EVOLUTION

expert opinion
EXPECTATION
AND REALITY
by maryline vuillerod and jeff kralowetz
Maryline Vuillerod is Strategic
Business Develop ment Manager
at Argus Media, a leading provider
of market reports containing price
assessments, commentary and
news, and business intelligence
that analyzes market and
industry trends.
Jeff Kralowetz is Argus Media’s Vice
President, Business Development.
It may seem intuitive that Canada could gain
more benefit from its crude oil resources by refining
them in Canada and exporting refined products.
But this theory fails to account for the structure of
global markets, constraints in infrastructure and
geography, and trends in global demand for
refined products.
THE STRUCTURE OF GLOBAL MARKETS
Any company considering investing $10 to $15 billion dollars in
export refineries must take into account significant Asian growth
that has been matched by rapid building and even over-building of
refining capacity in China, India and the Middle East. Even there,
refinery utilization has fallen.
Refinery utilization rates
90 %
OECD refinery shutdowns
mb/d
1.5
1.0
0.5
85 %
80 %
0
2008 2009 2010 2011 2012 2013 2014 2015
OECD Americas OECD Europe OECD Asia Oceania
75 %
70 % 2008 2009 2010 2011 2012 2013 2014 2015
World OECD Non-OECD
Any new Canadian refinery would enter a market in which capacity has been
over-built and refinery utilization has been falling since 2006, particularly
in the Organization for Economic Cooperation and Development (OECD)
member countries.
Source: IEA, June 2014 Medium Term Market Report: Market Analysis and Forecasts to 2019
Constraints in infrastructure
Furthermore, the world is cutting back on refinery construction projects
and closing existing capacity.
Since 2008, 4.5 million barrels per day (b/d) of OECD refining capacity has
been shut down.
Source: IEA, June 2014 Medium Term Market Report: Market Analysis and Forecasts to 2019
Continued on page 17
canadianfuels.ca
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