Altering global crude routes and refining

Wood Mackenzie has said that by 2025, mega projects offshore Brazil and Norway will add approximately 3.8 million bpd of new crude supply from the Atlantic Basic. Since most of this crude will be of a similar quality; relatively heavy and sweet, it represents a major opportunity for refineries in Europe and beyond as they endeavour to maximise margins for these streams.


The presalt megaprojects in Brazil are expected to produce 3.2 million bpd by 2025, which is 78% of all Brazilian production. With Petrobras having cancelled, or delayed many of its refinery expansion plans, domestic refining capacity is expected to reach only 2.5 million bpd that year. If no further expansions emerge, export markets will be needed for up to 1.8 million bpd of crude by 2025.

The US Gulf Coast is a natural fit for presale crude, but it is expected to end up competing with US crude and imports from Canada, Mexico, Venezuela, the Middle East and West Africa. Wood Mackenzie has however noted that Europe has limited capacity for processing heavier crudes.

Gordon McManus, Research Director EMEARC Refining and Oil Product Markets, Wood Mackenzie commented, “as a result, we believe over 1 million bpd of presalt crude will flow to Asia by 2025. Asian markets are under served by heavy crude, and their demand is expected to rise.”


As new supply from North American hits Us refineries, Brazilian presalt crude will look to Europe. However, it will end up competing with Norway’s Johan Sverdrup field which is expected to dominate North Sea production from 2020. When Johan Sverdrup production peaks in 2024, total heavy crude supply in northwest Europe will exceed 1 million bpd, while demand will remain close to the current 600 000 bpd. Lower shipping costs are expected to favour the Norwegian crude, but the competitive balance will depend on refined product pricing, and how well matched European refineries are to the new crude streams. This will become clearer once the all important crude assay data for Johan Sverdrup is released to the market.

Gail Anderson, Principal Analyst Upstream Oil and Gas, Wood Mackenzie noted that the dramatic growth in heaver crude availability will influence price differentials in the region. She said, “we expect presalt Brazil and Johan Sverdrup will trade at a 3 – 4% discount to Brent. Medium and heavy crude discounts to Brent are likely to widen when this heavier supply peaks, benefitting complex refiners. In turn, this would make the Atlantic Basin less attractive to Urals and medium Middle Eastern grades which could be diverted east.”

Edited from press release by Claira Lloyd

Published on 12/05/2015

Get your FREE Oilfield Technology magazine »

Get your FREE trial of Hydrocarbon Engineering magazine »

Get your FREE trial of World Pipelines magazine »


Related articles

Norway supplies 21% of Europe natural gas needs

According to the US Energy Information Administration (EIA), Norway supplied 21% of total European natural gas needs in 2013.

Brazil’s oil and gas industry

Business Monitor has released its latest findings on the Brazilian oil and gas industry.

Norway to open up eastern Arctic

With production falling to a 25 year low, Norway has for the first time, invited companies to bid on exploration licenses in the country’s eastern Arctic waters.

Brazil’s Petrobras: new light oil find; prospects for production, pipelines

Petrobras has announced a new light oil find in the Campos Basin. This article looks at the new oil find; Petrobras’ International Business Plan; relations between Brazil and China; foreign participation in the Brazilian market and prospects for the Brazilian pipeline sector over the next few years.

Recommend magazines

  Hydrocarbon Engineering  Oilfield Technology