China's Petroleum Industry in the International Context by Fereidun Fesharaki

Author:Fereidun Fesharaki [Fesharaki, Fereidun]
Language: eng
Format: epub
ISBN: 9780367020453
Google: kpMtxQEACAAJ
Goodreads: 45913970
Publisher: Routledge
Published: 2019-04-18T00:00:00+00:00

Future Trends

The Asia-Pacific region will continue to suffer from an imbalance between supply and demand for petroleum products. We believe that the imbalance will be more serious in the case of residual fuel oil. The current wave of substitution of residual fuel oil is fairly well established and will continue until the early 1990s. By the mid-1990s, residual fuel oil demand for power generation and for the industrial sector will begin to rise again unless another round of substitution takes place.

If the Asia-Pacific region as a whole remains insulated from outside fuel oil exports, the domestic regional surplus will only be in the range of 25 to 50 thousand b/d during 1990 to 1995—a small volume in the regional balance. There are 2 sources of fuel oil imports that will disturb the balance. First, residual fuel oil exports from the U.S. West Coast will continue in the range of 70 to 100 thousand b/d through 1995. Second, fuel oil exports of around 100 thousand b/d or more are likely to be available from the Middle East export refineries. Together, a potential surplus of 200 to 250 thousand b/d of fuel oil may emerge in the region with a downward impact on fuel oil price relative to crude and other products. It is impossible to say exactly how much the drop is likely to be, but we feel the trend is unmistakably downwards, at least through the early 1990s. Clearly, if the residual fuel oil price drop is substantial, new upgrading facilities will be built to bring supply into line with demand. Moreover, a lower fuel oil price will bring into question the wisdom of many fuel oil substitution policies of the past and may encourage further use of fuel oil in the region.

Whether fuel oil demand rises because of lower prices or because of an additional need as cracker feed, fuel oil prices could begin to rise again from the early to mid-1990s. This, of course, is the cyclical nature of the industry which has been repeated many times before.

If new upgrading capacities are to be installed, they will no doubt be geared toward maximizing the portion of the demand barrel that is growing fastest—this we believe to be the middle distillates, Thus, hydrocracking seems to be the most logical route for refinery upgrading when and if product price differentials justify such investments. By 1995, between 50 to 300 thousand b/d of new hydrocracking capacity may be needed to balance supply with demand. The lower figures assume fuel liberalization of product imports, while the higher figures assume no product imports are allowed. Since the real world falls somewhere in between — depending on the trade balance of each country—we expect the need for new hydrocracking capacity will be around 150 to 200 thousand b/d by 1995.

In the previous paper John O'Brien warns that the region faces a surplus of the light end of the barrel, while this paper is concerned with a potential surplus of the heavy end of the

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