World Oil Outlook - Opec

Chapter 9
Oil movements
Generally, the economics of oil movements and refining means there is a preference
for locating refining capacity in consuming regions. This is mainly due to lower
transport costs for crude oil, as opposed to oil products, unless construction costs
for building the required capacity outweigh the advantage of transport costs. For
consuming countries, there is the added significance of securing a supply of required
refined products, by emphasizing local refining over products imports, regardless of
economic factors. Conversely, many oil producing countries may look to increase
their domestic refining capacity to benefit from the ‘value-added’ of oil refining via
the exporting of products. Moreover, in efforts to secure future outlets for their crude
production, some producing countries opt for joint participation in refining projects
in consuming countries that are often associated with long-term contracts for feedstock
supply.
Given these potentially conflicting interests, and because oil is to a large extent
a fungible commodity traded on global markets, there is a great deal of uncertainty
associated with projections about future oil movements, especially if the guiding principle
for future trade flows is global cost minimization as is the case for the WORLD
model that was adopted to examine the likely changes in key inter-regional flows, as
well as refining developments.
In addition, the trade volumes of crude oil and products that are generated and
reported depend on regional groupings within the model. A more detailed regional
breakdown will tend to show higher imports and exports than one with more aggregated
regions. Therefore, traded volumes presented in this Chapter should be considered
as an indication of certain trends and future options for resolving regional supply
and demand imbalances, rather than projections of specific movements.
Compared to last year, changes in the regional supply and demand levels, combined
with this year’s more detailed breakdown of the US & Canada into sub-regions,
results in higher reported volumes of global oil movements. If oil trade between all 22
model regions is considered, 14 as presented in Figure 9.1, projections indicate steady
growth in the trade flows of both crude oil and liquid products. In terms of volume,
increases are in the range of 7 mb/d each between 2011 and 2035. However, from a
growth rate perspective product trade will grow faster, on average around 1.3% p.a.,
compared to crude oil trade at 0.7% p.a. This difference is especially noticeable in
the period up to 2015. Within this period, product trade is set to increase by around
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