Diesel Deficit Impending for Europe
12 August 2005
A new study by energy and life-sciences consultancy Wood MacKenzie concludes that Europe faces a substantial deficit of diesel by 2015 which will not be satisfied by imports from Russia or the Middle East.
The study, The Long and Short of It—European Product Imbalances and their Implications, finds that although a number of large-scale hydrocracking projects are currently planned in Europe, they will not be sufficient to meet the growing deficit.
Fundamentally, demand for middle distillates is forecast to continue to grow rapidly, outpacing any increases in supply from current, planned investments. Where this supply comes from in the future, and what impact this has on refining margins for Europe, is fundamental for the industry and investors to understand.—Aileen Jamieson, Downstream Managing Consultant
The analysis suggests that while Europe is going to become increasingly dependent on importing diesel from other regions, so will the Asia Pacific and the US. Even taking into account planned investment in the Russian refining industry and export refineries geared towards Europe in the Middle East, the additional forecast supply of gas/diesel oil will not meet requirements.
You have to take into account that, at the same time, both Asia Pacific and the US will also be deficit diesel. This means we will need to see further investment in upgrading projects globally, as well as additional refining capacity in Asia.
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