Page 9 - DMEA Week 09 2020

DMEA COMMENTARY DMEA
environment and find other ways of ensuring liquefaction capacity is built. However, Shell does not appear to be concerned that this over- supply will be a feature of the global market for the long term.
Looking ahead
Shell expects that supply growth will slow in the near term as LNG producers struggle with mar- ket conditions. However, the super-major also forecasts that after the current wave of construc- tion comes to an end around 2021, new supply will drop off until the mid-2020s. Equilibrium is expected to be restored during this period, Shell said.
In the longer term, though, the company believes that global LNG demand will dou- ble to 700mn tonnes by 2040. It attributes this in large part to natural gas playing an ever greater role as the world shifts to lower-car- bon energy.
“While we see weak market conditions today due to record new supply coming in, two suc- cessive mild winters and the coronavirus situa- tion, we expect equilibrium to return, driven by a combination of continued demand growth and reduction in new supply coming on stream until the mid-2020s,” Wetselaar said.
Shell anticipates that despite the dominance
of European demand last year, Asia will still be the dominant region for years to come. South and Southeast Asia in particular are expected to come to the fore, with Shell predicting that this region will account for more than half of the increased demand.
In line with the trend towards decarbonisa- tion, Shell also expects that demand for LNG as a marine fuel will grow, potentially rising above 30mn tonnes per year (tpy) by 2040 as more LNG-fuelled ships are ordered and the required infrastructure is developed.
These expectations are in stark contrast to the state of today’s LNG market. Indeed, there are expectations that some new liquefaction pro- jects could be shelved – potentially speeding up the projected restoration of equilibrium in the medium term.
However the full impact of the coronavirus outbreak still remains unknown, and while the situation appears to be improving in China – where energy demand was badly affected – other countries are still bracing for more actions that may need to be taken in order to contain the outbreak. Once again, energy demand could take a hit as transport is restricted. In other words, in the immediate term, things could eas- ily get worse for the LNG market before they get better.™
REFINING
Algeria brings oil refinery back online
ALGERIA
Algeria plans to launch gasoline exports next year.
ALGERIA resumed operations at its Sidi Rezine oil refinery in Algiers earlier this month, after completing an expansion programme.
The refinery is now capable of annually pro- cessing 3.645mn tonnes (73,2000 barrels per day) of oil, versus 54,200 bpd prior to the expan- sion. Its restart was marked by a ceremony held by Prime Minister Abdelaziz Djerad.
Algeria currently has to import refined prod- ucts to meet its growing needs, despite pro- ducing around 30mn tonnes per year of fuels domestically. Its goal is to start exporting gaso- line next year and diesel in 2024 after upgrading its refineries, however.
The country’s gasoline production stood at 2.7mn tonnes last year, the refinery’s plant man- ager was quoted as saying by state news agency APS on February 24, while domestic consump- tion totalled 4mn tonnes.
Modernisation of the Sidi Rezine plant began in 2018 and was undertaken by China Petroleum Engineering and Construction (CPECC).
In order to overcome imports, Algeria is also looking to build new refineries as well. Its state oil company Sonatrach struck a deal in January hiring Spain’s Rechnicas Reunidas and South Korea’s Samsung Engineering to build the 100,000 bpd Hassi Messaoud refinery. Under the
contract, worth $3.7bn, the pair aims to com- plete the plant in the first half of 2024.
The Hassi Messaoud facility will be placed at Haoud El Hamra in the Hassi Messaoud region, where Algeria’s largest oilfield, flowing 400,000 bpd, is also located. The fuels that the plant pro- duces will comply with Euro-5 environmental standards.
Algeria had earlier set out to construct as many as five new refineries, before scaling back its plan to the Hassi Messaoud project and another proposed facility in Tiaret. ™
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