Singapore predicted to bask in fuel deficits in emerging countries

Refiners are already popping the champagne.

According to BMI Research, over the next decade, they forecast a change in the ordering of the region's largest net importers. In particular, strong growth in auto sales and large refining capacity expansions will see India leapfrog Japan to become the region's second largest net importer. 

In contrast, muted domestic demand for refined products will stagnate crude oil imports in Japan and South Korea.

The region's other large net importers, Japan, South Korea and Singapore, look well-positioned to benefit from the fuel deficits in the emerging economies.

Here's more from BMI Research:

Though they will remain large net importers of crude oil to supply their refineries, refiners in these countries continue to be challenged by falling domestic demand for refined products.

In particular, the implementation of stringent fuel efficiency standards in the transport sectors in Japan and Korea will hit gasoline and diesel consumption beyond 2020. This will prompt refiners to look to offload their surplus products in the export market.

Therefore, the impending fuels defic it in the region's emerging economies will prove a boon for these refiners, with their surplus gasoline and diesel supplies ensuring that they remain well-positioned to capitalise on this development.

For example, soaring car ownership in the emerging economies - such as Thailand, China, Indonesia, Vietnam, India and the Philippines - will drive their gas oline demand into a deficit.

As the majority of the refining capacities in these countries are geared towards diesel production, they will need to import gasoline from the region's traditional refiners , such as Japan, South Korea and Singapore, whose surplus gas oline volumes will allow them to capitalise on this development.

Additionally, Pakis tan's gradual shift to increase the size of its oil-based transportation fleet will increase its need for diesel imports by 37% over the next decade, while aggressive production activities in the mining sector will sustain strong demand for diesel in Australia.