APPEC-Global oil demand seen reaching pre-pandemic levels by early 2022

SINGAPORE, Sept 27 (Reuters) – World gas demand is predicted to achieve pre-pandemic ranges by early subsequent yr because the financial system shrugs off pandemic woes, however spare refining capability is more likely to weigh on outlook, oil producers and merchants mentioned on Monday.

Whereas a persistent rise in COVID-19 infections in a number of markets has harm restoration in demand for some refined merchandise reminiscent of jet gas, consumption traits of petrol and diesel point out increased development, the business leaders mentioned.

They had been talking on the Platts APPEC 2021 convention that’s being held in a hybrid format this yr, together with each in-person and digital contributors.

“We noticed refining margins rebound as demand rebounded … However total for the world, there’s nonetheless loads of unutilised capability and loads of capability has been taken off stream,” mentioned Eugene Leong, president of BP Singapore and CEO of BP’s buying and selling & transport arm of Asia Pacific and the Center East.

“The spare (refining) capability might be going to behave as a bit of little bit of a cap on margins,” he mentioned in a pre-recorded speech for the convention.

“This yr alone we have seen some mega refining (and) petrochemical complexes begin up, so I feel that is going to be difficult for refining.”

In China, new mega refiner Shenghong Petrochemical is about to start out trial operations quickly, whereas Zhejiang Petrochemical accomplished two new crude items earlier this yr.

Malaysia’s Petronas additionally hopes to restart operations at its 300,000 barrels-per-day refinery-petrochemical advanced with Saudi Aramco by yr finish, mentioned Arif Mahmood, Petronas’ govt vp and CEO of downstream.

Nevertheless, recovering demand is predicted to spice up income for refiners and create extra room for returning or new manufacturing.

GLOBAL DEMAND RECOVERY

Brent crude futures have jumped greater than 50% this yr to their highest since October 2018, helped by a restoration in gas demand in addition to tighter provides from the Group of the Petroleum Exporting Nations and its allies together with Russia, a bunch generally known as OPEC+.

U.S. oil and gasoline producer Hess Corp expects international demand to climb to pre-pandemic ranges of 100 million barrels per day (bpd) by the top of this yr or early 2022, its president, Greg Hill, mentioned.

The Worldwide Power Company (IEA) has additionally forecast a sturdy rebound from the fourth quarter, citing “robust pent-up demand and continued progress in vaccination programmes”.

It expects international oil demand to common 96.1 million bpd in 2021 and 99.4 million bpd in 2022, versus 90.9 million bpd in 2020. The OPEC expects demand to common 99.70 million bpd within the fourth quarter of 2021.

In the meantime, India’s personal refiner Nayara Power hopes to function its 400,000 barrels per day (bpd) refinery at near 100% capability in 2021 as gas demand picks up, CEO Alois Virag mentioned.

India’s gas demand is more likely to rise by 9%-11% as its financial system is “steered in the direction of increased development” after the easing of the second wave of COVID-19 infections, he mentioned.

“Relating to refining, petroleum merchandise, we stay cautious,” mentioned Petronas’ Arif, including that journey curbs proceed to weigh on aviation gas demand restoration.

“We’ll see restoration hopefully in the direction of the top of this yr, early subsequent yr,” Arif mentioned, including “there’s oversupply of refining capability”.

Reporting by Florence Tan, Koustav Samanta, Roslan Khasawneh and Jessica Jaganathan in Singapore, Sonali Paul in Melbourne and Nidhi Verma in New Delhi; Modifying by Himani Sarkar

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