American Oil and Gas Reporter - July 2015 - 22

IndustryDigest
of this crude will be of a similar
quality-relatively heavy and sweet-the
study says it represents a major
opportunity for European refiners as
they seek to maximize margins from
these streams.
The presalt Brazilian projects will
produce 3.2 MMbbl/d by 2025, 78
percent of all Brazilian production,
Wood Mackenzie forecasts. With
Petrobras having canceled or delayed
many of its refinery expansion plans,
the study says domestic refining
capacity is expected to reach only 2.5
MMbbl/d that year. If no further
expansion emerges, the study warns
export markets will be needed for as
much as 1.8 MMbbl/d of crude by 2025.
While the U.S. Gulf Coast is a
natural fit for presalt crude, Wood
Mackenzie says the Brazilian cargoes
will end up competing there with
domestic crudes and imports from
Canada, Mexico, Venezuela, the Middle
East and West Africa. Europe, the study
notes, has limited capacity for
processing heavier crudes.

"As a result, we believe more than
1.0 MMbbl/d of presalt crude will flow
to Asia by 2025," says Gordon
McManus, research director EMEARC
refining and oil products markets at
Wood Mackenzie.
As new North American supplies fill
U.S. refineries, the analysis says some
presalt crude will look to Europe but it
will be competing with Norway's Johan
Sverdrup Field, which will dominate
North Sea production after 2020.
When Johan Sverdrup production
peaks in 2024, McManus says total
heavy crude supply in Northwest
Europe will exceed 1.0 MMbbl/d, while
demand will remain close to the current
600,000 barrels a day. Lower shipping
costs will favor the Norwegian crude,
but the competitive balance will depend
on refined product pricing and how
well-matched European refineries are to
the new crude stream.
Gail Anderson, principal analyst
upstream oil and gas at Wood
Mackenzie, points out the dramatic
growth in heavier crude availability will

influence regional price differentials.
"We expect presalt Brazil and Johan
Sverdrup will trade at a 3-4 percent
discount to Brent. Medium and heavy
crude discounts to Brent are likely to
widen when this heavier supply peaks,
benefitting complex refiners," Anderson
says. "In turn, this would make the
Atlantic Basin less attractive to Urals
and medium Middle Eastern grades,
which could be diverted east." r

IOPA, Tri-State To Host
Annual Picnic In September
EVANSVILLE, IN.-The
Independent Oil Producers Association,
Tri-State will host its annual picnic,
barbecue and golf outing Friday, Sept.
11 at the Mt. Carmel, Il., City Park and
Golf Course.
Association President Douglas W.
Reynolds encourages all IOPA, TriState members to register early and
bring their employees. The association
will host an 18-hole golf scramble for

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Avoiding

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22 THE AMERICAN OIL & GAS REPORTER

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American Oil and Gas Reporter - July 2015

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