| BRUSSELS, Sept 30
BRUSSELS, Sept 30 U.S. shale gas will displace a
growing portion of the world's expanding energy demand, cutting
into the need for oil products from refineries, BP's head of
refining economics said on Friday.
Natural gas liquids (NGLs) from the U.S. shale boom such as
ethane, an alternative to naphtha refined from crude, could feed
as much as a third of demand growth in 2017, BP's Richard de
Caux told the Platts Refining Summit in Brussels.
Refined oil products already in storage will further
undercut refinery profits, he said.
"We expect a substantial chunk of the incremental demand
growth next year to be met by two sources which don't come from
a refinery," de Caux said, citing NGLs and oil products in
This week, the first U.S. ethane cargo arrived at a
chemicals plant in Scotland, and de Caux said the vessel was a
harbinger of supply to come that would undercut profit support
for refineries running crude oil, whose margins boomed over the
past two years of cheap crude and stellar demand growth.
"That's coming out of oil demand," de Caux said of
petrochemicals coming from ethane, rather than from refined
naphtha, in petrochemical units.
BP expects demand growth of 1.2-1.4 million barrels per day
(bpd) in 2017, of which 300,000-400,000 bpd could come from
natural gas liquids. This is up from around 200,000 bpd from as
a larger overall demand growth in recent years, de Caux said.
Other consumption growth would be fed by inventories of oil
products, which in the developed world stood nearly 150 million
barrels above the five-year average in 2016, "close to full," de
This is likely to limit refinery margins and runs, putting
pressure to close on the continent's refineries, along with
ageing units in Japan and possibly on the U.S. Atlantic Coast -
areas where demand growth is stagnating.
"The cheap oil prices did not save Europe from further
rationalisations," he said.
(Editing by William Hardy)