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  5. > Analysis of the Global Market for Condensates and Reformates : Effect of Plummeting Oil Prices on Demand

Key Findings - Global Condensates Market

•The condensates market is supply driven and depends on natural gas and oil production. Before the recent plummeting of oil prices, natural gas production was expected to increase at a compound annual growth rate (CAGR) of x % from 2013 to 2020—faster than crude oil growth (at x %)—due to factors such as increased shale plays, which further enhanced the supply of condensates. the supply of condensates.
•The Middle East, North America, and Russia have the highest production of condensates globally, although exact estimates differ by source. The lack of a conclusive definition of what constitutes “condensates” has resulted in a variety of country estimates.
•Condensate demand is largely located in Asia due to the need for naphtha. Countries such as Japan, Singapore, and South Korea rely entirely on condensate imports, while other countries, such as China, Indonesia, Malaysia, and Thailand, require imported condensates to supplement local production to meet demand.
•Condensate prices are linked to the price of oil, and trade below it. However, the exact price varies by region, the American Petroleum Institute (API) gravity, and whether the condensates are used domestically or exported.
•The recent slump in oil prices to under $ x a barrel has prompted major condensate-producing countries, such as Qatar and Saudi Arabia, to increase domestic use and to process condensates into more value-added oil products, such as naphtha, than simply exporting large volumes of condensates. This, however, is expected to reduce the price of naphtha in 2015.

Key Findings - Global Reformates Market

•The catalytic reformates market is demand-driven, mainly by the demand for gasoline. However, there are various challenges facing this market.
•Although gasoline demand is increasing in emerging regions, Europe and North America are experiencing flat or declining demand. Octane-increasing substitutes, such as ethanol, are available for reformates. Growing adoption of ethanol technology, due to country legislation, will decrease the demand for reformates.
•Naphtha, the feedstock for catalytic reforming, is largely produced by Saudi Arabia, Russia, and the United States. North America and Asia accounted for x % of the global reforming capacity in 2013.
•However, reforming capacity is shifting. North America and Western Europe have reduced capacity over the past x years due to plant acquisitions, consolidations, and closures, while China and India have increased capacity due to the greater demand and a modernisation programme in China.
•The recent slump in oil prices is expected to reduce naphtha prices in 2015. For a refiner with reforming capacity and an abundant supply of cheaper naphtha, options include designating greater volumes of naphtha and reformates for gasoline blending; expanding existing reforming capacity to increase naphtha volumes; or producing more benzene, toluene, and xylene (BTX) aromatics.
•As a last resort, reformates would have to compete on heat value with liquefied petroleum gas (LPG), which is not a lucrative market.

Objectives of the Research Service

The main objectives are to:
•Provide a global overview of the condensates and reformates markets.
•Indicate factors influencing market demand versus supply.
•Provide a market analysis (that is, demand and supply conditions, and any bottlenecks).
•Identify key market regions involved in the condensate and reformate markets.

Global Energy Production

In 2013, the global energy production was estimated at x billion tonnes of oil equivalent (TOE), according to BP Energy Outlook x statistics. Other sources, however, provide alternative estimates as high as x billion TOE in 2013. The discrepancy is attributed to the differing estimates for each of the types of energy produced.
Drawing on BP Energy Outlook’s data, global energy production is likely to increase at a CAGR of x % from 2013 to 2020. Of the larger energy sources, natural gas is expected to have a significantly higher production rate (at a CAGR of x %) above coal (at x %), with crude oil showing slower growth (of x %) from 2013 to 2020.
Condensates are obtained from natural gas fields; therefore, the growth in natural gas production is expected to directly drive condensate supply. The United States accounted for x % of the global natural gas supply in 2013, followed by Russia with x %.
Naphtha, the feedstock for catalytic reforming, can be obtained from crude oil and natural gas. Saudi Arabia produced x % of the global oil supply in 2013, followed by Russia (with x %), and the United States (with x %).

Condensate Overview

Condensates, or lease condensates, are extracted in liquid form at atmospheric temperature and pressure from natural gas wells and shale fields. The condensates market is supply driven and production is growing at a rate higher than that of crude oil. As such, the greater the extraction of natural gas and, more recently, shale gas, the greater the supply of condensates. Condensates vary in quality and quantity when extracted, and each gathering system and processing facility needs to be tailored accordingly based on commercial and operational factors.

Amongst their various uses, condensates can be added to other crude to be refined, as they lower the sulfur content of the crude and reduce the volatility of the condensate. They can be mixed with oil sands as a diluent to enable pipeline transportation. Stand-alone condensate splitters are used to produce naphtha, gas oil, and other individual components. These can then be used in the production of various types of fuels (such as boiler, diesel, jet fuel, and high-octane gasoline) and as petrochemical intermediates. Aromatics, monomers, and olefins obtained from condensates are used to produce polymers, fibres, and resins. Products from refined condensates are almost identical to those produced from crude, but these products are limited to a select basket of lighter hydrocarbons.

Condensate volumes vary by region and the field from which they are extracted. The Middle East, North America (the United States, Canada, and Mexico), and Russia are the leading producers for crude and lease condensates. Condensate prices follow crude oil prices and can be sold as a liquid blended with crude oil, lowering the price of crude oil as well. In 2012, the domestic price of x API gravity condensate from the US Eagle Ford shale fields was $ x below that of 40 API gravity crude oil. From January to October 2014, the export price of condensates from Iran was trailing $ x behind the Brent crude price. As such, prices vary by region, API gravity, and whether condensates are used domestically or exported.

Reformate Overview

Catalytic reforming is the oil-refining process of transforming heavy, low-octane naphtha feedstock— obtained from crude distillation—into reformates and by-products such as high-purity hydrogen gas and isobutane. Reformates, which are high-octane, low-sulfur blending components, are used in the production of gasoline. Other blending components include alkylate, cracked gasoline, hydrocrackate, naphtha, and straight-run gasoline. The exact amount of these blending components depends on the desired specifications of the final gasoline product.

Reformates are also used as feedstock in the petrochemical industry due their significant BTX components, and are referred to as aromatics. BTX aromatics are extracted from reformates via a solvent extraction process and used in the production of fibres and polymers.
According to refining capacities as of 1 January 2014, North America produces x % of the global reformates with more than x million barrels per calendar day (b/cd), followed by Asia, Western Europe, and Eastern Europe.

Leading Oil and Gas Companies

Based on the global oil and gas production figures for 2013, the top x oil and gas companies are Saudi Aramco, Gazprom, National Iranian Oil Company, ExxonMobil, and PetroChina. However, these rankings do not necessarily correlate with the highest production levels of condensates or reformates.

Table Of Contents

Analysis of the Global Market for Condensates and Reformates : Effect of Plummeting Oil Prices on Demand
Executive Summary 3
Market Overview 6
Overview of Condensates in the Global Market 15
Condensates—Demand and Supply Factors 20
Overview of Reformates in the Global Market 25
Reformates—Demand and Supply Factors 30
The Impact of Declining Oil Prices on the Condensates and Reformates Markets 36
Conclusions 42
The Frost and Sullivan Story 46

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