By Libby George
BRUSSELS, Sept 30 (Reuters) - U.S. shale gas will displace agrowing portion of the world's expanding energy demand, cuttinginto the need for oil products from refineries, BP's head ofrefining economics said on Friday.
Natural gas liquids (NGLs) from the U.S. shale boom such asethane, an alternative to naphtha refined from crude, could feedas much as a third of demand growth in 2017, BP's Richard deCaux told the Platts Refining Summit in Brussels.
Refined oil products already in storage will furtherundercut refinery profits, he said.
"We expect a substantial chunk of the incremental demandgrowth next year to be met by two sources which don't come froma refinery," de Caux said, citing NGLs and oil products instorage.
This week, the first U.S. ethane cargo arrived at achemicals plant in Scotland, and de Caux said the vessel was aharbinger of supply to come that would undercut profit supportfor refineries running crude oil, whose margins boomed over thepast two years of cheap crude and stellar demand growth.
"That's coming out of oil demand," de Caux said ofpetrochemicals coming from ethane, rather than from refinednaphtha, in petrochemical units.
BP expects demand growth of 1.2-1.4 million barrels per day(bpd) in 2017, of which 300,000-400,000 bpd could come fromnatural gas liquids. This is up from around 200,000 bpd from asa larger overall demand growth in recent years, de Caux said.
Other consumption growth would be fed by inventories of oilproducts, which in the developed world stood nearly 150 millionbarrels above the five-year average in 2016, "close to full," deCaux said.
This is likely to limit refinery margins and runs, puttingpressure to close on the continent's refineries, along withageing units in Japan and possibly on the U.S. Atlantic Coast -areas where demand growth is stagnating.
"The cheap oil prices did not save Europe from furtherrationalisations," he said. (Editing by William Hardy)