London, 19 October (Argus) — The share of global refining capacity accounted for by the member countries of the Gulf Co-operation Council will rise to 5.2pc or 5.2mn b/d by 2015, up from 4.2pc now and 3.6pc in 2000, credit ratings agency Moody's said in a report today.
The countries in the group — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE — have competitive advantages that mitigate the risks of capital intensive and cyclical industry with volatile margins, the report said. Expansion projects there are large-scale and of high complexity. They focus on heavier feedstocks, which tend to be cheaper, and benefit from economies of scale. Delivered feedstock prices are cheaper because of their proximity to upstream production. Many of the projects are not due on stream until after 2014, when demand is forecast to have recovered to 2008 levels.
In addition, refiners in the GCC will escape tougher environmental conditions prevailing in the EU and US. Project financing is expected to be increasingly important and regional governments are well-placed to use accumulated hydrocarbon wealth to support projects whose viability will be aided by the current rising trend in oil prices and lower engineering, procurement and construction costs.
Some 66pc of GCC oil and gas exports go to Asia-Pacific markets. European and North American demand is forecast to decline, in the Mideast and Asia it is seen growing over the next five years, with the GCC expected to capture most of the increase, Moody's said.
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