European Refining Summit - Amazon S3 · Refinery Yanbu Aramco/Sinopec Rabigh Jazan Al Zour Ras Tanura Ras Laffan Fujairah Sohar Duqm Ruwais Aramco/Sinopec QP/Total 2016 Aramco Aramco/Total

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European Refining Summit Gasoline: losing its lustre Francesco Di Salvo, September 29, 2016


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Private & Confidential 2

Agenda:

• Overview of trends in the global gasoline complex

• Repositioning of global arbitrages

• Outlook of West African demand

• Gasoline vs Diesel: what way forward?

AGENDA


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0

5

10

15

20

25

30

35

($/b

)

Eurobob gasoline crack vs Dated Brent

European gasoline cracks: a reversal of fortunes

Data: Platts


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400

420

440

460

480

500

520

Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17

$/m

t

EBOB Forward curve, July 2016

Contango main feature of the market

Data: Platts


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0

20

40

60

80

100

120

Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16

(S/m

t)

Eurobob gasoline discount to front-month swap

Physical market weakness persists, inducing storage, after a strong Q2

Data: Platts


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0

2

4

6

8

10

12

Jul-16 Jul-15 Five-year average

Mill

ion

bar

rels

ARA Gasoline stocks

High stocks dictate bearishness

Data: PJK International


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0

50

100

150

200

250

300

May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16

($/m

t)

Gasoline/Naphtha Spread

European blending margins eroded

Data: Platts


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Naphtha follows gasoline amid lack of outlets

-15

-10

-5

0

5

10

15

20

S/m

t

CIF NWE Naphtha Cargo differential to Mo-1 swap


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Components under pressure

1.1

1.15

1.2

1.25

1.3

1.35

1.4

1.45

1.5

1.55

Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16

MTBE/EBOB gasoline factor


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Global arbitrages suffer

UKC-WAF

UKC-USAC

Med-AG


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190

200

210

220

230

240

250

260

270


Mill

ion

bar

rels

US Stocks levels

weekly

5-year average

US stocks above five-year average…

Data: EIA


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0

2000

4000

6000

8000

10000

12000

01

-Jan

-16

08

-Jan

-16

15

-Jan

-16

22

-Jan

-16

29

-Jan

-16

05

-Fe

b-1

6

12

-Fe

b-1

6

Feb

19

, 20

16

Feb

26

, 20

16

Mar

04

, 20

16

11

-Mar

-16

Mar

18

, 20

16

Mar

ch 2

5 2

01

6

Ap

r 0

1, 2

01

6

Ap

r 0

8, 2

01

6

Ap

r 1

5, 2

01

6

Ap

r 2

2, 2

01

6

Ap

r 2

9, 2

01

6

May

06

, 20

16

13

-May

-16

May

20

, 20

16

May

27

, 20

16

Jun

03

, 20

16

Jun

10

, 20

16

Jun

17

, 20

16

Jun

25

, 20

16

Jul 0

1, 2

01

6

Jul 0

8, 2

01

6

Jul 1

5, 2

01

6

Jul 2

2, 2

01

6

Jul 2

9, 2

01

6

1,0

00

b/d

US Demand

weekly

5-year average

…despite high demand levels

Data: EIA


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0

100

200

300

400

500

600

700

800

900

1000


1,0

00

b/d

US gasoline imports

Weekly

5-year average

US imports of European barrels become more marginal

Data: EIA


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Eastern arbitrages suffer

-8

-6

-4

-2

0

2

4

6

8

Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16

$/b

East/West Spread


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Middle East refinery expansions

Yanbu

Jazan

Rabigh

Duqm

Sohar

Fujairah Ras Laffan

11

Ras Tanura

Jubail

Al Zour

Ruwais 1

2

3

4

5

6 7

11

8

9

10

Refinery

Yanbu

Rabigh

Jazan

Al Zour

Jubail

Ras Tanura

Ras Laffan

Fujairah

Sohar

Duqm

Ruwais

Aramco/Sinopec

Aramco/Sinopec

QP/Total

Aramco

KNPC

Aramco/Total

Aramco

IPIC

QRPIC

IPIC/OOC

ADNOC

400 kb/d

Upgraded (Phase 2)

+146 kb/d

400 kb/d

615 kb/d

400kdb

Upgrade

200 kb/d

+86 kb/d

230 kb/d

+417kbd

2014

2016

2016

2018

2019

2013

Relaunch

2016

2015

Owner Capacity/ Expansion Completion


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-100

-80

-60

-40

-20

0

20

40

Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16

(S/m

t)

WAF-grade vs 10 ppm premium unleaded barges

West African grade gasoline lacks traction


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• Abandonment of import allocations with marketers able to buy in the free

market

• Price cap at N145/litre

• Nigeria moves to “price modulation” but policy hailed as first step

towards liberalisation

• De facto subsidy removal, but governmental direction persists

• Lack of foreign exchange affects financing and imports

• Emphasis on Direct-Sale/Direct Purchase programmes

Nigeria embarks on road to deregulation


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Relative fall of diesel cracks vs gasoline

0

5

10

15

20

25

30

Aug-2012 Jan-2013 Jun-2013 Nov-2013 Apr-2014 Sep-2014 Feb-2015 Jul-2015 Dec-2015 May-2016

$/b

arre

l

Diesel Gasoline


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European diesel car sales – 50%

0

10

20

30

40

50

60

70

80

Irelan

d

Luxe

mb

ou

rg

Po

rtugal

Spain

Gre

ece

Be

lgium

France

Swe

de

n

Au

stria

Italy

UK

Ge

rma

ny

No

rwa

y

Switze

rland

Finlan

d

De

nm

ark

Ne

the

rlan

ds

% c

ar s

ale

s d

iese

l


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Change in diesel market car share

-12

-10

-8

-6

-4

-2

0

2

4

6

8

Gre

ece

No

rway

Be

lgium

Spain

Luxem

bo

urg

France

Ne

therlan

ds

Swe

de

n

Po

rtugal

Finlan

d

Ge

rman

y

Ireland

UK

Au

stria

Italy

Switzerlan

d

Den

mark

% c

han

ge in

die

sel c

ar s

ale

s


Questions & Answers


Documents

European Refining Summit - Amazon S3 · Refinery Yanbu Aramco/Sinopec Rabigh Jazan Al Zour Ras Tanura Ras Laffan Fujairah Sohar Duqm Ruwais Aramco/Sinopec QP/Total 2016 Aramco Aramco/Total