Bapco’s Dawood Nassif tells delegates at the European Refining Technology Conference (ERTC) that refining margins will come under constant pressure.
Dawood Nassif, general manager of strategy and business development at Bapco, believes that an oil price of US$100-a-barrel is here to stay and that oil prices will peak in 2017–2021. Speaking during a panel discussion at the European Refining Technology Conference 2011 in Barcelona today, Nassif also warned that there will be long-term tightness in the crude oil market. He added that refining will continue to be a difficult and competitive business and that "margins will be under pressure at all times."
Nassif was discussing refining markets in the Middle East region and their impact on the European refining industry. Export-orientated refiners, Nassif said, are currently planning ahead to avoid having to find an outlet for high sulphur fuel oil, in response to the International Maritime Organization's (IMO) bunker fuel quality changes.
He told delegates at the ERTC that the Middle East has an advantage in its business culture, with communities welcoming investment in refining. Nassif also said that so far, freight costs and fuel quality differences have worked to protect Europe from severe direct competition, with growth in Asia being a contributing factor.
With several new refineries in the Middle East expected to come online in the next three to five years, he warned that Europe may feel the pressure. Nassif also gave some insight into Bapco's downstream investment plans, noting that its Refinery Master Plan will invest US$6–7 billion to maximise middle distillate output and energy efficiency, and to meet all potential fuel specifications and environmental regulations.
As far as European refiners are concerned, Nassif warned that raising capital will not be easy and that "justifying upgrades to accommodate regulation changes will be very difficult."
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