Ending Gasoline Subsidies in Iran
created: 21 Dec 2010 07:44
tags: iran prices subsidy
When oil prices were breaking records on a daily basis back in 2008, one of the talking points was that the only countries enjoying demand growth were those that were subsidising their prices. At those very high prices, consumers in the USA, Europe and Japan, were cutting back.
Countries like India and China figured heavily. Their prices were set by the government and so were being indirrectly subsidised. India has at least freed the price of gasoline since then and plans to do the same for diesel.
Oil producing countries however are the ones where the subsidises are the most significant, and one of the craziest countries in this regard was Iran. It spends more on fuel subsidies than it gains on oil exports.
Strangely enough, the Iranian government has been saved from the unsustainable madness, by none other than the Great Satan himself. Unable to import or produce enough gasoline to meet demand, they have finally bit the bullet.
On Saturday night, though, the Iranian president announced that subsidies would be abruptly slashed. Each of the first 60 liters of gasoline per person will now cost 4000 rials (about $1.50 per gallon), and additional gasoline will go for 7000 rials per liter (about $2.70 per gallon).
Now Iranians will have to pay the real price for their gasoline, and we will see a shift in demand patterns. If the government can survive the backlash, they will have money to spend on more sensible things. Perhaps on increasing production.
From the point of view of the rest of the world, this frees up Iranian crude oil for the rest of us to consume. If only OPEC's other members would follow suit, it would remove a big supply risk that hangs over the market. As long as everyone pays market prices, then demand will automatically change with prices, making the disaster scenarios of the peak oil crowd nothing more than fantasy.
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New Refinery Projects to be Completed in 2011
created: 20 Dec 2010 13:36
tags: 2011 be completed in new projects refinery to
Unlike 2009 when 2 million barrels per day of extra refining capacity came on stream, and 2010, when less than one million did so, 2011 looks to be neither a bumper year, nor one of drought. By my calculations, about 1.46 million barrels of capacity will be completed during 2011.
In Europe, two small projects will be finished, each of them an expansion and upgrade of existing facilities. In Poland Gdansk refinery will grow by 90,000 bpd whilst in Romania Ploiesti Refinery will add 30,000 bpd.
In Russia, the first phase of the 140,000 bpd Tatneft Nizhnekamsk Refinery. Eventually this will be a highly complex one, but for now it is starting up as a hydroskimmer.
North America sees only one completion, Valero’s expansion of the Quebec Refinery in Canada by 45,000 bpd
The Middle East boasts one huge Project and two small ones. The giant is Iran’s Bandar Abbas Persian Gulf Star Refinery, built to process gas condensates. It will be 360,000 bpd, and is perhaps the only one of Iran’s new projects on course. Neighbours Iraq, will meanwhile complete the 70,000 bpd Basra refinery whilst Jordan will finish the 31,000 bpd expansion of Zarqa Refinery.
As always, Asia has the most activity.
In China, Quanzhou, Ningxia and Changling refineries will add 260,000 bpd. India meanwhile will see Mangalore Refinery, Guru Gobind Singh Refinery, and Vadvinar’s expansion all commissioned, a total of about 350,000 bpd. Pakistan’s Karachi refinery adds another 84,000 bpd
Overall, capacity will grow by a little more than demand. The likely closures will improve the situation for refiners somewhat, but the market will once again be a little demanding, and refinery margins in 2011, are unlikely to advance too much with this volume of new capacity additions.
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New Refining Projects in China
created: 14 Dec 2010 09:05
tags: china projects refinery
Much is said about the impact of Chinese Refinery investments on the sector, so I thought I would analyse the situation and share my findings.
After a bumper year in 2009, the capacity additions in China's refining sector were significantly down in 2010.
In 2009, Dushanzi, Fujian, Huizhou, Liaoning and Tianjin] projects were completed. This added 810,000 barrels per day of capacity.
In 2010, only two new projects were completed, Dongying and Guangxi / Qinzhou and two expansions Wuhan and Qilu were finished. This led to only 330,000 barrels per day of capacity additions.
In 2011 and 2012, additions will again be marginal. It is not until 2013 that we expect to see a big increase in refining capacities in the world's fastest growing market.
In 2011 the Ningxia Expansion, Quanzhou and the Changling will add about 260,000 330,000 barrels per day of capacity. In 2012, there are currently no projects expected to be completed.
2013 is a different matter all together. A total of 7 projects will add 1.3 million barrels per day of capacity. This is about the total increase in global consumption for a typical year.
Cangzhou, Caofeidian, Chongqing, Dalian, Guangdong/Nansha, Shijiazhuang and Sichuan projects are all expected to be completed.
If I am correct, we have nothing to fear from increased capacity in China until 2013
There are other projects which will come on stream later, but their completition dates are more difficult to estimate.
Note: These are all my estimates, and there may well be errors. I appreciate being corrected, and any information on any of these projects would be welcome.
