacity Outlook Company Site Dow Hahnville, LA 360 Westlake Lake Charles, LA Shell Westlake Calvert City, KY 90 Aither Ineos Chocolate Bayou, TX 115 Appalachian Resins Williams Geismar, LA 270 Formosa LyondellBasell LaPorte, TX 380 Axiall + Lotte LyondellBasell Channelview, TX IVL LyondellBasell Corpus Christi, TX 363 Sabic BFLP Port Arthur, TX 190 Odebrecht/Braskem CP Chem Cedar Bayou, TX Siluria CP Chem Sweeny, TX (#33) 90 Hanwha Formosa Point Comfort, TX 1500 TOTAL ExxonMobil Baytown, TX 1500 Badlands Dow Freeport, TX 1500 PTTGC/Marubeni Sasol Lake Charles, LA 1500 Oxy/Mexichem Ingelside, TX 500 Shin-etsu Plaquemine, LA 500 New Capacity, Year Cumulative KTA Bill lb/yr Ethane MB/D Incremental Ethane MB/D Cumulative

27 /lb Ethane challenged as preferred feed to US crackers Cost of ethylene, US 100 Ethane Propane Butane Nat Gasoline 80 Spot Ethylene Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Propane and butane rival ethane as feedstocks of choice natural gasoline competitive temporarily Ethylene prices fall as supply improves and global prices fall with naphtha Margins slip but currently attractive for all NGL s

28 Ethylene vs. Naphtha/Ethane Cash Cost

29 Ethane advantage squeezed at $50/bbl Estimated Ethylene Cash Costs, $/mt US Ethane ME Ethane EU Naph Asian Naph $100/bbl Jan '15

30 Refining Market Dynamics Market Reporting Consulting Events

31 Crude oil quality comparison Crude Comparison Table NSD Bonny Lt WTI Eagle Ford Bakken API Gravity Sulfur Wt% Yields Vol% Light Ends C5-165 C Naphtha Jet C Diesel C VGO C Resid 540+ C Total C5-165 C Naptha Vol% Napthenes Aromatics N+A

32 US becomes a net product exporter 4 Net Exports of US Products Positive through 2013 US Total Petroleum Products (mm bbls/day) US Product Exports 0 Net Exports -1-2 US Product Imports Source: EIA

33 Conclusions US shale region exploitation still a game changer US natural gas derivatives see a revitalization Global LNG projects (liquifaction) currently less attractive, but gasification moving forward US olefin production expansion will supply the region with derivatives US refining industry has become an export machine

34 Chuck Venezia Argus DeWitt Houston, TX Copyright notice All intellectual property rights in this presentation and the information herein are the exclusive property of Argus and and/or its licensors and may only be used under licence from Argus. Without limiting the foregoing, by reading this presentation you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of Argus. Trademark notice ARGUS, ARGUS MEDIA, the ARGUS logo, DeWitt, FMB, FUNDALYTICS, ARGUS publication titles and ARGUS index names are trademarks of Argus Media Limited. Visit for more information. Disclaimer All data and other information presented (the Data ) are provided on an as is basis. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of the Data or fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party s reliance on the Data and disclaims any and all liability related to or arising out of use of the Data to the full extent permissible by law.