KPC Participates in World Petroleum Congress

The Market Research Department is one of the integral departments at the International Marketing Sector, whose role is crucial to keeping KPC up-to-date with latest market developments and industry variables. Towards that end, the Department diligently attends key international oil events and conferences. Naila Baqer, Team Leader Market Research, recently attended the 19^th World Petroleum Congress, which was held this year at Spain, Madrid.
Here she reports on the most important topics that were discussed in this event.

Important topics discussed in (WPC)
By: Naila Baqer
Market Research Department

Brown fields (BF) vs. Green fields (GF)
Many opted for brown field refineries for several factors:-
●    Already established a social foundation with the community surrounding the facilities
●    Infrastructure already exists
●    The risk of delays and the cost that comes with BF delays are minimal when compared with GF
●    Also minimize risk of reputation (the operability of the facility and the mis-haps that could occur)
●    Finally economics of scale.

Diesel Market
●    Overall world is short in diesel and will continue to be so
●    FSU will be short in diesel in 2015
●    China consumes 2-3 bbls of fuel per person and the USA consumes 27 bbls per person, yet China surpasses the US with CO2 emissions due to the lack of energy efficiency.
●    People are leaning towards dieselization (turning their cars from mogas to diesel), because its more environmentally friendly.
●    To produce lighter fuels however, Euro IV & V, the refinery emissions have increased, which is harming the environment- which is controversial.
●    Furthermore, even by increasing the yield cut in the refinery and increasing and straining the system to produce more diesel on the back of mogas  increases CO2 emissions.
●    Even if diesel cars are no longer produced, the demand for diesel will not stop but just slow down slightly due to road ullage (freight). With the increase to GDP more goods are changing hands within the EU and its being transported by road.
●    In the automotive industry, they are designing engines that take naphtha, as well as engines that take a mixture of both mogas and diesel.

Diesel legislations
●    China uses diesel in 7 sectors: Vehicles, Industry, Agriculture, Electricity, Petrochemical, Refinery, Marine, with the vehicles’ sector being small in market share.
●    However, China has only one policy that caters to the motor/auto diesel sector while neglecting the rest; as is the case in all of Asia.
●    In OECD countries they have several diesel policies/regulations for different diesel qualities (on & off road, marine, etc.). In Asia they are adhering to just one auto diesel regulation (the most stringent).
●    Asia is therefore stressing their systems suddenly without gradual progression.

Bio-fuels
●    There is little possibility of decreasing the emissions in the well-to-wheel process; however there are big possibilities of doing so in the tank-to-wheel process.
●    This is done by increasing the bio-fuels in the system. But not any or all bio-fuels are efficient.
●    The controversy of bio-fuels legislations is that more bio-ethanol will be produced when the market is long in mogas, and not enough will be produced in bio-diesel.
●    Fears of implementing the bio-fuels law as is, might actually create more imbalance in the product market, especially in the mogas/diesel ratio.

IOCs and NOCs
●    The major difference between the two is the accessibility to resources.
●    Many NOCs are now behaving like IOCs eg. Petrobras, Petronas as well as a few Chinese companies.
●    NOCs want more than technology/money/project management; they want genuine social responsibility and a dedication to the community.
●    Therefore IOCs are expected to generate “excellence + listening + trust + acceptability” to the hosting country.

Social Responsibility
India announced that it will not join the Asian trend of decreasing its subsidies in the short term because it has a responsibility towards the deprived segment in their society, and they believe that the government should share the wealth and help the impoverished people.