Report Published: "Belgium Oil & Gas Report Q3 2013"

From: Fast Market Research, Inc.
Published: Mon Jul 22 2013

Subdued oil demand growth means the prospects for refiners and fuels distributors are poor, with many already facing strong competition. The purchase and reopening of Petroplus' Antwerp plant should reduce downstream uncertainty and the US$1bn modernisation scheme approved for Total's Antwerp facility is a boost for the region's battered downstream sector. With no domestic reserves of oil or gas, there is some upside from nascent efforts to tap Belgium's coal bed methane (CBM) potential.

The main trends and developments in Belgium's oil and gas sector are:

* Although we forecast both gas reserves and production to remain at zero, we highlight efforts by Dart Energy and NVM's joint venture Limburg gas that will help to determine the feasibility of commercial recovery of coal bed methane. The Flemish Institute of Technology estimates the Limburg area could contain 7bn cubic metres (bcm) worth of gas.
* If commercial, such volumes would ease the country's total dependence upon imports, yet at present, we believe it is more likely that any output would not only be outside our forecast period, but would stem rather than halt the country's dependence upon imports. However, Dart has suggested production may be possible from 2019.
* Total confirmed a US$1.29bn investment plan that would boost diesel production capacity at its Antwerp plant. The refinery would not see a cut in its 350,000 barrels per day (b/d) output, but would produce less heavy fuel in a move that Total says could result a US$500mn boost to its refining and petrochemical earnings.
* Petroplus, Europe's largest independent refiner, announced in January 2012 that it had shut down its 107,500b/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. In May 2012, Gunvor Group said that it had successfully completed the purchase of the Antwerp refinery, along with the remaining inventory of stock located at the plant. Cyprus-registered Gunvor is one of the world's largest oil traders and exports about 30% of Russia's crude oil.
* 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 gasfired, with an emphasis on renewables. We forecast that Belgian gas demand will rise to 19.8bcm by 2017 and 21.3bcm by 2022 - all met by increased pipeline and liquefied natural gas (LNG) imports. * Belgium imported a net 6.57bcm of gas in the form of LNG in 2011, with Qatar the dominant supplier.
We expect volumes to move higher in line with rising gas consumption, although near-term progress is likely to be slow. Belgium is expected to import 8.0bcm per annum of LNG by 2016 and 9bcm by the end of our 10-year forecast period in 2022, with further upside from possible capacity expansions.

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