PFC Energy: The Mediterranean oil product markets have historically been dominated by the Western European Med markets (France, Italy and Spain), both in terms of demand (47% of demand in 2008) and in terms of refining production (48% of supply in 2008). Going forward, however, Western European markets will see their weight progressively decline, due to a decline in demand and to challenges for some of its refineries.
The situation is quite different in the other side of the Med, where demand growth is expected and a few select refinery projects are likely to materialize in the next five to ten years. This is particularly true for North Africa, where the potential for medium to long-run demand growth remains substantial and several refinery projects are mooted. In the short run, the economic crisis is of course impacting demand in all the Mediterranean countries, but not all of them to the same extent; demand remains more robust in developing countries, where prices are subsidized, while it has been severely impacted in OECD countries, where demand is forecast to remain flat at best in the longer run. In these conditions, the most likely greenfield refining projects to come onstream will be concentrated in countries enjoying sustained demand growth, crude oil production and/or new pipeline transit; in a word, North Africa and Turkey. The crisis will thus deepen the structural shifts among the different parts of the Mediterranean Basin, with the Basin’s epicenter moving toward the South and East…read more