Tài liệu OIL MARKET REPORT 2013 pdf

18 January 2013
HIGHLIGHTS


• Crude oil prices edged higher as 2012 drew to a close, gathering
strength from seasonally stronger winter demand and geopolitical
concerns. By mid-January, prices were trading above December
levels, with Brent at $110.75/bbl and WTI around $95.15/bbl.

• The world is forecast to consume 90.8 mb/d of oil in 2013, 240 kb/d
more than in last month’s report and 930 kb/d (1.0%) up on 2012. A
raised 4Q12 demand estimate and heightened expectations for China
are the main contributors to the hike.

• Global supplies fell by 170 kb/d in December, to 91.2 mb/d. Non-
OPEC production rebounded by 90 kb/d from the prior month, to
54.2 mb/d and is expected to increase by 590 kb/d in 1Q13 y-o-y. For
2013, non-OPEC production is projected to rise by 980 kb/d to
54.3 mb/d, the highest growth rate since 2010.

• OPEC crude supply in December fell to its lowest level in a year at
30.65 mb/d on lower output from Saudi Arabia and Iraq. Average OPEC
crude output reached an historic high in 2012 in the wake of continued
global demand growth. The ‘call on OPEC crude and stock change’ for
2013 was raised by 100 kb/d, to 30 mb/d.

• OECD industry inventories drew by 18.7 mb in November, led by a
further drop of 11 mb in middle distillate stocks, extending earlier
declines. On a forward demand basis, total products cover fell by 0.5
days to 30 days in November. December preliminary data point to a

further 18.4 mb decline in OECD industry inventories.

• Global refinery runs rose 1.5 mb/d y-o-y to around 75.9 mb/d in
4Q12, with growth in refining activity concentrated in China, India and
Russia. Favourable refining margins, a gradual reduction in offline
capacity and a cold snap in Asia and the FSU supported refinery
throughputs in the last months of 2012.


TABLE OF CONTENTS
HIGHLIGHTS 1
CROUCHING TIGER, HIDDEN DRAGON 3
DEMAND 4
Summary 4
Global Overview 4
Top-10 Consumers 5
Chinese Demand Forecast Upgraded 7
OECD 11
Americas 12
Europe 12
Asia Oceania 12
Non-OECD 13
SUPPLY 14
Summary 14
OPEC Crude Oil Supply 15
Non-OPEC 20
OECD 20
Americas 20
Up Against the Export Wall: Hurdles to US LTO Production Growth 22
North Sea 27

OECD Asia 27
Non-OECD 28
Former Soviet Union 28
Middle East 29
Africa 29
Latin America 29
Asia 30
OECD STOCKS 31
Summary 31
OECD Inventory Position at End-November and Revisions to October Data 31
Analysis of Recent OECD Industry Stock Changes 32
OECD Americas 32
OECD Europe 33
OECD Asia Oceania 34
Recent Developments in Singapore and China Stocks 35
PRICES 37
Summary 37
Market Overview 37
Futures Markets 39
Activity Levels 39
Market Regulation 41
The Changing Structure of Energy Trading Markets 42
Spot Crude Oil Prices 44
Spot Product Prices 46
Freight 48
REFINING 49
Summary 49
Global Refinery Overview 49
OECD Refinery Throughputs 52
Non-OECD Refinery Throughputs 56

TABLES 61
INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT MARKET OVERVIEW
3 18 JANUARY 2013

CROUCHING TIGER, HIDDEN DRAGON

This first Report since the year-end holidays paints a sobering, ‘morning after’ view of the oil market. In
one fell swoop, the estimate of the ‘Call on OPEC’ for 4Q12 has been nudged up by 400 kb/d. All of a
sudden, the market looks tighter than we thought. On the demand front, a marked departure in Chinese
apparent demand from the preceding low-growth trend brings to mind Napoleonic metaphors about
awakening dragons. On the supply front, a down tick in Saudi production from the 30-year highs that had
characterised it through so much of last year gave headline writers a field day, sparking much hand
wringing about Saudi budget needs and price appetite. OECD inventories are getting tighter – a clean
break from the protracted and often counter-seasonal builds that had been a hallmark of 2012.
5
6
7
8
9
10
11
Jan Mar May Jul Sep Nov Jan
mb/d
China
Range 07-11 Average 07-11
2012 2011
Refinery runs

7.5
8.0

8.5
9.0
9.5
10.0
10.5
Jan Ma
r
May Jul Sep Nov Jan
mb/d
Saudi Arabia
Range 07-11 Average 07-11
2011 2012
Crude Production


It may be too early, however, to declare the start of a new market cycle or a return to the bull market of
yesteryear. Both Chinese demand and Saudi supply are too complex for hasty interpretations. In
hindsight, the latest twists in Chinese and Saudi data may partly reflect fleeting factors. The dip in Saudi
supply, for one, seems less driven by price considerations than by the weather. Analysts often lose sight
of the fact that Saudi Arabia has become its own single largest customer. A dip in air conditioning
demand – as well as reduced demand from refineries undergoing seasonal maintenance – likely goes a
long way towards explaining reduced output. Nothing for the global market to worry about.

Chinese data are another story. The prospects for the Chinese economy, ultimately the main driver of
the country’s demand, are as clear as the Beijing sky. Chinese economic indicators have been mixed, but
recent bullish readings have signalled the potential for a rebound. There is no lack of alternative
explanations for the latest demand data, though. First, tax changes might have offered market
participants – including the so-called ‘teapot’ refineries an incentive to boost refinery runs before they
came into effect. Apparent 4Q12 demand might thus include ‘borrowed’ 1Q13 demand. Second, record-
high refinery runs – supported also by the start-up of a swath of new state-owned capacity – likely

caused large product builds, weakening the validity of apparent demand estimates. As the country’s
refining capacity leaps ahead of demand growth, apparent demand will become an increasingly blunt
and misleading proxy for consumption. Brutal swings in apparent demand in both directions may
become a fact of life, masking unreported inventory builds and draws.

The bull market of 2003-2008 was all about demand growth and perceived supply constraints. The bear
market that followed was all about financial meltdown. Today’s market, as the latest data underscore,
has a lot to do with political risk writ large, and not just in Syria, Iran, Iraq, Libya or Venezuela. Changes in
tax and trade policies, in China as in Russia, can, at the stroke of a pen, shakeup crude and products
markets and redraw the oil trade map. Producer country policies on power generation and price
subsidies loom as large in oil supply as E&P investment or EOR technology. As producer demand grows,
so will those policies’ impact. Nor are OECD economies free from political risk. The abrupt shifts in oil
markets in the last year expose instances where resources and regulations – such as export and shipping
legislation – have become misaligned. Bringing tomorrow’s oil supply to market may hinge on resolving
those ‘above-ground’ issues as much as on geology, investment, technology or anything else.
DEMAND INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT

4 18 JANUARY 2013
DEMAND

Summary
• Estimates of global oil demand for 2012 have been revised upwards to 89.8 mb/d on stronger-than-
expected 4Q12 data. Demand growth for 2012 is now estimated at 975 kb/d (or 1.1%), 175 kb/d
more than assumed in December’s OMR. Fourth-quarter demand surprised on the upside, with the
greatest upwards revisions seen in China (+200 kb/d), the US (+155 kb/d) and Brazil (+155 kb/d). The
demand forecast for 2013 has been revised upwards by 240 kb/d, to 90.8 mb/d, underpinned by
higher Chinese demand expectations; yet continuing concerns about the macroeconomic
environment keep growth relatively restrained at 930 kb/d.

Global Oil Demand (2011-2013)

(million barrels per day)
1Q11 2Q11 3Q11 4Q11 2011 1Q12 2Q12 3Q12 4Q12 2012 1Q13 2Q13 3Q13 4Q13 2013
Africa
3.3 3.3 3.2 3.3 3.3 3.4 3.4 3.4 3.5 3.4 3.5 3.5 3.5 3.6 3.5
Americas
30.3 30.1 30.7 30.4 30.4 29.8 30.3 30.5 30.7 30.3 30.0 30.2 30.8 30.9 30.5
Asia/Pacific
29.0 27.7 27.8 29.2 28.4 30.0 28.7 28.8 30.3 29.4 30.6 29.4 29.3 30.5 29.9
Europe
14.9 14.8 15.4 14.8 15.0 14.4 14.5 14.5 14.6 14.5 14.0 14.0 14.5 14.5 14.3
FSU
4.2 4.4 4.6 4.6 4.4 4.5 4.5 4.7 4.7 4.6 4.6 4.6 4.8 4.9 4.7
Middle East
6.9 7.4 7.8 7.3 7.4 7.1 7.7 8.0 7.5 7.6 7.3 7.8 8.3 7.7 7.8
World 88.7 87.6 89.4 89.7 88.9 89.1 89.0 90.0 91.2 89.8 90.1 89.6 91.3 92.0 90.8
Annual Chg (%) 2.5 0.4 0.8 0.2 0.9 0.5 1.5 0.6 1.7 1.1 1.1 0.8 1.4 0.9 1.0
Annual Chg (mb/d) 2.1 0.4 0.7 0.2 0.8 0.5 1.3 0.5 1.6 1.0 1.0 0.7 1.3 0.8 0.9
Changes from last OMR (mb/d) 0.00 0.00 0.00 0.00 0.00 0.00 0.02 -0.02 0.71 0.17 0.12 0.15 0.20 0.49 0.24


• Chinese manufacturing sentiment continued to improve in 4Q12, supporting an apparent uptick in
oil demand growth in the world’s second largest consumer. Chinese implied demand reached an
estimated 10.1 mb/d in 4Q12, an increase of 700 kb/d on the year. Coming on the heels of relatively
slow growth through most of 2012, the 4Q12 acceleration surprised with its velocity. This heady pace
of growth is unlikely to be sustained in 2013, as one-off factors helped support 4Q12 demand, but the
forecast for the year as a whole has still been revised higher by 135 kb/d, to 10 mb/d. Chinese
demand growth for 2013 is now projected at 390 kb/d (or 4.0%).

• Early indicators of 4Q12 US demand point to higher-than-expected average consumption of
18.8 mb/d, 155 kb/d more than the projection carried last month, but still down by 100 kb/d (or

0.5%) on the year. The 4Q12 decline is the shallowest contraction in US demand in nearly two years.

Global Overview
The latest global demand estimate for 4Q12 comes out at 91.2 mb/d, equivalent to year-on-year growth
of 1.7 mb/d (or 1.7%). This is 710 kb/d more than forecast in last month’s Report. The most notable 4Q12
upwards revisions centred on China (200 kb/d higher), the US (+155 kb/d), Brazil (+155 kb/d), Russia
(+55 kb/d), Korea (+40 kb/d), Belgium (+40 kb/d) and Saudi Arabia (+30 kb/d). Underpinning these
adjustments were higher-than-expected October estimates, with the biggest revisions being the US
(235 kb/d higher), Brazil (+225 kb/d), China (+155 kb/d) and Saudi Arabia (+95 kb/d). Those revisions
more than offset downwards adjustments to demand for the UK (50 kb/d lower), India (-45 kb/d),
Germany (-40 kb/d), Canada (-30 kb/d) and Russia (-15 kb/d). Preliminary November data also impacted
the 4Q12 demand estimate, with big additions being seen in data for China, the US, Brazil, Korea, Russia
and France, offsetting downward adjustments for India, Italy, Spain and Poland.
INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT DEMAND
18 JANUARY 2013 5
Global Oil Demand Growth 2011/2012/2013
thousand barrels per day
(
mb/d
)
2011 0.84 1.0%
2012 0.98 1.1%
2013 0.93 1.0%
Global Demand Growth
206
256
155
229
49
194

118
124
2
North America
Latin America Africa
Middle East
Europe
664
1017
507
Asia
-333
-488
-224
281
134
164
FSU
-75
-241
15


For 2012 as a whole, global demand is estimated at 89.8 mb/d, 975 kb/d (or 1.1%) more than in 2011,
with strong Asian demand (+1.0 mb/d) leading the increase. Non-OECD Asian demand expanded by an
estimated 675 kb/d, or 3.3%, while Japanese fuel switching away from nuclear power generation
supported OECD demand growth. Projections for 2013 demand growth remain relatively subdued at
930 kb/d (to 90.8 mb/d). Upwards revisions to Chinese demand forecasts fail to offset continued
concerns about the broader macroeconomic environment and reduced support from Japanese fuel
switching.

Global Oil Product Demand
70,000
75,000
80,000
85,000
90,000
1996 2000 2004 2008 2012
kb/d
-1,400
-600
200
1,000
1,800
2,600
Y-o-Y
Chg

World: Oil Demand Growth by Product,
2009-2013, mb/d
(1.0)
(0.5)
-
0.5
1.0
1.5
2009 2010 2011 2012 2013
(2.0)
(1.0)
-

1.0
2.0
3.0
Gasoline Distillates
LPG & Naphtha Fuel Oil
Other Total (RHS)


Top-10 Consumers
Opposite seasonal factors in two of the world’s top consumers saw Brazil and Saudi Arabia switch
positions in our top-10-rankings for October, as reduced air conditioning demand in Saudi Arabia
countered the impact of a counter-seasonal gain in Brazil. Both nations traditionally see falling month-
on-month demand trends in October, but only Saudi Arabia fell in October 2012. Germany and Canada
also traded places, as Canadian demand fell seasonally month-on-month in October, but German
demand rose counter-seasonally. Mexico also made a late run for tenth spot in the October rankings,
replacing South Korea as expected. The change occurred as additional replacement demand arose on
account of the closure of Pemex’s Reynosa gas processing facility. Korea will likely soon regain its 10
th

spot in the rankings, as strong seasonal domestic demand is likely to return in November.

DEMAND INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT

6 18 JANUARY 2013
Top-10 Oil Consumers
(thousand barrels per day)
Oct-12 2012 2013 Oct-12 2012 2013 Oct-12 2012 2013
US50 18,781 18,696 18,702 -121 -313 6 -0.6 -1.6 0.0
China 9,749 9,595 9,984 739 352 388 8.2 3.8 4.0
Japan 4,422 4,698 4,529 28 234 -169 0.6 5.2 -3.6

India 3,624 3,645 3,747 165 131 101 4.8 3.7 2.8
Russia 3,389 3,370 3,520 -14 118 150 -0.4 3.6 4.5
Brazil 3,193 3,018 3,098 272 124 80 9.3 4.3 2.7
Saudi Arabia 3,116 3,040 3,167 304 166 127 10.8 5.8 4.2
Germany 2,510 2,349 2,326 2 -52 -23 0.1 -2.1 -1.0
Canada 2,278 2,329 2,329 88 40 0 4.0 1.7 0.0
Mexico 2,275 2,151 2,157 206 18 7 10.0 0.8 0.3
% global demand 59% 59% 59%
Demand Annual Chg (kb/d) Annual Chg (%)


Collectively the world’s ten largest oil consumers used 53.3 mb/d of oil products in October, which
roughly accounts for two-thirds of total global demand.

US
Preliminary estimates of 4Q12 US50 demand surprised on the upside, with average consumption now
predicted at 18.84 mb/d, 155 kb/d higher than projected in December’s OMR. Although the updated
4Q12 demand estimate is still 100 kb/d (or 0.5%) below 4Q11 figures, the annual decline rate was the
shallowest in nearly two years. Domestic transportation fuels led the revival, jet fuel demand rose by an
estimated 1.4% (to 1.42 mb/d) and gasoline by 0.2% (to 8.65 mb/d).

US50: Total Oil Product Demand
17,500
18,500
19,500
20,500
21,500
Jan Apr Jul Oct Jan
kb/d
Range 07-11 5-year avg

2011 2012

US50: Motor Gasoline Demand
8,200
8,600
9,000
9,400
9,800
Jan Apr Jul Oct Jan
kb/d
Range 07-11 5-year avg
2011 2012


Diminished pessimism has emerged in recent months: with the political status-quo maintained without
too much fuss; higher than anticipated 4Q12 demand; and, most importantly, the initial stages of the
circumnavigation of the US ‘fiscal cliff’. True, further flash points lie in wait concerning the US debt
ceiling, but January’s much anticipated hurdle passed without too much pain for world economies,
providing support for the IMF’s long held belief that economic growth will remain above 2% in 2013.
Indeed, such predictions of relative macroeconomic buoyancy allow us to maintain our belief that US
demand will essentially remain flat on the year.

China
Strong Chinese apparent demand growth in October of 740 kb/d y-o-y, to 9.7 mb/d, cements China’s
place as the world’s second largest oil consumer. Preliminary estimates for November imply further gains
of around 830 kb/d, to 10.4 mb/d – an all-time high. A surge in refinery runs on the back of new refining
capacity underpinned the increase in apparent demand (i.e. refinery output plus net product imports). A
January adjustment in excise duties, which brought blending components under the excise net, may have
INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT DEMAND
18 JANUARY 2013 7

artificially inflated November and December apparent demand, however. End-2012 demand may thus in
effect represent in part “borrowed demand” from early 2013. In addition, surging throughputs likely
caused steep product stock builds at the end of 2012, which may be drawn down later on, alongside
unreported builds of strategic stocks.

Chinese Demand Forecast Upgraded
China alone accounted for nearly two-thirds of total oil product demand growth between 2007 and 2011,
but Chinese demand growth all but disappeared
from September 2011-through-August 2012. Chinese
apparent demand picked up momentum in
September, however, as apparent growth rebounded
to 915 kb/d (or 10.3%), up from an average 110 kb/d
(or 1.2%) in the previous 12 months. Demand growth
remained robust in October and November. These
gains are the leading factor behind the upwards
revisions to global 4Q12 demand estimates in this
month’s Report.
Initial pessimism regarding the short-term Chinese
data led us to keep a lid on demand forecasts, but
recent data suggest that the tide may have begun to
turn. Manufacturing sentiment became “expansionary” (i.e. above 50) in November, albeit only marginally,
after a long spell contracting when the index came in below 50, and has maintained this bias, rising into
December. The Chinese trade figures, although mixed of
late, provide additional support for the ‘stronger Chinese
demand’ story. Total Chinese exports rose by 14.1% y-o-y
in December, to $199.23 billion, outpacing imports which
rose by a more modest 6%. This is in contrast to November,
when exports rose by just 2.9% y-o-y. Other supportive
influences include stronger electricity use (with double-
digit percentage point gains returning in December, against

a 2012 average of 5.5%) and increased rail usage, with 11%
y-o-y more passengers carried in December.
Restraining the upside – hence the still below consensus
4% 2013 projection – are concerns about the sustainability
of the Chinese upturn: as heightened debt levels, an enlarged shadow banking system, and worrisome
property markets loom.
Infrastructural spending provided large chunks of the late-2012 momentum. While this is not something that
can continue ad-infinitum, additional infrastructural expenditure is the key reason we are revising up the
2013 Chinese growth forecast, by 135 kb/d, to 10 mb/d –
a projected annual expansion of 390 kb/d or 4%. China
watchers, such as CICC, BNP Paribas and HSBC, appear
confident that the new Chinese political leadership will
rely on infrastructural projects as a form of economic
stimulus, at least through its first full year in office. On
the flip-side, the resumption of rising inflation in
December, to a six-month high of 2.5% over the prior
year, may limit the scope for government support.
Underpinning stronger growth predictions will be China’s
plentiful demand for cheap plastics, which will support
robust naphtha demand, while predictions of 7% growth
in new-vehicle sales (up from 4.3% in 2012) will underpin
gasoline demand – though not at the pace seen at the end of 2012, when one-off factors provided support.
Continued growth in air passenger traffic (which rose by 9.2% in 2012) will accordingly support demand for
jet fuel.
China: Total Oil Product Demand
6,500
7,500
8,500
9,500
10,500

Jan Apr Jul Oct Jan
kb/d
2009 2010 2011 2012
Chinese Manufacturing PMI
47
48
49
50
51
52
Oct11 Feb12 Jun12 Oct12
Note: 50=contraction/expansion threshold. Sources: HSBC, Markit
DEMAND INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT

8 18 JANUARY 2013

China: Demand by Product
(thousand barrels per day)
Annual Chg (kb/d) Annual Chg (%)
2011 2012 2013 2012 2013 2012 2013
LPG & Ethane 720 731 742 12 11 1.6 1.5
Naphtha 1,113 1,130 1,209 18 79 1.6 7.0
Motor Gasoline 1,754 1,914 2,029 160 115 9.1 6.0
Jet Fuel & Kerosene 419 438 453 19 15 4.5 3.5
Gas/Diesel Oil 3,193 3,232 3,356 39 124 1.2 3.8
Residual Fuel Oil 507 517 519 9 3 1.8 0.5
Other Products 1,538 1,634 1,675 95 42 6.2 2.6
Total Products 9,243 9,595 9,984 352 388 3.8 4.0
Demand

Chinese demand estimates for 2012 have been revised upwards by around 50 kb/d since last month’s
Report, to 9.6 mb/d, on the strength of the preliminary 4Q12 data. Estimates for 4Q12 have been raised
by 200 kb/d, to 10.1 mb/d, a y-o-y gain of 7.4%, in line with signs of stronger manufacturing sentiment.
HSBC’s Chinese Manufacturing Purchasing Managers’ Index (PMI) rose to 51.5 in December, its second
consecutive month above the key 50-threshold. Readings above 50 indicate that more survey
respondents anticipate expanding conditions than contracting.

Japan
Japanese demand growth eased in October to 0.6% bringing consumption to an average of around
4.42 mb/d. Last month’s OMR had assumed slightly more subdued growth of 0.2%. The weaker growth
seen in October is a dramatic climb-down from the 7.3% average expansion seen in the previous twelve
months, when fuel switching out of nuclear power generation lifted demand for fuel oil and ‘other
products’ by 39.4% and 43.1%, respectively. Although the pace at which this replacement demand
unwinds is forecast to be slow, no new replacement-demand is anticipated since 2011, hence the step
change in year-on-year growth. Preliminary estimates of November demand, based on inland-deliveries,
hint at a further deceleration to 0.1% y-o-y growth, to 4.61 mb/d. This is 30 kb/d more than projected
last month, as a cold spell supported stronger-than-expected kerosene demand.

Japan: Total Oil Product Demand
3,500
4,000
4,500
5,000
5,500
6,000
Jan Apr Jul Oct Jan
kb/d
Range 07-11 5-year avg
2011 2012

Japan: Other Products Demand
250
350
450
550
650
750
Jan Apr Jul Oct Jan
kb/d
Range 07-11 5-year avg
2011 2012


India
India consumed a revised 3.6 mb/d of oil products in October, 45 kb/d less than assumed in last month’s
report but still 165 kb/d higher than the year earlier. Gasoil led the growth momentum, contributing
roughly half of the total growth, followed by LPG (+25 kb/d), gasoline (+20 kb/d) and naphtha (+20 kb/d).
Growth came to a near-complete standstill in November, according to preliminary statistics, with
significant y-o-y contractions seen in fuel oil, LPG and jet/kerosene. Gasoil demand growth eased to a
19-month low, as better weather patterns required less diesel-powered irrigation, while the spill-over
INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT DEMAND
18 JANUARY 2013 9
from September’s subsidy reduction (equivalent to a 14% rise in the price of diesel) continued. Demand
averaged roughly 3.7 mb/d in November and is expected to average 3.6 mb/d for the year as a whole,
130 kb/d more than in 2011.

India: Gasoil Demand
800
1,000

1,200
1,400
1,600
Jan Apr Jul Oct Jan
kb/d
Range 2007-2011 5-year avg
2011 2012

Russia: Total Oil Product Demand
2,600
2,800
3,000
3,200
3,400
3,600
Jan Apr Jul Oct Jan
kb/d
Range 2007-2011 5-year avg
2011 2012
Source: Petromarket RG, IEA


Russia
Revised estimates of Russian demand depict it averaging 3.4 mb/d in October, 15 kb/d less than we
assumed a month ago and down 0.4% on the corresponding month a year earlier, its first y-o-y decline
since July 2010. Between August and October, Russian demand growth averaged just 0.4% year-on-year,
well down on the previous 12-month trend (7.2%). The slowdown is largely attributable to above trend
growth in 2011 and, hence, is likely to have ended in November, when growth is forecast to resume at
around 3.4%, as demand averages 3.6 mb/d. Russian consumption for the year as a whole is projected at
3.4 mb/d, 3.6% up on 2011. Growth is forecast to accelerate in 2013, to 4.5%, as momentum in Russia

gains on the expanded income base.

Brazil
Brazil leapfrogged Saudi Arabia into sixth place in the top-10 rankings of oil consumers for October, as
demand rose counter-seasonally by 160 kb/d month-on-month, against a five-year average contraction
of 5 kb/d. Stronger gasoil and gasoline demand underpinned the October turn-around, rising by 75 kb/d
and 60 kb/d m-o-m, respectively, versus flat five-year averages. Gasoil demand rising as additional diesel-
fired power generation was required to compensate for dwindling drought-hit hydropower supplies. The
lower ethanol-mix of the gasoline blend by default boosted gasoline demand. Brazil consumed 3.2 mb/d
of oil products in October, a gain of 9.3% on the year earlier (a two-year high) and 225 kb/d more than
the estimate carried last month. A similar aggregate number is foreseen in November, amounting to
160 kb/d more demand than forecast earlier. Gasoline and gasoil account for the bulk of the upside in
both months, as the previously ailing economy showed clear signs of recovery towards the end of the
year. Manufacturing sentiment, as tracked by HSBC rose into ‘expansionary’ territory, October-through-
December, having endured ‘contracting’ conditions previously.

Brazil: Total Oil Product Demand
2,200
2,400
2,600
2,800
3,000
3,200
Jan Apr Jul Oct Jan
kb/d
Range 2007-2011 5-year avg
2011 2012

Saudi Arabia:
Other Products Demand

200
400
600
800
1,000
Jan Apr Jul Oct Jan
kb/d
Range 2007-2011 5-year avg
2011 2012

DEMAND INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT

10 18 JANUARY 2013
Saudi Arabia
Strong ‘other product’ demand growth underpinned Saudi Arabian consumption of 3.1 mb/d in October,
a 305 kb/d (or 10.8%) increase on the year. That revised October estimate was 95 kb/d higher than
forecast in last month’s report. Demand for ‘other products’, notably crude oil in the power sector,
expanded by 215 kb/d on the year earlier, to 730 kb/d. Large gains were also seen in demand for
gasoline (+55 kb/d, to 490 kb/d) and gasoil (+40 kb/d, to 695 kb/d). Stronger-than-anticipated October
demand growth led us to revise higher our 4Q12 forecast by 35 kb/d over last month’s Report, to
3.0 mb/d, lifting the overall 2012 forecast by a more modest 10 kb/d to 3.0 mb/d – a gain of 165 kb/d on
the year earlier. A deceleration to 125 kb/d is foreseen in 2013, as economic growth eases. Saudi Arabia
maintained its traditionally sharply falling October trend, with consumption down by 8% on the month
earlier, in contrast to the 10.8% y-o-y gain.

Germany
Having endured a topsy-turvy year through most of 2012, the German demand trend has strengthened
somewhat in recent months, breaking back into y-o-y growth territory in October and November.
October’s 0.1% gain saw consumption average out at around 2.5 mb/d. Rebounding naphtha and gasoil
demand underpinned the trend, rising by 13.8% and 1.0% in October and 31.6% and 1.2% in November,

respectively. For the year as a whole demand is projected at 2.35 mb/d, equating to a decline rate of
2.1% y-o-y, with a further reduction of 1% forecast in 2013, to 2.33 mb/d, as economic conditions remain
under pressure.
German: Total Oil Product Demand
2,100
2,300
2,500
2,700
2,900
Jan Apr Jul Oct Jan
kb/d
Range 07-11 5-year avg
2011 2012

German: Gasoil Demand
800
1,000
1,200
1,400
Jan Apr Jul Oct Jan
kb/d
Range 07-11 5-year avg
2011 2012


Canada
Canadian oil demand grew by 90 kb/d or 4% to 2.3 mb/d in October, extending earlier gains, albeit at a
more moderate pace. The Canadian economy continues, at least for now, to shrug off the recessionary
trend that has bedevilled many other OECD countries. Momentum has moderated, however, compared
to September’s 115 kb/d expansion or the recent peak of 180 kb/d achieved in May, as manufacturing

sentiment has slipped.
Canada: Total Oil Product Demand
2,000
2,100
2,200
2,300
2,400
2,500
2,600
Jan Apr Jul Oct Jan
kb/d
Range 07-11 5-year avg
2011 2012

Canadian Manufacturing PMI
49
50
51
52
53
54
55
Feb12 May12 Aug12 Nov12
Not e: 50=cont r act ion/ expansion t hreshold. Sour ces: RBC, Markit


INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT DEMAND
18 JANUARY 2013 11
Mexico
Mexico achieved tenth position in the Top-10 Consumers ranking in October on account of an explosion

at Pemex’s Reynosa gas processing plant. The disruption temporarily took 900 million cubic feet per day
of natural gas off the Mexican market, equivalent to around 300 kb/d of oil products. Of course, not all of
the shortfall was accounted for by oil products, but a very substantial fillip was seen. This replacement
demand fell away in November, and we will likely see Mexico fall below the Top-10 ranking in next
months report, as average consumption declined exactly in line with last month’s report to 2.18 mb/d
(from 2.28 mb/d in October). Gasoline demand of 785 kb/d accounts for roughly one third of total
demand.

Mexico: Total Oil Product Demand
1,950
2,100
2,250
Jan Apr Jul Oct Jan
kb/d
Range 07-11 5-year avg
2011
2012

Mexico: Motor Gasoline Demand
700
750
800
850
Jan Apr Jul Oct Jan
kb/d
Range 07-11 5-year avg
2011 2012


OECD

OECD demand showed signs of life in November as the y-o-y contraction slowed to a relatively modest
0.5%, to 46.5 mb/d, with more robust demand generally at the lighter end of the barrel (as well as in
‘other products’, which include crude oil used for power generation in Japan). OECD demand contracted
by more than 1% in the previous 12-months. November’s more subdued contraction came about on
reports of colder weather conditions in many countries (notably Japan, Korea, the US and Canada) and
early indications that some economies might be bottoming-out. In addition, demand in the year-ago
reference period had been exceptionally low. A clear regional split is apparent, with demand expanding
in Asia Oceania, staying flat in the Americas and contracting in Europe, much as has been the case since
mid-2012.

OECD Demand based on Adjusted Preliminary Submissions - November 2012
(million barrels per day)
mb/d % pa mb/d % pa mb/d % pa mb/d % pa mb/d % pa mb/d % pa mb/d % pa
OECD Americas* 10.30 0.8 1.68 1.6 4.42 -3.2 0.81 -8.5 0.75 -5.2 6.10 1.06 24.06 -0.4
US50 8.64 1.0 1.44 0.7 3.57 -4.0 0.33 -15.8 0.35 -14.3 4.55 -1.1 18.88 -1.2
Canada 0.75 -0.9 0.13 7.8 0.29 -6.3 0.30 -4.0 0.09 3.5 0.78 12.1 2.33 2.5
Mexico 0.79 -0.7 0.06 9.6 0.35 4.5 0.15 4.5 0.20 9.9 0.64 1.8 2.18 2.4
OECD Europe 1.89 -8.5 1.13 -1.0 4.40 -2.5 1.85 4.0 1.05 -9.0 3.53 -0.2 13.85 -2.4
Germany 0.41 -13.4 0.19 12.3 0.71 -2.6 0.44 8.1 0.13 -5.0 0.63 15.9 2.50 2.1
United Kingdom 0.31 -7.8 0.30 -6.9 0.47 -2.0 0.12 2.2 0.05 -23.6 0.22 -20.2 1.47 -7.8
France 0.16 -0.9 0.14 -2.1 0.72 5.2 0.31 31.1 0.07 -23.8 0.39 -3.5 1.80 3.9
Italy 0.19 -11.4 0.07 -8.1 0.44 -12.8 0.11 -15.2 0.09 -11.5 0.34 -10.4 1.24 -11.8
Spain 0.10 -7.8 0.09 -11.7 0.41 -8.7 0.20 0.3 0.18 -5.5 0.29 -9.2 1.26 -7.2
OECD Asia & Oceania 1.62 -0.2 1.00 10.5 1.33 10.4 0.51 -13.9 0.86 2.5 3.26 1.2 8.57 2.3
Japan 0.96 -0.6 0.64 18.3 0.46 0.5 0.37 -1.2 0.51 1.7 1.66 -5.4 4.61 0.1
Korea 0.20 3.6 0.18 -2.3 0.30 8.7 0.13 -4.3 0.26 5.2 1.34 11.4 2.42 7.6
Australia 0.34 0.1 0.13 3.2 0.43 3.6 0.00 0.0 0.02 -32.0 0.18 1.3 1.11 1.2
OECD Total 13.82 -0.7 3.81 3.0 10.14 -1.3 3.17 -2.6 2.66 -4.5 12.88 0.7 46.48 -0.5
* Including US territories
RFO Other Total ProductsGasoline Jet/Kerosene Diesel Other Gasoil

DEMAND INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT

12 18 JANUARY 2013
Americas
Robust demand growth in both Canada and Mexico took the November average for the OECD Americas
to near-flat y-o-y, according to preliminary data. The transport sector led the gains as gasoline demand
edged up 0.8% y-o-y (to 10.3 mb/d) and jet/kerosene demand rose 1.6% to 1.7 mb/d. Modestly
improved employment statistics supported the transportation figures, with unemployment in both
Canada (7.2%) and the US (7.9%) near four-year lows in November.

OECD Americas:
Total Oil Product Demand
22.5
23.5
24.5
25.5
26.5
Jan Apr Jul Oct Jan
mb/d
Range 07-11 5-year avg
2011 2012

OECD Americas: Total Demand
by Product, 2012
13.0%
1.4%

43.8%
7.0%
18.1%
3.2%
3.3%
10.3%
LPG
Naphtha
Gasoline
Jet/Kero
Diesel
Heating Oil
Fue l Oil
Other


Europe
OECD European demand averaged roughly 13.8 mb/d in November, according to preliminary statistics,
2.4% less than the year earlier. This is a dramatic deceleration from the previous 12-month average y-o-y
decline of 4.2%, partly explained by exceptionally low demand a year earlier. November 2011 was almost
the worst part of the European demand decline, triggered by very real concerns that the European single
currency could collapse. Talk of upside should not, however, distract from the overwhelming trend which
remains clearly a declining one. We project that European demand will fall by a further 1.7% in 2013, to
13.6 mb/d.

OECD Europe:
Total Oil Product Demand
13.0
13.5
14.0

14.5
15.0
15.5
16.0
16.5
Jan Apr Jul Oct Jan
mb/d
Range 07-11 5-year avg
2011 2012

OECD Europe: Total Demand
by Product, 2012
6.7%
8.6%
14.3%
8.7%
31.2%
12.1%
8.1%
10.4%
LPG
Naphtha
Gasoline
Jet/Kero
Diesel
Heating Oil
Fue l Oil
Other

Asia Oceania
Asia Oceania continues to lead OECD demand growth. Preliminary statistics suggest that demand rose by
2.3% in November y-o-y, to 8.6 mb/d. All of the main product categories bar gasoline saw gains. An East
Asian cold snap supported demand, compounding the impact of closed nuclear capacity in Japan and in
contrast to unseasonably low demand in November 2011.

INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT DEMAND
18 JANUARY 2013 13
OECD Asia Oceania:
Total Oil Product Demand
7.0
8.0
9.0
10.0
Jan Apr Jul Oct Jan
mb/d
Range 07-11 5-year avg
2011 2012

-150
-100
-50
0
50
100
150
200
Nov 11 Feb 12 May 12 Aug 12 Nov 12
Days
Heating Degree Days - Korea

Diff. to 10-Year Average and Previous Year
Diff to 10-year Average Diff to Previous year

Non-OECD
Preliminary estimates of total non-OECD demand averaged 45.2 mb/d in November, 3.9% up on the year
earlier, a noted deceleration on October’s pace of growth. Demand growth slowed markedly in India,
Saudi Arabia and Brazil, in contrast to October when all three accelerated. Light products led November’s
upside, with naphtha and gasoline rising particularly steeply, predominantly in China. Growth of around
3.3% is expected for 2012 as a whole, to an average of around 43.7 mb/d. This is forecast to expand to
around 45 mb/d in 2013, with total non-OECD demand forecast to briefly outpace OECD demand in 2Q13
before reversing on strong seasonal 2H13 OECD demand.

Non-OECD: Demand by Product
(thousand barrels per day)
Annual Chg (kb/d) Annual Chg (%)
Sep-12 Oct-12 Nov-12 Oct-12 Nov-12 Oct-12 Nov-12
LPG & Ethane 4,637 4,630 4,685 55 28 1.2 0.6
Naphtha 2,722 2,909 3,199 174 248 6.4 8.4
Motor Gasoline 8,899 8,922 9,147 439 576 5.2 6.7
Jet Fuel & Kerosene 2,886 2,854 2,861 92 26 3.3 0.9
Gas/Diesel Oil 13,542 13,536 13,862 380 290 2.9 2.1
Residual Fuel Oil 5,463 5,443 5,504 126 214 2.4 4.1
Other Products 6,209 6,044 5,963 712 322 13.4 5.7
Total Products 44,358 44,338 45,220 1,978 1,705 4.7 3.9
Demand


Taiwanese consumption saw an unseasonably large 60 kb/d hike in October, compared to a five-year
average decline of 20 kb/d for that month. Strong naphtha demand accounted for the majority of the
momentum, rising by 30 kb/d in October compared to five-year average decline rate of 10 kb/d.

Taiwan: Total Oil Product Demand
700.0
800.0
900.0
1,000.0
1,100.0
1,200.0
Jan Apr Jul Oct Jan
kb/d
Range 2007-2011 5-year avg
2011 2012

Non-OECD: Total Oil Product Demand
36
38
40
42
44
46
Jan Apr Jul Oct Jan
mb/d
2009 2010 2011 2012




SUPPLY INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT
14 18 JANUARY 2013
SUPPLY

Summary
• Global supplies fell by 170 kb/d in December to 91.2 mb/d, with OPEC crude down by 265 kb/d.
Compared to 2011, December production stood 1.6 mb/d higher, with non-OPEC supply growth
accounting for 60% of the increase. For all of 2012, global supplies grew by 2.5 mb/d, the highest rate
of growth since 2004, with OPEC crude accounting for 60% of the increase.

• Non-OPEC production rebounded by 90 kb/d in December from the prior month to 54.2 mb/d with
higher output from North America offsetting lower global biofuels output. Production is expected to
increase by 590 kb/d in 1Q13 compared to 1Q12, roughly 160 kb/d higher than last month’s
assessment. For 2013, non-OPEC production is projected to rise by 980 kb/d to 54.3 mb/d, the highest
growth rate since 2010 and 150 kb/d higher than the previous forecast.

• OPEC crude oil production in December fell to its lowest level in a year, with reduced output from
Saudi Arabia and Iraq partially offset by a recovery in Nigerian supplies. December production fell by
265 kb/d to 30.65 mb/d. On an annual basis, OPEC collectively increased crude output in 2012 to the
highest level ever in the wake of continued global demand growth. OPEC NGLs also posted historic
highs in 2012, up 425 kb/d to 6.2 mb/d.

• The ‘call on OPEC crude and stock change’ for 2013 was raised by 100 kb/d this month, to 30 mb/d,
following a 710 kb/d upward revision in demand for 4Q12, largely driven by China. The 4Q call was
raised by 400 kb/d to 30.8 mb/d for the final three months of the year. OPEC’s ‘effective’ spare
capacity rose to 3.26 mb/d, in line with reduced OPEC supplies last month. The supply cushion is now
at its highest level since October 2011.

-0.5
0.0
0.5
1.0
1.5

2.0
2.5
3.0
3.5
4.0
4.5
Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12
mb/d
OPEC and Non-OPEC Oil Supply
Year-on-Year Change
OPEC Crude Non-OPEC
OPEC NGLs Total Supply

28.0
28.5
29.0
29.5
30.0
30.5
31.0
31.5
32.0
50
52
54
56
58
60
62
Jan 12 Jul 12 Jan 13 Jul 13

mb/d
mb/d
OPEC and Non-OPEC Oil Supply
Non-OPEC OPEC NGLs
OPEC Crude - RS


All world oil supply figures for December discussed in this report are IEA estimates. Estimates for OPEC
countries, Alaska, Indonesia and Russia are supported by preliminary November supply data.

Note: Random events present downside risk to the non-OPEC production forecast contained in this report. These
events can include accidents, unplanned or unannounced maintenance, technical problems, labour strikes,
political unrest, guerrilla activity, wars and weather-related supply losses. Specific allowance has been made in
the forecast for scheduled maintenance in all regions and for typical seasonal supply outages (including
hurricane-related stoppages) in North America. In addition, from July 2007, a nationally allocated (but not field-
specific) reliability adjustment has also been applied for the non-OPEC forecast to reflect a historical tendency
for unexpected events to reduce actual supply compared with the initial forecast. After heavy outages seen in
2011 and 2012, this adjustment now totals ‒500 kb/d for non-OPEC as a whole, with most downward
adjustments focused in the OECD.
INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT SUPPLY
18 JANUARY 2013 15
OPEC Crude Oil Supply
OPEC crude oil production in December fell to its lowest level in a year, with reduced output from Saudi
Arabia and Iraq partially offset by a recovery in Nigerian supplies. December production fell by 265 kb/d
to 30.65 mb/d. On an annual basis, however, OPEC collectively increased output in 2012 to the highest
level ever in the wake of continued global demand growth and despite exceptional increases in North
American supplies. OPEC NGLs also posted historic highs in 2012, up 425 kb/d to 6.2 mb/d. The group’s
revenues are estimated to have reached peak levels last year, at more than $1 trillion, in line with higher
production and record Brent prices.

OPEC ministers, as expected, unanimously opted to rollover their 30 mb/d production target at the
12 December 2012 meeting in Vienna. Unable to agree a new Secretary General, however, the producer
group extended the tenure of Abdalla Salem El-Badri for one year, effective 1 January 2013. The next
meeting will take place in Vienna on 31 May 2013.

The ‘call on OPEC crude and stock change’ for 2012 and 2013 was raised by 100 kb/d this month, to
30.3 mb/d and 30 mb/d, respectively. A sharp upward revision in demand for 4Q12, largely driven by
China, is behind a 400 kb/d increase on the ‘call’ to 30.8 mb/d for in the final three months of the year.
OPEC’s ‘effective’ spare capacity in December was estimated at 3.26 mb/d versus 2.49 mb/d in
November, in line with reduced OPEC supplies last month. The increase represents the group’s highest
level of spare capacity since October 2011.

28
29
30
31
32
Jan Ma
r
May Jul Sep Nov Jan
mb/d
OPEC Crude Oil Production
2009 2010 2011 2012
Entire series based on OPEC Composition as of January 2009
onwards (including Angola & Ecuador & excluding Indonesia)

26
27
28
29

30
31
32
1Q 2Q 3Q 4Q
mb/d
Quarterly Call on OPEC Crude +
Stock Change
2011 2012 2013
Entire series based on OPEC Composition as of January 2009
onwards (including Angola & Ecuador & excluding Indonesia)


Preliminary data show OPEC output in 2012 averaged 31.36 mb/d, an increase of 1.48 mb/d, with the
sharp rebound in Libyan supplies in the aftermath of the 2011 civil war accounting for two-thirds of the
year-on-year increase. Libyan output recovered by 930 kb/d to an average 1.39 mb/d. That compares
with 1.55 mb/d on average in 2009 and 2010.

OPEC’s crude production stayed above the 31 mb/d mark for the first 10 months of the year before
edging down in the final two months. OPEC Gulf producers Saudi Arabia, Kuwait, Iraq and the UAE
combined increased production by 1.2 mb/d. Saudi supplies rose by around 530 kb/d to an average
9.86 mb/d. Iraqi production was up by 280 kb/d, to 2.95 mb/d, the highest annual average since the
country’s 1990 invasion of Kuwait but well below initial government projections for the year. By contrast,
Iranian production tumbled 650 kb/d for the year, to 3 mb/d. All other OPEC members posted only
marginal year-on-year changes (see table below).

After increasing production for most of last year, Saudi Arabia reduced supplies by just under 300 kb/d in
December, to 9.36 mb/d. That is down 600 kb/d from October’s lofty 9.95 mb/d, when crude exports
surged to China. However, the downturn in production reflects a myriad of fundamental developments,
not least of which is the country’s sharply lower seasonal domestic demand. Saudi Arabia’s domestic
SUPPLY INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT

16 18 JANUARY 2013
demand declined on a seasonal basis by around 400 kb/d from the third to the fourth quarter, when use
of crude for burning at electricity and water desalination plants falls sharply. Crude burned at utility
plants typically peaks in the May-September period before starting on a seasonal downturn. Latest data
from JODI show Saudi crude burned over the May-September period averaged 700 kb/d before tumbling
to 400 kb/d in October. Lower output in recent months also reflects a seasonal cutback in demand by
refiners for the country’s crude. Reduced output in December may also reflect lower-than-expected
shipments to the US, where Aramco was planning to restart a new 325 kb/d crude unit at its joint-
venture Motiva refinery in Port Arthur, Texas. Further technical problems have now delayed the planned
start-up, however (see ‘Refining’).

7.5
8.0
8.5
9.0
9.5
10.0
10.5
Jan Mar May Jul Sep Nov Jan
mb/d
Saudi Arabia Crude Production
2009 2010 2011 2012

-50%
0%
50%
100%
150%
200%
0

200
400
600
800
1000
Jan-09 Jan-10 Jan-11 Jan-12
kb/d
Saudi Implied Crude Oil Direct Burn
Implied Crude Oil Direct Burn y-o-y Change


Speculation that recent lower Saudi production levels equates to a desire for higher prices appears
misplaced. Market speculation was rife that Saudi Arabia reduced supplies in a bid to set a new price
target of $110/bbl. In response, the oil ministry categorically denied the rumours and confirmed
seasonal, fundamental issues were at play. Saudi Oil Minister Ali Naimi reaffirmed last fall that the
Kingdom “would like to see it [prices] lower, towards $100/bbl” versus Brent at $111-112/bbl. Saudi
officials reported supplies to the market in December of 9.15 mb/d, about 200 kb/d below our monthly
estimates based on tanker data and industry sources.

Oct 2012 Nov 2012 Dec 2012
Supply Supply Supply
Algeria
1.12 1.18 1.18 1.19 0.01 1.17 -0.02
Angola
1.73 1.75 1.73 1.89 0.16 1.75 0.08
Ecuador
0.51 0.50 0.50 0.52 0.02 0.50 0.00
Iran
2.72 2.70 2.70 3.03 0.33 3.00 -0.62
Iraq

3.20 3.21 2.97 3.30 0.33 2.95 0.28
Kuwait
2
2.78 2.74 2.78 2.86 0.08 2.74 0.21
Libya
1.42 1.45 1.40 1.58 0.18 1.39 0.93
Nigeria
3
1.98 1.88 2.10 2.49 0.39 2.10 -0.08
Qatar
0.73 0.73 0.74 0.74 0.00 0.74 0.01
Saudi Arabia
2
9.95 9.65 9.36 11.80 2.44 9.86 0.53
UAE
2.67 2.65 2.68 2.80 0.12 2.65 0.15
Venezuela
4
2.48 2.47 2.50 2.60 0.10 2.50 0.00
Total OPEC
31.29 30.90 30.64 34.80 4.16 31.36 1.48
(excluding Iraq, Nigeria, Libya and Iran)
3.26)
1 Capacity levels can be reached within 30 days and sustained for 90 days.
2 Includes half of Neutral Zone production.
3 Nigeria's current capacity estimate excludes some 200 kb/d of shut-in capacity.
4 Includes upgraded Orinoco extra-heavy oil assumed at 390 kb/d in December.
2012 Annual
Production
Average

Sustainable
Production
Capacity
1
Spare Capacity
vs Dec 2012
Supply
Volume Chg
2012 vs 2011
OPEC Crude Production
(million barrels per day)


INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT SUPPLY
18 JANUARY 2013 17
Iraqi crude oil production also posted a significant drop in December. A long-simmering political standoff
between Baghdad and Erbil was behind reduced exports from the northern region while weather-related
delays affected southern supplies, forcing operators to curtail production due to the lack of storage
facilities at the ports. Output fell by 235 kb/d in December, to a six-month low of 2.97 mb/d. Full-year
production rose to the highest level in more than three decades at 2.95 mb/d, an increase of 280 kb/d
but well short of expectations.

Crude exports in December fell 235 kb/d, to 2.39 mb/d. Rough weather at the southern terminals
disrupted Basrah shipments, with exports off 134 kb/d, to 2.06 mb/d. Full-year exports from the Basrah
terminals rose by around 350 kb/d, to an average
2.06 mb/d, but well below expectations. The start-up
of the two new 900 kb/d Single Point Moorings (SPMs)
in the spring had led officials to forecast a much larger
increase in southern exports for 2012 but as yet
unresolved technical and infrastructure problems have

undermined the operation of the SPMs.

Northern exports of Kirkuk crude via the Turkish
Mediterranean port of Ceyhan tumbled as well, down
100 kb/d to 315 kb/d. An additional 10 kb/d of Kirkuk
crude was trucked to Jordan. Oil flows from the
Kurdish region, which are exported as part of the
Kirkuk crude stream, fell to an estimated 50 kb/d in December compared with 150 kb/d in November as
the quarrel escalated between the central government in Baghdad and the Kurdish Regional Government
(KRG) in the North over payment and volume issues escalated.

The protracted dispute deteriorated further in early January when the KRG started selling crude via truck
to Turkey. Initially a few thousand barrels per day were trucked, but operator Genel Energy says it plans
to move as much as 20 kb/d by the end of January. In response, the central government in Baghdad
threatened legal action against companies producing or buying the crude. The deterioration in relations
between the two governments is likely to constrain northern exports further near term.

0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0.0
0.2
0.4
0.6
0.8

1.0
1.2
Jan-11 Jul-11 Jan-12 Jul-12
mb/d
Iranian Crude Imports
Total -RHS OECD EUR
OECD PAC China / India
Other Non-OECD

2.6
2.8
3.0
3.2
3.4
3.6
3.8
4.0
Jan Mar May Jul Sep Nov Jan
mb/d
Iran Crude Production
2009 2010 2011 2012


Iranian oil output in December was pegged at 2.70 mb/d, unchanged from the previous month. The
sanctions-hit country saw 2012 production decline to an average 3 mb/d, the lowest level since 1990.
Preliminary data show imports of Iranian crude in December declined by 250 kb/d, to 1.2 mb/d from an
upwardly revised 1.45 mb/d in November. Japan and India reduced December imports by a combined
100 kb/d, to 160 kb/d and 150 kb/d, respectively. By contrast, South Korea and China both increased
imports last month, to 250 kb/d and 450 kb/d, respectively. The US granted a second set of 180 day
waivers to eight countries in December, including China. In early January, China reportedly signed a new

term contract with Iran for 2013.
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
Jan Mar May Jul Sep Nov Jan
mb/d
Iraq Crude Production
2009 2010 2011 2012
SUPPLY INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT
18 18 JANUARY 2013
Kuwaiti production rose by 40 kb/d to 2.78 mb/d in December, bringing the full-year 2012 output to
record levels. Average production in 2012 rose by 210 kb/d to 2.74 mb/d. Last year’s increase follows a
rise of 300 kb/d in 2011 stemming from debottlenecking at the Mina al-Ahmadi oil terminal, which
enabled increased production from the giant Burgan oil field.

Production from the UAE edged up 30 kb/d to 2.68 mb/d while Qatari production was up a smaller
10 kb/d at 740 kb/d. The UAE’s plans to increase production capacity from the current 2.8 mb/d to
3 mb/d have been delayed from 4Q12 to 1Q13 now.

2.2
2.3
2.4
2.5
2.6
2.7

2.8
Jan Mar May Jul Sep Nov Jan
mb/d
Kuwait Crude Production
2009 2010 2011 2012

2.2
2.3
2.4
2.5
2.6
2.7
2.8
Jan Mar May Jul Sep Nov Jan
mb/d
UAE Crude Production
2009 2010 2011 2012


Nigerian production rebounded in December following the end of the rainy season and severe flooding
which sharply curbed output. Force majeures on Bonny, Forcados and Qua Iboe exports crudes were
lifted in December. ENI also lifted its force majeure on Brass River crude 15 January, which had been in
place since early November. A resurgence in sabotage and ensuing damage to infrastructure from illegal
bunkering last year was behind the annual decline in Nigerian output, off 80 kb/d to an average 2.1 mb/d
in 2012.

1.6
1.8
2.0
2.2

2.4
Jan Mar May Jul Sep Nov Jan
mb/d
Nigeria Crude Production
2009 2010 2011 2012

1.5
1.6
1.7
1.8
1.9
2.0
Jan Mar May Jul Sep Nov Jan
mb/d
Angola Crude Production
2009 2010 2011 2012


Crude oil output in Angola edged lower in December due to continued technical problems at some fields,
down 25 kb/d to 1.73 mb/d. The decline was partially offset by the 6 December start-up of the BP-
operated 150 kb/d PSVM fields. One field is reportedly in operation, averaging between 60-90 kb/d with
the remaining fields expected to be connected to the platform in coming months.

Algerian crude oil production was unchanged at 1.18 mb/d for December and for full-year down a
marginal 15 kb/d to 1.17 mb/d. The 16 January kidnapping and murder of foreign oil workers at the
In Amenas gas field has cast a dark cloud over the outlook for the country’s energy sector. Production at
the field was shut-in, including an estimated 50 kb/d of condensate. The In Amenas gas project is a joint
venture partnering Statoil, the operator, BP and state-run Sonatrach. Japan’s JGC engineering firm is also
on site. The Islamist militants said the attack was in retaliation for French involvement in Mali, where the
INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT SUPPLY

18 JANUARY 2013 19
government and French troops have launched an offensive against rebels that have taken over the
northern region of the country.

Libyan production was off 50 kb/d, to 1.4 mb/d in
December, due to striking workers. Exports have been
curtailed by the strike action which forced the shut-in of
production. The country’s oil infrastructure has been
targeted by protesters unhappy with the country’s new
government, elected last summer. Militia attacks also
continue, with the latest targeting the Italian consul in
Benghazi. Despite the precarious security situation,
Libyan crude oil production recovered to an average
1.39 mb/d in 2012.

Venezuelan production in December rose by 35 kb/d to 2.5 mb/d. Oil production ebbed and flowed
throughout the year in tandem with chronic operational problems at the country’s four heavy crude oil
upgraders, but overall full-year output was unchanged
at an average 2.5 mb/d. President Hugo Chavez’s
worsening health condition has injected another level of
instability into the outlook for the country’s oil sector.
Following his re-election to a new six-year term on
7 October 2012, Chavez’s deteriorating health has
caused a constitutional crisis. The president, still
recuperating from surgery, could not be sworn in for
another term on 10 January, but announced he would
run the country from his hospital bed in Cuba. The
country’s constitution stipulates that new elections must
be held within 30 days, but the current government has
ruled Chavez is still in charge. The opposition is challenging this decision, which could potentially lead to

an escalation in protests and civil unrest.


0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
mb/d
Libya Crude Production
2.2
2.4
2.6
2.8
3.0
Jan Mar May Jul Sep Nov Jan
mb/d
Venezuela Crude Production
2009 2010 2011 2012
SUPPLY INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT
20 18 JANUARY 2013
Non-OPEC
Non-OPEC supplies continue to show strong growth rates in 2012, and 2013 is expected to fare even
better. Intense supply growth in North America is trumping systematic geopolitical and technical-related

problems that continue to reduce supplies elsewhere, a trend that we see continuing through 2013.
Based on the most recent estimates, non-OPEC supplies grew to 54.1 mb/d in 4Q12, around 870 kb/d
higher than the prior year. Production was 1.2 mb/d higher in 4Q12 in North America but was offset by
European output that was almost 500 kb/d lower than in 2011. The lingering impact of the dispute
between Sudan and South Sudan dragged down non-OPEC supplies by a further 350 kb/d in 4Q12. North
Sea production volumes rebounded by 135 kb/d in 4Q12 to 2.9 mb/d, but are still 14% below prior
year levels.

Taking stock of 2012, non-OPEC production rose by 560 kb/d to a yearly average of 53.3 mb/d, around
400 kb/d less than predicted at end-2011. Although US production exceeded expectations by a wide
margin, that was more than offset by reduced production from other regions, which fell short of forecast
levels. Higher-than-expected growth from the US mitigated the lacklustre performance of the Middle
East, Africa, and the North Sea. For 2013, non-OPEC output is forecast to increase by 1 mb/d to
54.3 mb/d, and we expect a reduction in unplanned outages this year. Some outages already have
subsided. For example, in China, the Peng Lai field has returned to service and in the UK the Buzzard field
is producing at capacity. Of course, 2013 will bring with it its share of unplanned and unpredictable
outages elsewhere - the Brent pipeline system shut down in January is a case in point - but at this stage it
is difficult to envision more acute outages in places like Syria, Yemen, and Colombia, and South Sudan.
We also factor in a downward adjustment of roughly -500 kb/d to account for such unforeseen outages.


-1.0
-0.5
0.0
0.5
1.0
1.5
1997 2001 2005 2009 2013
mb/d
Total Non-OPEC Supply, y-o-y chg

Other North America Total

-200
-100
0
100
200
300
1Q12 3Q12 1Q13 3Q13
mb/d
Non-OPEC Supply - Revisions
NAM OECD EUR FSU
China Other Asia LAM
PG & Biofuels Other Total
'Other'=mostl
y
ME and Africa


Upwards revisions outpaced downward revisions to non-OPEC supply this month and led to a 50 kb/d
increase to the 2012 average supply growth estimate and a 150 kb/d upward adjustment for 2013.
Higher-than-expected growth in the US in 2012 and 2013 was offset by lower-than-forecast Brazilian
ethanol and Indian crude output in 4Q12 and an 80 kb/d reduction in Brazilian crude output in 2013.

OECD
Americas
US – December preliminary, Alaska actual, other states estimated: US crude oil production grew by
almost 900 kb/d y-o-y in December to 6.9 mb/d. Based on this preliminary estimate, 2012 output grew
by a total of 780 kb/d to 6.4 mb/d. In addition to revisions to October estimates from EIA’s Petroleum
Supply Monthly, 1Q-3Q12 historical production data were also adjusted upwards slightly by around

30 kb/d based on EIA’s revisions. For the week ending 4 January, EIA data showed that production
reached over 7 mb/d, a level not seen for 20 years. In 2013, US crude output is forecast to grow by
around 600 kb/d y-o-y to around 7.1 mb/d, 170 kb/d higher than previously estimated. Despite the
headlines reporting lower rig counts in some tight plays in the US, producers are gaining knowledge
INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT SUPPLY
18 JANUARY 2013 21
about their assets, resulting in efficiency gains and enabling them to drill more wells with fewer rigs. The
Bakken (North Dakota) saw its first month-on-month decline of 10 kb/d to 670 kb/d in November 2012.
Nonetheless, production there is expected to grow by 140 kb/d in 2013 to 740 kb/d, compared to growth
of 240 kb/d in 2012. In the Eagle Ford, in-fill drilling success, improved drilling efficiency, and new NGL
processing capability are projected to result in higher-than-expected output in 2H13. Eagle Ford crude
production is expected to grow by over 320 kb/d in 2013, to around 900 kb/d, compared to annual
growth of 350 kb/d in 2012.

2.9
3.3
3.7
4.1
4.5
Jan Mar May Jul Sep Nov Jan
mb/d
Canadian Oil Supply
2009 2010
2011 2012
2012 forecast 2013 forecast

-0.6
-0.4
-0.2
0.0

0.2
0.4
0.6
0.8
1.0
1.2
1Q11 3Q11 1Q12 3Q12 1Q13 3Q13
mb/d
US Total Oil Supply - Yearly Change
Alaska California Texas
Other Lower-48 Gulf of Mexico NGLs
Other Total



Canada – October preliminary: Canadian oil production continued its upward trajectory in October,
rising 170 kb/d to 3.8 mb/d from September. Rising output from oil sands projects in 4Q12 was partly
offset by the effect of continuing maintenance at offshore projects in Eastern Canada, but at 3.9 mb/d,
production remained 200 kb/d higher than 4Q11 levels. Last month, Syncrude Canada Ltd trimmed its
production forecast for December due to the impact of cold weather on equipment but company data
revealed little impact. Next year, the crude oil outlook has been reduced by 20 kb/d due to delays at
some upcoming oil sands projects, and most importantly a new delay at the largest project to come
online this year, Imperial’s 110-kb/d Kearl bitumen project. Imperial recently announced that the project
would be delayed for several weeks (the original start date was December 2012). We now expect first oil
in late January. In contrast to other surface mining projects with dedicated upgraders, the operator will
market the diluted bitumen to the mid-continent where it will compete with other heavy oil streams.
Alternatively, the bitumen will be refined at Imperial and ExxonMobil’s facilities in Ontario or in PADD II.
Despite these adjustments to the 2013 outlook, output is still expected to increase by 330 kb/d to
average 4.1 mb/d in 2013.

Mexico – December preliminary: Mexican production rebounded over the last two months to almost
3.0 mb/d in December from levels of around 2.9 mb/d in October. Mexican production has remained
remarkably stable over the course of 2012, declining by only 20 kb/d to average 2.9 mb/d for the year.
Ku-Maloob-Zaap (KMZ) production increased in each quarter this year to average 850 kb/d in 4Q12, and
Cantarell’s decline on an annual basis was maintained at -9%, in contrast to annual declines of over 30%
in both 2008 and 2009. The latest monthly statistics also indicate that the Tsimin and Kuil fields (onshore
in the south) have added about 25 kb/d since August to the country’s output, which we have carried
through the 2013 forecast. Because of these new field additions we have raised 2013 output by 40 kb/d
to 2.8 mb/d, a 90 kb/d annual decline from 2012.
SUPPLY INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT
22 18 JANUARY 2013

Up Against the Export Wall: Hurdles to US LTO Production Growth
Anybody with even a remote understanding of North American crude oil markets has become aware of the
logistical hurdles facing future production growth, but the exact nature of those hurdles is less commonly
understood. It is widely known that US light, tight oil (LTO) and Canadian oil sands which taken together
account for the bulk of forecast North American production growth for 2013 and beyond – lack transport
access to some growing markets which has kept their prices artificially depressed. A continued ‘disconnect’
between high-growth LTO and oil sands streams and international benchmarks could theoretically put
further supply growth at risk, if the new barrels traded at a discount so deep as to make their production
uneconomical. It is as if new production was running against a fast-approaching wall – a logistical wall or
price wall – not unlike the so-called ‘blending wall’ facing ethanol output – in that case, the US gasoline
market’s limited ability to absorb incremental ethanol supply under current gasoline blending rules.
New pipeline and rail links are set to link rapidly increasing LTO and oil sands production with refining
markets that had been geographically or economically out of reach beforehand. A first swath of new
transport capacity opened up in mid-January with the start-up of a 300-kb/d expansion of the Seaway
pipeline running from Cushing to the US Gulf, and there is more to follow over the course of 2013. Already,
WTI prices have started to firm versus Brent. But the debottlenecking of transport capacity within North
America and especially within the US may not in and of itself spell the end of LTO’s market troubles. That is
because of the North American refining market’s ultimately limited appetite for incremental light, sweet oil

supply. While new pipeline links, supplemented with increasingly efficient railroad links, will give producers
short-term relief from depressed prices, at the end of the day US LTO production growth will need new
export outlets. Under current legislation, however, US crude exports enjoy at best limited growth potential.
In contrast with internal US pipeline capacity, which looks set to realign with production trends, export
restrictions are becoming increasingly misaligned with the new marketplace reality. Given the twin
constraints of finite refining capacity and legal limits on crude oil exports, pressure will be mounting to
revisit the current regulatory regime and allow crude oil exports on a larger, less regulated scale.
Transport Constraints and Processing Capacity Raise Incentives to Export. Intra-US transport constraints
and occasional shortages of processing capacity due to refiner turnarounds have put downward pressure on
LTO prices. In some cases the resulting cut in producer netbacks has threatened the marginal barrel of crude
production. Not only have transportation bottlenecks caused WTI at Cushing to trade at a widening discount
to UK benchmark Brent, but price differentials for Canadian heavy crude, WTI at Midland, Texas and Bakken
LTO prices at Clearbrook, Minnesota have chronically widened even further, often veering far below WTI
Cushing prices.
New pipeline and rail capacity is set to open up in 2013 that will deepen the market reach of Midwestern
supply and let incremental barrels move more freely to Gulf Coast refining hubs as well as to east and west
coast refineries. First and foremost is the Seaway pipeline, which was reversed in 2012 with a capacity of
150 kb/d and just expanded to 400 kb/d in January. The line is expected to reach full capacity of 800 kb/d by
1Q14. All in all, more than 20 medium-sized or major pipelines are expected to come on stream this year.
Most of those will run from the Midwest to Texas. Several will run from West Texas south to coastal
refineries in South Texas, and new capacity will also link Texas to Louisiana refineries. WTI discounts to Brent
already have started narrowing on news of the Seaway pipeline expansion, while coastal grades have
weakened. However, new pipeline capacity, while a step in the right direction, will not bring LTO marketing
problems to an end, as Gulf Coast capacity to absorb new light, sweet supply, even with blending, will not be
limitless.
As shipping capacity to the Gulf Coast increases, however, light, tight oil barrels will compete for relatively
limited refining capacity. Much of the Gulf Coast refining capacity is geared to process heavy, sour grades,
which normally trade at a discount to light, sweet oil. Sophisticated, deep-conversion Gulf Coast plants are
designed to extract maximum yields of high-value light products from that discounted feedstock, and have
limited appetite for premium lighter grades. In the mid-continent, Bakken producers are likely to find better

netbacks by selling their crude oil to eastern Canada and the US East Coast, rather than compete for
takeaway capacity to Cushing and the US Gulf Coast, which will already be filled to the brim with Eagle Ford
and Permian crudes. These incentives are likely to be amplified any time takeaway capacity becomes
constrained or if processing capacity in the mid-continent and US Gulf Coast is less than planned.

INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT SUPPLY
18 JANUARY 2013 23
Up Against the Export Wall: Hurdles to US LTO Production Growth (continued)
Existing Statute Limits Exports. While the need for export capacity is clear, US producers are hopelessly
constrained in their capacity to export domestic crude. In the past, export regulations facilitated the export
of Alaskan crude oil to Canada and abroad. Crude exports are governed by the Export Administration Act
(EAA) of 1979, which allows the US President to prohibit or curtail the export of commodities, namely crude
oil, determined to be in “short supply.” The most comprehensive summary of the existing statute is found in
the Export Administration Regulations (EAR), Section 7.
1
This statute is the result of a series of Congressional
Acts, Executive Orders, and subsequent amendments. Under current regulations, exports of crude oil
produced in the US require a license from the Bureau of Industry and Security (BIS), a branch of the US
Department of Commerce. BIS will generally review and approve the application to export crude oil
2
as long
as it is consistent with the national interest and purposes of the Energy Policy and Conservation Act of 1975.
Criteria and stipulations are set forth in the Code of Federal Regulations (C.F.R.) Title 5, Part 754.2 and are
also discussed in the EAR. Such licenses are routinely granted for crude oil that falls within several
categories, including:
3

• Exports from Alaska's Cook Inlet (unless via a federal right-of-way)
• Exports to Canada for consumption or use therein, with the exception of Alaskan crude sent via
the Trans-Alaskan Pipeline (where the policy is to approve applications for an average of no more

than 50 kb/d for consumption or use in Canada)
• Exports of Alaskan North Slope oil, unless there has been a national interest determination to the
contrary
• Exports of California heavy crude oil, up to 25 kb/d
• Exports in connection with refining or exchange of oil in strategic reserves
• Exports that are consistent with findings made by the President under an applicable statute
Alaskan North Slope crude does not require a license. Domestically produced crude oil, transported via
federal rights of way (granted under the Mineral Leasing Act of 1920
4
) requires a license but may be
exported under certain conditions. The exports must be licensed under the EAR; must not reduce the total
quantity or quality of petroleum refined within, stored within, or legally committed to be transported to and
sold within the US; must be in the national interest;
and be in agreement with the EAA. BIS must also
determine if the export or exchange would otherwise
lower refiner acquisition costs within 3 months time.
5

Unless the export of crude is explicitly described in
the regulations cited above, a person or entity may
undertake transactions subject to the EAR without a
license or other authorization. For example, crude
and lease condensate produced on state lands and
moved to port by means other than inter-state
pipelines, would not be restricted.
If BIS grants a crude export license, it is valid for one
year from date of issue and for a specific dollar value,
as opposed to a specific quantity of crude oil.
6

1
Legal Authority Export Administration Regulations (EAR). 17 November 2011. Accessed online at

2
Crude oil is defined as a mixture of hydrocarbons that existed in liquid phase underground and remains liquid at atmospheric pressure after
passing through surface separation facilities and which has not been processed through a crude distillation tower. Also included is lease
condensate.
3
Authority granted in 15 CFR 754.2. Other restrictions exist concerning strategic stocks, export of foreign-origin crude oil, and exports that are
consistent with international emergency supply requirements, which are unlikely to have a long-term market impact and are outside of the
scope of this analysis.
4
Mineral Leasing Act, Section 28(u).
5
Legal Authority Export Administration Regulations (EAR).
6
“Market Implications of Increased Domestic Production of Light Sweet Crude Oil.” This Week in Petroleum. US Energy Information
Administration, 28 November 2012.
0
500
1000
1500
2000
2500
0
50
100
150

200
250
300
350
400
1960 1970 1980 1990 2000 2010
Alaskan Production and US
Crude Exports
kb/d
kb/d
Exports (LHS)
AK Production (RHS)
Source: US EIA
SUPPLY INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT
24 18 JANUARY 2013
Up Against the Export Wall: Hurdles to US LTO Production Growth (continued)
US Crude Exports to Canada on the Rise. Despite the relatively cumbersome nature of US crude export
regulations, exports to Canada have been on the rise. Both Canada, and Mexico for that matter, benefit from
free trade agreements with the US. Crude exports to Canada averaged 50 kb/d in 2011 and 60 kb/d
between January-and October 2012. Around 85% of these exports have come from PADD II, the location of
North Dakota’s prolific Williston Basin and Bakken play. Exports totalled around 70 kb/d in October 2012
based on the latest EIA data. Exports of light, sweet Bakken crude flow via Enbridge Inc's Lakehead pipeline
to the Sarnia, Ontario refining and petrochemical hub. The 300-kb/d Irving oil refiner at Saint John, New
Brunswick, is taking railcars of Bakken crude to replace more-expensive seaborne supplies. Valero also
recently noted that its 265 kb/d St. Romuald refinery in Quebec could run 90% light crude, and has
reportedly received an export license from BIS to facilitate the export of Eagle Ford crude at a cost of around
$1.50-2.00/bbl. On balance, the extent to which new crude and condensate volumes flow to Canada will
depend first on oil sands’ operators demand for diluent, which will clearly rise in the coming years, and on
the competitiveness of these crudes at the refinery gate, net of transport costs, with their existing, largely
Brent-priced import slate.

0
20
40
60
80
100
120
140
160
180
02 03 04 05 06 07 08 09 10 11 12
kb/d
US Pentanes Plus Exports to Canada
Source: EIA

0
50
100
150
200
250
02 03 04 05 06 07 08 09 10 11 12
kb/d
US LPG Exports
Source: EIA


Plant Condensate and LPG Exports Provide an Outlet. The export restrictions described above specifically
include “lease condensate” in the definition of crude oil. Lease condensate cannot be exported because it
has not been processed. Pentanes Plus, on the other hand, which include natural gasoline or plant processed

condensate, on the other hand, are not constrained by an export restriction. These hydrocarbons are mostly
being sent to Canada to be used as a diluent for oil sands marketing and transport. Pentanes Plus exports
have surged in the last two years, from 20-40 kb/d from 2008-2011 to over 100 kb/d over the past year.
These exports are occurring because of fast-rising production growth in Canadian oil sands, where shippers
use pentanes plus to move heavy bitumen via pipelines. Looking forward, there might be particular
pressures to remove lease condensate from export restrictions, so as to let producers tap the fast growing
Canadian market, where lease condensate could be processed in Canada. In the absence of such exceptions,
ethane and propane, derived from condensate, could be targeted for exports. US exports of LPG, mostly
propane, have more than tripled since 2008 to 206 kb/d in October. So far Mexico and other Central and
Latin American countries have been the main market, though US propane is also shipped to the Netherlands
and elsewhere. In the future, however, ethane and propane could find growing markets in Asian and
European petrochemical plants. The MTOMR, published in October 2012, projected that Asian ethylene
demand will rise by almost 20% by 2017. Africa is also a growing market for LPG, used as a cooking fuel to
replace traditional biomass, among other purposes.
INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT SUPPLY
18 JANUARY 2013 25
Up Against the Export Wall: Hurdles to US LTO Production Growth (continued)
Are Refiners Constrained in How Much They Can Process? Exports of refined products are not restricted in
any way under US law, though recently there have been legislative efforts to extend crude export
restrictions to products. In the last few years, the refining industry has in effect become a conduit for crude
oil exports, allowing rising US crude production to be exported in product form. In just a few years, the US
has transformed itself from the world’s top product importer to its second largest product exporter,
surpassed only by Russia. US product exports have averaged 3.1 mb/d from January to October 2012,
compared with 2.9 in 2011 and just 1 mb/d in 2005. On a net basis, the numbers are even more impressive,
showing that the US exported 900 kb/d of oil products so far this year, compared with net imports of 2.5
mb/d of refined products in 2005. The US refining industry has become a highly competitive export industry,
benefitting from the twin strength of ‘advantaged’ crude – LTO and other feedstock trading at a deep
discount to international benchmarks and some of the lowest natural gas prices on the planet. US refiners
use natural gas as a refiner fuel and to produce hydrogen used in refinery processing. Refining utilization
rates have streely risen recently. US refinery utilization rates were estimated at 89% in December, a level

normally seen in the summer months.
Effective as it may have been as a way to leverage US crude production growth in international markets, the
US refining industry has limited capacity to absorb incremental production of light, sweet oil. The imminent
restart of Motiva’s new 325 kb/d crude unit at its Port Arthur refinery in Texas could lift US throughput, but
the refinery is geared to heavy grades. Beyond the Motiva expansion, the US is set to add very little crude
distillation capacity before 2018, limiting longer term growth in product exports. The Motiva expansion will
also partly offset the closure of Sunoco’s Marcus Hook refinery and a partial shutdown of Flint Hill’s North
Pole refinery in Alaska in 2012. Another 200 kb/d of distillation capacity is being added before 2018, through
several smaller expansion and upgrading projects. In all, US refining capacity is expanding by a net 285 kb/d
from 2012 to 2017. With utilisation rates already trending near record highs, there seems to be little room
for further gains in utilisation. Also in Canada there is little spare capacity to process additional crude
volumes. Current throughput rates are averaging around 1.7 mb/d, compared to nameplate capacity of
some 1.9 mb/d.
Objections to and opportunities for exports. Policymakers will have to balance growing producer incentives
to export crude with existing law that governs US resources in “short supply” as set forth in the Export
Administration Act. Producers may find a dwindling market for their crude in Gulf Coast refiners, who
invested heavily in conversion capacity over the last 20 years, and whose appetite to undergo
reconfiguration will be determined by their profitability. Running increasing amounts of blended LTO and
heavier crudes would mean lower yields of middle distillates and reduced operating rates of some

Pipeline Operator Type From To
Planned Cap
(kb/d)
Target Date
Enbridge Mainline North Dakota Enbridge Crude Plentywood, MT Clearbrook, MN 210 In service
Enbridge Line 5 Enbridge Crude/Condensate Superior, WI Sarnia, ON 490 In service
Crude/Condensate Superior, WI Sarnia, ON +50 1Q 2013
Portland Montreal PMPL Crude Portland, ME Montreal, QC 602 In service
Enbridge Line 6B Enbridge Crude Griffith, IN Sarnia, ON 240 In service
Crude Griffith, IN Stockbridge, MI +260 2013/2014

Enbridge Line 7 Enbridge Crude/Condensate Sarnia, ON Westover, ON 150 In service
Enbridge Line 65 Enbridge Crude Cromer, Manitoba Clearbrook,MN 185 In service
Southen Lights Enbridge Dilluent Manhattan, IL Edmonton, AB 180 In service
Toledo Enbridge Crude Stockbridge, MI Oregon, OH 100 In service
Enbridge Line 79 Enbridge Crude Stockbridge, MI Romulus, MI 80 1Q 2013
Enbridge Bakken Expansion Enbridge Crude Beaver Lodge, ND Cromer, MB 25 In service
Enbridge Crude Beaver Lodge, ND Cromer, MB +120 1Q 2013
Enbridge Line 9A reversal Enbridge Crude Sarnia, ON Westover, ON 50 1Q 2013
Enbridge Line 9B reversal* Enbridge Crude Westover, ON Montreal, QC 250 2014
Bakken North Pipeline* PAA Crude Williston, ND Regina, SK 75 2Q 2013
High Prairie Saddle Butte Crude Alexander, ND Clearbrook, MN 150 4Q 2013
Cochin reversal Kinder Morgan Dilluent Windsor, ON Fort Saskatchewan, AB 95 3Q 2014
Sandpiper* Enbridge Crude Tioga, ND Superior, WI 225 2015/2016
* Project awaiting approval or only proposed
Source: CAPP, Deutsche Bank, ND Pipeline Authority, Company data
Major Selected Crude, Condensate and Diluent Pipelines to Canada