Indonesian gasoline demand rises, gives new use for surplus European gas

Indonesia’s growing gasoline demand could help open a new trade route for the fuel in the next five years, as cargo starts heading to Asia on a regular basis from a European market facing a fuel glut.
Asia has plenty of gasoline suppliers now. Taiwan, China, South Korea, Singapore and India provide more than the region can absorb from key exporters such as Reliance Industries, SK Energy and Formosa Petrochemical Corp.
At the same time, Indonesia is set to become the world’s biggest importer of gasoline by 2018, overtaking the United States and Mexico combined, offering refiners a market as Europe remains well-supplied and as the United States cuts imports due to a domestic shale oil boom.
“Even after factoring in refinery closures, Europe will still need to manage their surplus,” Sushant Gupta of research and consulting firm Wood Mackenzie said.
Refinery closures in Japan and Australia due to poor local margins will decrease Asian supply, at the same time as gasoline demand in Asia is expected to grow in the 3-4% range annually between 2012 and 2015, said Victor Shum of energy information group IHS.
“Overall, we forecast the Asian gasoline surplus to vanish by around 2017, 2018, after which the region is expected to turn into a net importer,” said David Wech of JBC Energy. That will keep Reliance and South Korean refiners running their units at high rates, he said.
China, the world’s second-largest gasoline consumer after the United States, may also have to scale back on its exports. The country will add 3 million barrels per day (bpd) of new capacity between 2013 and 2015 to meet rising demand.
Between January and August 2013, China shipped nearly 53% of its gasoline exports of 3.3 million tons (approximately 28 million barrels) to Indonesia, Chinese official data showed. That’s about 17% of Indonesia’s average monthly imports of around 11 million barrels.
Indonesia’s gasoline deficit is likely to grow to 420,000 bpd in 2018, compared with an estimated 360,000 bpd this year, even if state-owned oil company PT Pertamina adds a new 60,000 bpd residue fluid catalytic cracker (RFCC) in 2015 in Cilacap refinery, according to Wood Mackenzie.
Europe, which will have between 400,000 and 500,000 bpd of excess gasoline for the next five year, seems the most logical supplier for Asia, while U.S. gasoline imports continue to fall.
U.S. gasoline import demand fell to 650,000 bpd of gasoline in 2012, about half of the 2008 levels, although the descent is now likely to slow, so European refiners will need to find alternative markets.
(October 7, 2013)