Malaysian palm oil company Kim Loong Resources Bhd has secured European energy trading group Vitol as buyer for all its carbon credits from its planned biogas plant in Kota Tinggi. The biogas facility generates methane from palm oil mill effluent, a waste product. The project is expected to generate over RM2 million (€423,000/US$579,000) of earnings annually. The methane capture and power generation project was registered and approved by the Clean Development Mechanism.
Report: biofuels may lead to gasoline oversupply, lower prices by 2010
Growth in supply of oil products from outside the refining system, that is biofuels and oil products supplied from Natural Gas Liquids (NGLs), will lead to a potential oversupply situation in 2010. This is expected to reduce gasoline prices and impact on refinery utilisation rates concludes oil & gas consultancy Wood Mackenzie in its latest downstream research report Global Refining in 2010 – Out of Balance.
The central conclusion — that a glut of fuel supply from outside the conventional refining system could depress gasoline prices — differs considerably from the consensus amongst other energy experts, which holds that the supply impact from biofuels and other sources will be limited between now and the end of the decade. The report comes amid an industry-wide reevaluation of refinery expansion projects that were once considered likely to be online by 2010 (see the IEA's latest assessment, and OPEC's analysis).
In fact, Wood Mackenzie anticipates that almost 50 Mt of ethanol will be used globally by 2010, while just less than 20 Mt of biodiesel will be consumed. Brazil and the US are projected to account for 75 percent of global ethanol consumption, while the European Union accounts for almost two thirds of biodiesel use:
energy :: sustainability :: ethanol :: biodiesel ::biofuels :: gasoline :: natural gas liquids :: oversupply :: refinery :: downstream ::
The growth in NGLs production will also lead to a growing surplus of LPG at the same time as a large and growing deficit of naphtha, due to strong demand for petrochemicals. Hence the report also notes that feedstock flexibility will be key for petrochemicals manufacturers in the Middle East and Asia Pacific, where the greatest LPG/naphtha imbalances occur.
Meanwhile, overbuild of refinery upgrading units such as cokers and FCCs is leading to a global oversupply of gasoline and a growing shortage of fuel oil. Despite expected changes in refinery utilisation and yield patterns, as refineries are re-optimised to meet changing demand patterns, gasoline remains with an incremental surplus of 16 Mt, while fuel oil is incrementally 16 Mt short, globally, leading to downward pressure on the gasoline price and an upward pressure on fuel oil price.
References:
Wood Mackenzie: Wood Mackenzie Sees Global Oil Products Oversupply by 2010 Leading to Gasoline Price Reduction - July 31, 2007.
The central conclusion — that a glut of fuel supply from outside the conventional refining system could depress gasoline prices — differs considerably from the consensus amongst other energy experts, which holds that the supply impact from biofuels and other sources will be limited between now and the end of the decade. The report comes amid an industry-wide reevaluation of refinery expansion projects that were once considered likely to be online by 2010 (see the IEA's latest assessment, and OPEC's analysis).
Non-refinery supply is forecast to grow by just over 80 Mt between 2006 and 2010 due to increased NGLs production and from the drive to increase biofuels consumption. While rising refinery project costs (80-100 percent higher since 2002) have led to significant delays and cancellations of a number of key projects post 2010, this reduction in new refinery capacity alone is not enough to counter the oversupply issue. Large clean product surpluses emerging in the Middle East and Asia Pacific are projected to affect utilisation rates in the East of Suez region. - Aileen Jamieson, Downstream Research Manager for Wood MackenzieThe report states that the impact of the ethanol mandate in the US, and its potential future development, has led refiners to raise doubts about adding refining capacity. As a result, the gasoline deficit in North America will continue to grow by 2010, contrary to an industry expectation that this deficit will be reduced in the short-term. This will provide an outlet for Europe’s gasoline surplus, which is expected to continue to grow.
In fact, Wood Mackenzie anticipates that almost 50 Mt of ethanol will be used globally by 2010, while just less than 20 Mt of biodiesel will be consumed. Brazil and the US are projected to account for 75 percent of global ethanol consumption, while the European Union accounts for almost two thirds of biodiesel use:
energy :: sustainability :: ethanol :: biodiesel ::biofuels :: gasoline :: natural gas liquids :: oversupply :: refinery :: downstream :: The growth in NGLs production will also lead to a growing surplus of LPG at the same time as a large and growing deficit of naphtha, due to strong demand for petrochemicals. Hence the report also notes that feedstock flexibility will be key for petrochemicals manufacturers in the Middle East and Asia Pacific, where the greatest LPG/naphtha imbalances occur.
Meanwhile, overbuild of refinery upgrading units such as cokers and FCCs is leading to a global oversupply of gasoline and a growing shortage of fuel oil. Despite expected changes in refinery utilisation and yield patterns, as refineries are re-optimised to meet changing demand patterns, gasoline remains with an incremental surplus of 16 Mt, while fuel oil is incrementally 16 Mt short, globally, leading to downward pressure on the gasoline price and an upward pressure on fuel oil price.
References:
Wood Mackenzie: Wood Mackenzie Sees Global Oil Products Oversupply by 2010 Leading to Gasoline Price Reduction - July 31, 2007.
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