Southern Europe oil, gas and petrochemicals

Croatia

BMI has reported that in November last year, Croatia revived stalled plans to construct an LNG terminal on Krk Island. A new feasibility study for the project has been announced and officials are hoping to identify firms and countries interested in the project over the course of this year. Going downstream, the sector’s future remains uncertain as in November 2014, authorities confirmed talks between the government and operator INA regarding the possible closure of the Sisak refinery. Croatian authorities reportedly remain opposed to the closure of the facility. The US has apparently offered to help resolve a long running dispute over management between the government and Hungarian oil company MOL, providing the name of possible mediators. MOL’s proposal to shutdown the Sisak facility has exacerbated tensions with the government, although there is no clear indication as to when the dispute might be resolved.

Greece

Hydrocarbons production in Greece is forecast to decline by 0.6% this year, while consumption is expected to go up by 1.3%, leaving a net short fall of 356 000 bpd that will need to be imported. Downstream, BMI has said that the expertise of Greek refiners and the country’s place as a regional refining hub has made the country one of the preeminent downstream markets in Europe. Upgrades to refineries, coinciding with a depression in domestic fuel demand, means that Greece is now a significant fuels exporter, albeit almost exclusively of crude extracted elsewhere. BMI has said however that the refining sector is facing external pressure from competitors in MENA and North America as margins shrink and demand flattens for refined products.

BMI has reported that this year, the crude oil net import bill will come in at US$19.5 billion, reflecting the demand from refineries, with net crude oil imports reaching 505 200 bpd. The significant crude oil import cost will be offset by net fuels exports of approximately 230 000 bpd, valued at US$9.5 billion. Gas imports are expected to be US$2.5 billion in 2014, rising to US$2.7 billion by 2017.

Slovenia

Gas demand in Slovenia fell by 12% in 2012 and made partial recovery in 2013, growing by 5% and BMI has said that it is expected to reach 1 billion m3 by 2017, increasing further to 1.3 billion m3 by 2023. Domestic production for 2018 – 2023 is forecast to come in at approximately 0.5 billion m3/y based on the Petisovci Lovaszi project, which means that there will be a greatly reduced import requirement. Further success in proving up reserves and production potential could mean upside risk in terms of domestic gas supply, according to BMI.

BMI expects oil consumption to track the underlying GDP trend, with demand keeping pace with economic growth. With four years of consecutive negative growth since 2010, oil consumption has gone through a small contraction. A lack of supply infrastructure means a more dramatic rise in oil use is unlikely until much later in the BMI 10 year forecast. Slovenia consumed approximately 1% less oil in 2013. 2014 consumption is estimated to have dropped a further 1% with an economy that is stagnant, to 54 200 bpd. Consumption will however, BMI believes, pick up timidly from this year, reaching 54 500 bpd with estimates suggesting the country will finally achieve GDP growth of 2% after five years characterised by the double dip recession. GDP growth for this year should continue to be positive at 2.2%. BMI projections state that oil consumption could hit 55 300 bpd in 2017, before rising further to 57 300 bpd in 2013, this will be met entirely by imports.

Turkey

It has been said by BMI that the import dependent market ensures that Turkey will remain a significant polymer market, bud demand trends will influence the performance of imports. However, as an export oriented industry producer, the performance of the EU market will be crucial to the structure and imports, which will pose a downside to domestic market activity. BMI has also said that the fundamentals of the country’s petrochemicals market will keep the market on the watch list for investors, particularly in relation to opportunities n the PVC and construction polymers market.

Edited from report briefs by Claira Lloyd

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