This paper presents the prospects of the refining sector in the Mediterranean region in terms of oil products demand, supply and the resulting surplus and deficit balance over the period from 2004 to 2015. The paper examines three demand scenarios, two supply sensitivity analysis and also looks at the import and export potentials of its major trade partners. The analysis is based on an in-house model developed with energy companies operating in the Mediterranean region. The model includes 29 countries and uses data collected from questionnaires submitted to energy companies, and national administrations. It produces comprehensive products balances, and also provides an outlook based on different scenarios and assumptions. The scope, geographical coverage and use of first-hand data give the paper its originality. Currently the Mediterranean region not only represents 13% of global oil demand, but also holds 12% of the world's refining capacity. The main findings point to an overall increase in refinery capacities and an expected global reduction in oil product deficit in the Mediterranean region at horizon 2015. However the future of the region appears troubled. With little time on their hands to adjust and upgrade their refineries, the paper shows that Mediterranean countries will need to face the growing demand for desulphurised middle distillates, while their current main provider, Russia, is looking less likely to supply the required quantities and quality over the coming years. In addition, increasing gasoline surpluses in the region are expected to exceed the needs of its importers (I.E. USA), leading to future predicaments for the industry, the Mediterranean region and its populations. Moreover, the results show that current and foreseen environmental measures are likely to reinforce the unbalance of the region. The paper also discusses several interrelated issues including oil quality, oil prices, biofuels prospects, product specifications and refining margins.


The Mediterranean region is facing two main trends: on one hand increasing oil product demand and on the other the mismatch of oil product supply and limited capacity additions. As a result of string growth in demand for refined products in recent years, spare capacity is rapidly diminishing. Allowing for maintenance, there is now limited further utilisation, so that the bulk of increasing demand for refined products will call for capacity additions or increased imports. The Mediterranean faces a number of challenges that complicate the prospects for the refining industry and raise concerns of increasing import dependency of Mediterranean countries for certain oil products. While environmental restrictions are hindering new additions and upgrades in many parts of the Mediterranean, a shift in demand towards lighter products, mainly for transport, is pushing demand upwards and increasing the needs for upgrading units. The conversion units that are needed are costly and take a long time to build.

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