Japan, 5th April 2017: Mr. Areepong Bhoocha-Oom, Permanent Secretary of the Ministry of Energy of Thailand launched today the ‘Future Energy Asia Exhibition & Conference’ as a major initiative towards securing the path to Thailand’s Energy 4.0. The transformation and development of Thailand is a major priority for the government which creates incredible business opportunities for both integrated and non-integrated energy companies globally. As such, ‘Future Energy Asia Exhibition & Conference’ is the perfect platform for NOCs and IOCs to foster the transition from traditional fuel suppliers to integrated energy providers for a more efficient and sustainable energy mix across Asia.
Globally energy demand will increase by around 30% to 2030, driven by increasing prosperity in developing countries and by fast growing emerging markets. The energy mix is changing driven by technology and environment concerns.
The primary demand will still be Oil and Gas but industry is adapting and changing and is seeing these traditional fossil fuels provide the transition to the evolution that is underway Natural Gas and LNG will be the primary fuel source for Asia’s continued development
Future Energy Asia under support of the Thailand Ministry of Energy promises to be the largest energy industry gathering Asia has ever seen. Focusing on oil, gas and renewables, the event is set forth to outline the perfect scenarios of mixed fuels and technologies needed to meet growing energy demand, improve efficiency and support the transition to a lower-carbon economy. It will be held from 12-14 December 2018 at BITEC, Thailand with 15,000+ visitors, 2,500+ delegates, 300 speakers and over 600 exhibiting companies. His Excellency Permanent Secretary announced the launch to a gathering of dignitaries, officials, energy sector leaders and prominent media together with international organiser dmg events and expert event co-organisers, Exposis from Thailand.
Dr. Areepong Bhoocha-Oom said “Thailand 4.0 means opportunity and the transformation in the energy sector of the country as well. As we move more closely towards an improved energy system, energy production and consumption must adapt radically to ensure the demands of growing populations are met, whilst ensuring cleaner and more efficient delivery is achieved. While renewable and other carbon-free energy will play a primary role, the importance of fossil fuels, in particular natural gas, in delivering the cost-effective and immediate requirements of Asia’s growing demand cannot be ignored. Fossil fuel & renewable energy can certainly form the core elements of a transition to a cleaner & more sustainable energy future for Asia”
He affirmed that holding Future Energy Asia exhibition and conference in Thailand reflects Thailand’s continuous efforts to promote new projects, attract investments in the energy sector, and consolidate communication with foreign investors and large international corporations, which are foremost on the investment opportunities map. The event will act as a collaborative effort to publicise Thailand’s new policies and readiness as an investment hub and showcase Thailand’s potential to become the sustainable energy hub for Asia, as it transitions to Thailand 4.0.
He added “We are delighted to host Future Energy Asia 2018 and look forward to the interactions with its delegates for the continued improvement of the global energy sector. The decisions and relationships built will foster a collaborative and economically viable energy future.”
From his part, Mr. Christopher Hudson, President of DMG Events Global Energy, the company responsible for organising the ‘Future Energy Asia’ presented the plans for the event. He explained that “The 3-day exhibition and conference is dedicated to advancing future energy, energy efficiency and clean technology. Going by the overwhelming response from the global events dmg organises such as ADIPEC and Gastech, the event promises to be the most sought after meeting point for Asia’s stake holders to discuss, debate and embrace future energy scenarios and solutions concerning long-term global energy policies.”
“Thailand is clearly a growing market with huge opportunities, and ‘Future Energy Asia 2018’ presents the first opportunity for local, regional and international energy companies across the full value chain of this promising sector to come together and create a blueprint for the future energy security of Asia. This inaugural Show will provide an opportunity for global buyers and sellers to display their products and services on the exhibition floor, and to establish alliances and partnerships. The conference represents an unparalleled opportunity for the global energy industry to explore the opportunities and challenges of the exciting Asian market" he said.
Along with the conference and exhibition, the event will host strategic Ministerial meetings, an ‘awards ceremony and fund’ that will support research and development in energy and social programs on all the days to facilitate networking with peers, business partners and key stake-holders in the energy sector.
Commenting further on the conference element of the show, Mr. Hudson added “The Conference will not only address the technical aspects of gas, oil and renewables, but also host discussions addressing the challenges facing the industry to include both business and political issues. Some of the key topics include ‘delivering power to grids’, developing efficient and smart electricity distribution and transmission networks, lighting up Asia’s cities: next-generation power generation strategies and technology and ‘creating a blueprint for a harmonious fuel mix: maximising the use and efficiency of fossil fuels in conjunction with carbon-free energy’”.
“We are extremely grateful for the support and understanding we have received from the Ministry of Energy of Thailand in ensuring the inaugural Future Energy Asia 2018 is a success. Having the Minister himself as Event Chairman underlines Thailand's commitment to bringing energy security to all..” concluded Mr. Hudson.
Future Energy Asia is also supported by Thailand Convention & Exhibition Bureau (TCEB). “TCEB, as a government organization dedicated to developing Thailand’s MICE industry, is pleased to support Future Energy Asia 2018. Thanks to DMG Events for the trust and confidence in Thailand to anchor the show for the first time in 2018 at Bangkok International Trade and Exhibition Centre (BITEC). Thailand’s trade exhibitions are well recognized as a high-potential marketplace and gateway to emerging business opportunities in ASEAN, Asia, and the world. With Thailand’s ASEAN-centric location, ease of doing business, TCEB’s strong network of local and international alliances, and the Thai government’s clear, forward-looking policy on energy, we are positive that locating Future Energy Asia in Thailand will be a contributing factor to its success, and that the show will be able to play a more effective role in connecting all key stakeholders in the development of ASEAN’s energy sector” said Mrs. Jaruwan Suwannasat, Exhibitions & Events Director, TCEB.
Future Energy Asia 2018 is the latest expansion in dmg events' Global Energy Division conference and exhibition portfolio, which includes some of the world's largest and most important events, including the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), Gastech in Barcelona, and the Global Petroleum Show (GPS) in Canada.
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Recent headlines on the oil industry have focused squarely on the upstream side: the amount of crude oil that is being produced and the resulting effect on oil prices, against a backdrop of the Covid-19 pandemic. But that is just one part of the supply chain. To be sold as final products, crude oil needs to be refined into its constituent fuels, each of which is facing its own crisis because of the overall demand destruction caused by the virus. And once the dust settles, the global refining industry will look very different.
Because even before the pandemic broke out, there was a surplus of refining capacity worldwide. According to the BP Statistical Review of World Energy 2019, global oil demand was some 99.85 mmb/d. However, this consumption figure includes substitute fuels – ethanol blended into US gasoline and biodiesel in Europe and parts of Asia – as well as chemical additives added on to fuels. While by no means an exact science, extrapolating oil demand to exclude this results in a global oil demand figure of some 95.44 mmb/d. In comparison, global refining capacity was just over 100 mmb/d. This overcapacity is intentional; since most refineries do not run at 100% utilisation all the time and many will shut down for scheduled maintenance periodically, global refining utilisation rates stand at about 85%.
Based on this, even accounting for differences in definitions and calculations, global oil demand and global oil refining supply is relatively evenly matched. However, demand is a fluid beast, while refineries are static. With the Covid-19 pandemic entering into its sixth month, the impact on fuels demand has been dramatic. Estimates suggest that global oil demand fell by as much as 20 mmb/d at its peak. In the early days of the crisis, refiners responded by slashing the production of jet fuel towards gasoline and diesel, as international air travel was one of the first victims of the virus. As national and sub-national lockdowns were introduced, demand destruction extended to transport fuels (gasoline, diesel, fuel oil), petrochemicals (naphtha, LPG) and power generation (gasoil, fuel oil). Just as shutting down an oil rig can take weeks to complete, shutting down an entire oil refinery can take a similar timeframe – while still producing fuels that there is no demand for.
Refineries responded by slashing utilisation rates, and prioritising certain fuel types. In China, state oil refiners moved from running their sites at 90% to 40-50% at the peak of the Chinese outbreak; similar moves were made by key refiners in South Korea and Japan. With the lockdowns easing across most of Asia, refining runs have now increased, stimulating demand for crude oil. In Europe, where the virus hit hard and fast, refinery utilisation rates dropped as low as 10% in some cases, with some countries (Portugal, Italy) halting refining activities altogether. In the USA, now the hardest-hit country in the world, several refineries have been shuttered, with no timeline on if and when production will resume. But with lockdowns easing, and the summer driving season up ahead, refinery production is gradually increasing.
But even if the end of the Covid-19 crisis is near, it still doesn’t change the fundamental issue facing the refining industry – there is still too much capacity. The supply/demand balance shows that most regions are quite even in terms of consumption and refining capacity, with the exception of overcapacity in Europe and the former Soviet Union bloc. The regional balances do hide some interesting stories; Chinese refining capacity exceeds its consumption by over 2 mmb/d, and with the addition of 3 new mega-refineries in 2019, that gap increases even further. The only reason why the balance in Asia looks relatively even is because of oil demand ‘sinks’ such as Indonesia, Vietnam and Pakistan. Even in the US, the wealth of refining capacity on the Gulf Coast makes smaller refineries on the East and West coasts increasingly redundant.
Given this, the aftermath of the Covid-19 crisis will be the inevitable hastening of the current trend in the refining industry, the closure of small, simpler refineries in favour of large, complex and more modern refineries. On the chopping block will be many of the sub-50 kb/d refineries in Europe; because why run a loss-making refinery when the product can be imported for cheaper, even accounting for shipping costs from the Middle East or Asia? Smaller US refineries are at risk as well, along with legacy sites in the Middle East and Russia. Based on current trends, Europe alone could lose some 2 mmb/d of refining capacity by 2025. Rising oil prices and improvements in refining margins could ensure the continued survival of some vulnerable refineries, but that will only be a temporary measure. The trend is clear; out with the small, in with the big. Covid-19 will only amplify that. It may be a painful process, but in the grand scheme of things, it is also a necessary one.
Infographic: Global oil consumption and refining capacity (BP Statistical Review of World Energy 2019)
|Region||Consumption (mmb/d)*||Refining Capacity (mmb/d)|
*Extrapolated to exclude additives and substitute fuels (ethanol, biodiesel)
End of Article
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Source: U.S. Energy Information Administration, based on Bloomberg L.P. data
Note: All prices except West Texas Intermediate (Cushing) are spot prices.
The New York Mercantile Exchange (NYMEX) front-month futures contract for West Texas Intermediate (WTI), the most heavily used crude oil price benchmark in North America, saw its largest and swiftest decline ever on April 20, 2020, dropping as low as -$40.32 per barrel (b) during intraday trading before closing at -$37.63/b. Prices have since recovered, and even though the market event proved short-lived, the incident is useful for highlighting the interconnectedness of the wider North American crude oil market.
Changes in the NYMEX WTI price can affect other price markers across North America because of physical market linkages such as pipelines—as with the WTI Midland price—or because a specific price is based on a formula—as with the Maya crude oil price. This interconnectedness led other North American crude oil spot price markers to also fall below zero on April 20, including WTI Midland, Mars, West Texas Sour (WTS), and Bakken Clearbrook. However, the usefulness of the NYMEX WTI to crude oil market participants as a reference price is limited by several factors.
Source: U.S. Energy Information Administration
First, NYMEX WTI is geographically specific because it is physically redeemed (or settled) at storage facilities located in Cushing, Oklahoma, and so it is influenced by events that may not reflect the wider market. The April 20 WTI price decline was driven in part by a local deficit of uncommitted crude oil storage capacity in Cushing. Similarly, while the price of the Bakken Guernsey marker declined to -$38.63/b, the price of Louisiana Light Sweet—a chemically comparable crude oil—decreased to $13.37/b.
Second, NYMEX WTI is chemically specific, meaning to be graded as WTI by NYMEX, a crude oil must fall within the acceptable ranges of 12 different physical characteristics such as density, sulfur content, acidity, and purity. NYMEX WTI can therefore be unsuitable as a price for crude oils with characteristics outside these specific ranges.
Finally, NYMEX WTI is time specific. As a futures contract, the price of a NYMEX WTI contract is the price to deliver 1,000 barrels of crude oil within a specific month in the future (typically at least 10 days). The last day of trading for the May 2020 contract, for instance, was April 21, with physical delivery occurring between May 1 and May 31. Some market participants, however, may prefer more immediate delivery than a NYMEX WTI futures contract provides. Consequently, these market participants will instead turn to shorter-term spot price alternatives.
Taken together, these attributes help to explain the variety of prices used in the North American crude oil market. These markers price most of the crude oils commonly used by U.S. buyers and cover a wide geographic area.
Principal contributor: Jesse Barnett