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Subdued oil demand growth means the prospects for refiners and fuels distributors – which are already facing strong competition and a need to maintain investment for environmental reasons – are not good. The closure of Petroplus' Antwerp plant has resulted in still greater downstream uncertainty. The gas market has greater potential, both in terms of rising domestic demand and the scope to re-sell surplus LNG through regional pipeline links. The market is mature meaning there is a risk that leading industry players may divest as they seek higher growth and wider margins elsewhere.
The main trends and developments we highlight for Belgium's Oil and Gas sector are:
- Petroplus, Europe's largest independent refiner, announced in January 2012 that it had shut down its 107,500 barrels per day (b/d) Antwerp refinery, along with others in Europe, after a syndicate comprising 13 banks froze a US$1bn credit facility the company was using to buy crude feedstock. Belgian Refining Corporation, which owns the Antwerp refinery, has filed for judicial reorganisation proceedings. Buyers are being sought for this plant and others owned by Petroplus in the UK, Germany, France and Switzerland.
- With nuclear generation capacity to remain stagnant over the next few years, before reactors are dismantled under the proposed phase-out, new electricity generating capacity is likely to be largely gas-fired, with some emphasis on renewables. We expect to see Belgian gas demand rise from around 19.4bn cubic metres (bcm) in 2011 to 20.5bcm by 2016, all met by increased pipeline and liquefied natural gas (LNG) imports.
- Gas could flow in both directions between France and Belgium by 2015 after the countries' energy regulators approved a new interconnection point at the Belgium border town of Veurne. The Veurne interconnector would connect non-odourised gas coming from France with the Belgian grid, according to project documents seen by energy data provider Platts. The interconnector would allow 8.4bcm-11.3bcm to be exported from France to Belgium each year, and CRE expects it to come on line in late 2014 or early 2015.
- Belgium imported a net 6.43bcm of gas in the form of LNG in 2010. We expect volumes to move higher in line with rising gas consumption, but near-term progress is likely to be slow. There were exports in 2010 of 0.57bcm. Belgium is expected to import 7.0bcm per annum of LNG by 2015/16.
- As with most of Developed Europe, Belgium is experiencing slow growth in oil consumption. Our assumption is that oil demand will have risen only slightly in 2011 to 603,750b/d. By 2016, we see demand at no more than 629,020b/d.
- The cost of crude imports is thought to have been US$23.69bn in 2011, easing to US$21.40bn by 2016. The cost of gas purchases was put at US$10.38bn in 2011 and should be US$9.50bn in 2016. Combined oil and gas costs are expected to be US$30.9bn by the end of the forecast period. At the time of writing we assume an OPEC basket oil price for 2012 of US$99.38/bbl, falling to US$97.23/bbl in 2013. Global GDP in 2012 is forecast at 3.2%, up from an assumed 3.1% in 2011, reflecting a faltering recovery in the US and uncertainty with regard to the eurozone debt situation. For 2013, growth is estimated at 3.7%.
Click for Report details:Belgium Oil and Gas Report Q2 2012