Industry Outlook PTT Auditorium 17 November 2015

Transcription

1 Industry Outlook 2016 PTT Auditorium 17 November 2015

2 Speakers 2

3 Contents Economics Oil & Refining LNG & Gas Petrochemical 3

4 Economics Presented By: Jittinan Aukayanagul Analyst Economics and Industry Research Department

5 5 US Economy: inventories and a strong dollar dragging down growth

6 Euro Area Economy: slow recovery continuing on the back of the ECB s QE 6

7 7 Chinese Economy: growth slowing down amid reforms and property slump

8 Global Economic Outlook: adjusting to lower commodity prices CLIs pointing to outlook of moderating growth in most major economies United States Euro Area China Growth losing momentum Stable growth momentum Growth losing momentum Source : OECD as of Nov 9, 2015 IMF, in Oct 2015, projecting the global economy to grow 3.1% in 2015 and 3.6% in 2016 GDP 2014 Share of World GDP in 2014 $ 77.3 Tn 22.5% 17.3% 6.0% 13.4% 2.7% 3.0% 2.4% 2.7% GDP (% yoy) Oct Jul 2015 Projection Jul Apr 2015 Projection / Source: IMF (Oct 2015) Note: 1/ ASEAN-5 = Indonesia, Malaysia, Philippines, Thailand, and Vietnam 8

9 9 Thai Economy: growth to pick up gradually amid higher public spending and robust tourism Measures for rural boost Real estate sector stimulus package Measures to instill investor confidence and Thailand s competitiveness Soft loans via village funds worth 60 bn baht A budget of 36 bn baht for subdistricts 40 bn baht worth of small govt. projects GHBank to receive a 1-year 10 bn baht budget to provide low-income earners with housing loans A reduction of transfer fees and mortgage fees to 0.01% from 2% and 1%, respectively, for 6 months First-home buyers to deduct taxable income with 20% of home value for a period of 5 years Corporate income tax permanently reduced from 23% to 20% 10-year corporate income tax and dividend tax exemptions for govt. venture capital funds Additional tax incentives to industries in the super clusters/clusters Businesses allowed to double their capex deduction for corporate income tax until end-2016 BOI tax benefits for private investment with actual investment by end-2017

10 10 Contents Economics Oil & Refining LNG & Gas Petrochemical

11 Oil & Refining Presented By: Anintita Praokaew Team Leader Business Planning and Subsidiary Management Department

12 2015 OIL MARKET RECAP $/BBL 120 Russia seized control of Crimea IS Invasion 2013 ICE Brent 2014 ICE Brent 2015 ICE Brent Large inflows of investor fund into oil China Stock Market Crash Price rebound from technical OPEC maintain production ceiling First Bottom Jan 15 Iran Nuclear Yemen Crisis Agreement Second Bottom Aug Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec MMB 1,100 1,000 Crude Inventories* MMB 1,500 1,400 Product Inventories , , Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec * Commercial inventories from U.S., EU, Singapore and Japan 1,100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: PTT International Market Analysis Team, Reuters, Bloomberg, EIA, PAJ, IES, PJK 12

13 SUPPLY NON-OPEC In 2016, Non-OPEC Declines and U.S. Shale Growth Slows Significantly... MMBD U.S. Crude Production VS Rig Count OPEC OPEC Declines and U.S. Shale Growth Slows Significantly MMBD Saudi Arabia OPEC PRODUCTION CHANGE 2015 (MMBD) 2014/2015 YoY 2015/2016 YoY Iraq Iran Nigeria Libya OPEC CRUDE PRODUCTION 2016 (MMBD) Production Rigs Qatar, 0.69 Ecuador, 0.54 Algeria, 1.08 Angola, 1.80 Nigeria, 2.16 Venezuela, 2.23 Libya, 0.38 Saudi Arabia, Kuwait, 2.82 UAE, 2.91 Iran, 3.20 Iraq, 4.24 Source: PTT International Market Analysis, PIRA, Citibank, DOE, Baker Hughes 13

14 DEMAND Cooling Down Demand growth slowdown in 2016 is becoming evident as economic slowdown hampers demand. MMBD MMBD YoY MMBD YoY 2015 Growth 2016 Growth Other U.S. Europe China FSU India Middle East Consumer s Led Market Light ends demand led the growth in 2015 and will lead the majority in MMBD Growth 2016 Growth LPG Naphtha Gasoline Jet Fuel Kerosene Gasoil Fuel Oil Other Low oil price in 2015 stimulates demand growth, especially in U.S., China and Europe. However, growth is expected to slowdown as economic landscape dragged down overall demand. Light ends demand especially gasoline shoots up in 2015 and expected to remain strong towards 2016 while gasoil growth which more related to global economy falls behind. Source: PTT International Market Analysis Team, DOE, IEA, OPEC, Vitol, PIRA 14

15 REFINING BUSINESS MMBD THE GOLDEN AGE REMAINS? Total CDU and Condensate Splitter Capacity Additions/Closure Africa Europe FSU Middle East Latin America North America Asia Total Slowing global economy causes projects stalling. Lower refining capacity additions than earlier is expected before oil prices begin to flatter, especially in China. High crude inventories will continue to give refinery sector an edge over other sector in the energy business. PTT expects 2016 refinery margins remain stable compare to year Source: PTT International Market Analysis Team, Energy Aspects, IEA 15

16 BALANCE MMBD Converging and rebalancing During 2014 to 2015 was the longest streak of oversupply market. Supply and demand already started to converge and form a new balance of oil price Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Demand Supply Assuming OPEC production at 31.1 MMBD before rising gradually in 2Q16 as Iran cargoes hit the market Starting from 4Q 15, fundamentals will start to converge to a new equilibrium. However, an inevitable supply from Iran will still push the rebalancing further to In 2015 and 2016, the world will experience two consecutive years of Capex cut. Thus, in 2017 price needs to go up in order to support new projects and maintain production. Source: PTT International Market Analysis Team, DOE, IEA, OPEC, PIRA 16

17 PRICE SCENARIO Crude Oil Fundamental Dubai Crude Price Scenario MMBD $/BBL BALANCE PRISM Dubai Price Outlook Assumption Brent Dubai Spread Average = $1.5/BBL BULL CASE PRISM VIEW $53 - $ Demand Supply BEAR CASE 2015 Q1/16 Q2/16 Q3/16 Q4/16 Bearish global economy But Demand Growth remains. Due to stock over hang, the market will start to tighten in 2H16. Shale cutback offsets Rising OPEC Supply. FED Tightening Policy encourages volatile capital flow. 16 Sources: PRISM Business Plan (Oct.,15), IEA, EIA, OPEC, PIRA 17

18 18 Contents Economics Oil & Refining LNG & Gas Petrochemical

19 LNG & Gas Presented By: Dulyapun Buranawit Team Leader Liquefied Natural Gas Supply Department

20 Demand and Supply LNG Demand Forecast LNG Supply Volume LNG Projects Under construction Global LNG Supply and Demand 2015: 19 MTPA 2016: 25 MTPA 2017: 35 MTPA 2018: 35 MTPA 2019: 30 MTPA Total: 144 MTPA Source: Wood Mackenzie, LNG World News, BG Energy Outlook

21 LNG Price Outlook and Key Drivers 2016 Henry Hub Outlook 2016 LNG Price Outlook 2016 HH $/MMBTU Long term LNG Price 7 9 $/MMBTU Spot LNG Price 6-7 $/MMBTU Price divergence Source: Wood Mackenzie, PIRA Remark: HH excludes liquefaction fees and freight costs LNG Market Key Drivers for 2016 Bull New LNG demand from emerging countries in South East Asia, Middle East, and Eastern Europe Positive outcomes from United Nation climate change conference in Paris (Nov) Faster-than-expected depletion of indigenous gas in Europe/Asia/South America EU policy for guidance of emission trading system (EU ETS) and gas diversification from Russia Bear New LNG supply from Australian and US projects (GLNG, APLNG, Gorgon, and Sabine Pass) Restart of nuclear power plants in Japan and new commercial operation plants in Korea Wildcard LNG projects in Angola and Yemen might start up their production in 2016 Existing gas price structures in India and China 20 discourage domestic gas consumption 21

22 22 Contents Economics Oil & Refining LNG & Gas Petrochemical

23 Petrochemical Presented By: Ekachai Sirithammasan Vice President Petrochemicals Subsidiary Planning & Management Department

24 Source : IHS 24 Olefins Outlook : Ethylene/PE: Margins to be Softer than This Year 2016 Ethylene New Capacity Outpace Demand Growth Unit : Million Ton Operating rate : % % 88.0% 89.0% % 88.0% Source : IHS % Africa Europe Indian Sub. Middle East 5.1 N. America NEA S. America SEA Demand Operating Rate 6.3 Ethylene/PE capacity growth concentrates in low cost and high demand regions i.e. North America, Middles East, and Asia (mainly from China) Fall in crude oil prices changed the competitive landscape 87.0% 86.0% 85.0% 84.0% 83.0% 82.0% 81.0% 80.0% Source : IHS USD/MT HDPE Operating Rate Start to Decline in 2016 Unit : Million Ton Operating rate : % 84.9% % % % 79.0% Africa Europe Indian Sub. Middle East 1.8 N. America NEA S. America SEA Demand Operating Rate 2.9 Lower Oil Prices Flatten Global Cost Curve 84.0% 83.0% 82.0% 81.0% 80.0% 110$ 90$ 70$ 50$

25 Capacity, mtpa Olefins Outlook : Ethylene/PE: Margins to be Softer than This Year Source : IHS 2015 Asia crackers by capacity and age Ethylene and PE Margins Slightly Decline China Japan Korea Taiwan India SEA Cracker Age in 2015, Years Risk emerge after the lifting of Iran sanction next year. Iran will return to be one of key players with a very competitive feedstock Old and uneconomical crackers in Japan will be closed by 2016 (2 Plants, 1,042 KTA) China s CTO/MTO projects still have several challenges such as limited economic growth, technical issues, environmental issues USD/MT 1,800 1,600 1,400 1,200 1, ,556 1,569 1,604 1,448 1,440 1,447 1, , ,188 1, ,375 1, ,234 1,170 1,242 1, HDPE Price Ethylene Price HDPE- Ethy. Ethy.- MOPS 1,072 1, Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/ Source : PRISM, Oct2015 KTA Operating Rate (%) 72% 74% 76% 72% 80% 61% 8,000 6,000 4,000 2,000 - Source : IHS Iranian Crackers Run at Low Rate during Sanction Total Capacity Domestic Demand Operating Rate (%) 60% 40% 20% 0% 25

26 Olefins Outlook : Propylene: Oversupply from New On-purpose Units Depresses Margin Source : IHS Propylene Pressured from Huge Surplus Unit : Million Ton Operating rate : % % 83.0% % % % 73.0% Africa Europe Indian Sub. Middle East 4.3 N. America NEA S. America SEA Demand 3.8 Operating Rate 81.0% 80.0% 79.0% 78.0% 77.0% 76.0% 75.0% 74.0% Source : IHS 2016 PP New Capacity Outpace Demand Growth Unit : Million Ton Operating rate : % % 86.0% % 84.0% % 84.0% 83.0% 82.0% 81.0% 80.0% 79.0% 78.0% Africa Europe Indian Sub. Middle East N. America NEA S. America SEA Demand Operating Rate global operating rate will decline both of Propylene and PP due to capacity addition of propylene still outpace demand growth since According to the Chinese Government self-sufficient policy, numbers of MTO/CTO plants gradually increase supported by subsidies and PDH plants are also gradually started up in China to fulfill future NEA demand growth. China will be able to improve self sufficient ratio of PP to above 90% in next 5 years. Structure Change of PP and Propylene market after huge investment in On-Purpose On-purpose units have many challenges PDHs in China mostly rely on high cost propane import from Middle East and US. China s CTO/MTO projects still have several challenges such as limited economic growth, technical issues, environmental issues. 26

27 Olefins Outlook : Propylene: Oversupply from New On-purpose Units Depresses Margin On-Purpose Production, Drive Propylene Market Propylene capacity additions by sources (30 Million Ton) MTO/CTO 33% Metathesis 3% Source : IHS Steam Cracker 7% FCC 15% PDH 42% MT Steam Cracker PDH MTO/CTO % On Purpose % On Purpose 30% FCC Metathesis Other 25% 20% 15% 10% 5% 0% USD/MT 1,800 1,600 1,400 1,200 1, Propylene Margins Decline from Market Pressure 1,369 1,279 1,301 1, Propylene Price Propy MOPS Q1/14Q2/14Q3/14Q4/14Q1/15Q2/15Q3/15Q4/ Source : PRISM, Oct global operating rate will decline both of Propylene and PP due to capacity addition of propylene still outpace demand growth since According to the Chinese Government self-sufficient policy, numbers of MTO/CTO plants gradually increase supported by subsidies and PDH plants are also gradually started up in China to fulfill future NEA demand growth. China will be able to improve self sufficient ratio of PP to above 90% in next 5 years. Structure Change of PP and Propylene market after huge investment in On-Purpose On-purpose units have many challenges PDHs in China mostly rely on high cost propane import from Middle East and US. China s CTO/MTO projects still have several challenges such as limited economic growth, technical issues, environmental issues. 27

28 Aromatics Outlook : PX Market Surplus Pressures Margin PX Capacity also Outstripped Demand PX spreads are expected to be held at low levels Unit : Million Ton Operating rate : % % 78.0% 76.8% % % % Source : IHS % Africa Europe Indian Sub. Middle East N. America NEA S. America SEA Demand Operating Rate 2016 global operating rate will decline as capacity addition still outpaces demand growth Overcapacity will force more rationalization Lower oil prices reduce production costs 75.0% 74.0% 73.0% 72.0% 71.0% USD/MT 1,800 1,600 1,400 1,200 1, USD/MT 2,000 1,800 1,600 1,400 1,200 1, ,262 1,236 1, PX Price PX MOPS Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/ Source : PRISM, Oct2015 Integrated ME and US PX Cost and Competitiveness New Integrated Asia Older/Smaller NEA Europe Small and Nonintegrated Plant Closure Cumulate Capacity (Million Ton) Source : IHS 28

29 Aromatics Outlook : BZ Remains Strong Thanks to Shale Gas Stable Demand Growth from Derivative Support BZ Market Unit : Million Ton Operating rate : % % 73.0% Source : IHS 71.1% % % Africa Europe Indian Sub. Middle East 1.1 N. America NEA S. America SEA Demand Operating Rate 72.0% 71.0% 70.0% The benzene market is inherently unbalanced with inelastic supply, nonintegrated demand and growing deep sea trade 2016 global operating rate will improved from 2015 operating rate due to demand growth outpace supply growth Lighter feedstock reduces benzene output 0.7 USD/MT 1,800 1,600 1,400 1,200 1, BZ spreads are expected to be held at low levels 1,299 1,292 1, BZ Price BZ MOPS Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/ Source : PRISM, Oct2015 Lighter Cracker Feedstock Reduces Benzene Output Ton BZ per ton Ethylene Lighter Feedstock 0.00 Ethane Propane Butane Light Heavy Gas Oil Naphtha Naphtha Source : IHS 29

30 Thank you PTT Public Company Limited Investor Relations Department Tel , Fax , ir@pttplc.com Website: Disclaimer The information contained in our presentation is intended solely for your personal reference only. In addition, such information contains projections and forward-looking statements that reflect our current views with respect to future events and financial performance. These views are based on assumptions subject to various risks and uncertainties. No assurance is given that future events will occur, that projections will be achieved, or that our assumptions are correct. Actual results may differ materially from those projected. Petroleum Reserves and Resources Information In this presentation, the Company discloses petroleum reserves and resources that are not included in the Securities Exchange and Commission of Thailand (SEC) Annual Registration Statement Form 56-1 under Supplemental Information on Petroleum Exploration and Production Activities. The reserves and resources data contained in this presentation reflects the Company s best estimates of its reserves and resources. While the Company periodically obtains an independent audit of a portion of its proved reserves, no independent qualified reserves evaluator or auditor was involved in the preparation of reserves and resources data disclosed in this presentation. Unless stated otherwise, reserves and resources are stated at the Company s gross basis. This presentation may contain the terms proved reserves, probable reserves, and/or contingent resources. Unless stated otherwise, the Company adopts similar description as defined by the Society of Petroleum Engineers. Proved Reserves - Proved reserves are defined as those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions, operating methods, and government regulations. Probable Reserves - Probable reserves are defined as those unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable. Contingent Resources Contingent resources are defined as those quantities of petroleum which are estimated, on a given date, 29 to be potentially recoverable from known accumulations, but which are not currently considered to be commercially recoverable. The reasons for non commerciality could be economic including market availability, political, environmental, or technological. 30

31 31 Q & A 30