Sunday, March 4, 2012

Inter-Regional Trade Movements of Petroleum Part 1: Introduction

Global flows of petroleum are vital to supporting a global economy, as petroleum is the key transport fuel that allows the movement of people, raw material and finished goods between distant regions of the world.  If the inter-regional flows of petroleum slow down, then so to must the global trade of goods.

This is the start of a new series of posts to summarize my analysis of changing trends in inter-regional movements of petroleum, including crude oil and petroleum products.  In this post, I summarize my data sources and methods of analysis.

Data Sources
1) The BP review
Every year BP (aka British Petroleum, aka Beyond Petroleum) for at least the last decade,  publishes on-line its “Statistical Review of World Energy” (hereinafter, BP review), a 40 to 50 page extensive summary of all the major energy sources and their consumption for all of the regions of the world and selected individual countries.   Included in the Petroleum section of this report are two tables entitled, “Inter-Area Movements” “Imports and Exports”  reproduced below from the 2011 review:

Accompanying these tables is a rather complicated chart summarizing some of the Inter-Area Movements. 

There is just way too much going in this chart to make much sense of it.  After staring at it for a while, you can get the sense that there are flows from Africa and the Middle East to North America and Asia Pacific regions, and extensive flows between North and South America and within the Asia Pacific region and a large region called Europe & Eurasia, which includes European and the Former Soviet Union countries.  But, after awhile my eyes glaze-over, I promise myself to go back and make more sense of this chart and these tables, but never do. 

Until now, that is.

I am interested in analyzing the details of inter-regional changes in petroleum imports and exports over time.  That is, how much petroleum is flowing between the major regions of the world and what is the time-trend of these interregional flows? 

The BP review does provide a third table entitled, “Trade Movements” which shows time dependent imports and exports for selected regions.  However, this table only shows imports for the USA Europe and Japan, with the rest of the world all lumped into one category.  A more extensive list of exporting regions or countries are also presented in this table, but, without knowing the imports into these regions or countries, one can’t see the total picture of what is happening within each region, or between regions, over time.  That kind of information is only provided in the “Inter-Area Movements” table. 

The most important and unique feature about the “Inter-Area Movements” table is that it excludes intra-regional movements of petroleum between countries within each of the regions.  This is vital if you want to truly track the inter-regional movements. 

The “Imports and Exports” table is also useful in that it provides a break down of crude oil and products imports and exports, from which I think I can make some reasonable estimates of the inter-regional movements of these quantities, as I explain below.

BP does not provide a public archive of its past BP Reviews, but fortunately, ASPO international has provided a freely available archive of the microsoft excel files corresponding to the 2002 to 2010 reports, and a pdf file format of the 2001 report.

2)  EIA International Energy Statistics
The USA’s Energy Information Agency’s International Energy Statistics Division was another useful source of statistics on petroleum and crude imports and exports. 

Unfortunately, as I reported several months ago in There will be no Epilogue, the USA can no longer afford to gather and report international energy statistics, and so the international export and import data stops around 2008/2009. 

As an aside, if these data are of interest to you, then you might want to download them now before they disappear altogether or the EIA becomes a pay-per-view site.  Similarly, my feeling is that the BP review’s days are numbered.  While BP’s risk of bankruptcy seems to have faded for now, it is likely only one more Deepwater type of oil spill disaster away from vanishing.

Methods of Analysis
Although this might seem like a simple exercise in data collation, some detailed analysis is needed to put these data condition in order to consistently and properly compare one year to the next and to understand what is being compared.

The BP review’s “Inter-Area Movements” and “Imports and Exports” tables are most decidedly not set up for a year by year comparison. 

The problem is that the regions being reported from year to year are almost continuously changing.  In the 2001 BP review, the year 2000 data separately reports petroleum movements for Western Europe and Central Europe, but in subsequent years just reports Europe.  The 2001 review takes the Asia-Pacific and divides and separately reports “Australasia” (Australia and New Zealand) Japan and China and reports the reminder as “other Asia Pacific.”  But by the 2007 review, the 2006 data further divides out Singapore, and, in the 2009 review, the 2008 data further divides out India.  For all of the available BP reviews, Africa is divided into North, West and East Africa and the trade movements into and out of Africa as a whole, with the exclusion of intra-regional movements between the North West and East, is not reported.  Similarly, the USA, Canada and Mexico are separately reported, and trade movements into and out of North America with exclusion of intra-regional movements between these three countries, is not reported. 

Based on these considerations, I decided to define nine regions and to correct the “Inter-Area Movements” and “Imports and Exports” tables for intra-area movements, as needed: 

1) North America (NA)
2) South America (SA)
3) Europe (EU)
4) former Soviet Union (FS)
5) Middle East (ME)
6) Africa (AF)
7) China (CH)
8) Japan (JP)
9) Asia-Pacific remainder (APr)

As a separate region, Japan is somewhat smaller in area and population compared to the other regions, but, its data is consistently divided out (unlike India and Singapore), and its trade movements of oil are comparable in size to the other regions.  Plus comparing the trade movements of Japan and China over the past decade makes for an interesting story as, you will see.

Corrected Inter-Area Movements
Some of these regions (SA, FS, ME, CH, JP) are as-reported in the BP review, and therefore are assumed to properly exclude intra-region trade movements between the countries with each region.

For the “Inter-Area Movements” table it is straight forward to correct the combining of sub-regions or countries to form my larger regions, by simply adding the sum of the Exports or Imports of the countries now being combined into one value.  For instance, using the data from the 2011 review, NA exports to SA will equal the sum of US, Canada and Mexico exports to SA (from the green box in the “Inter-Area Movements” table shown above) to each of these countries:

NA exports to SA = (Ex US to SA) + (Ex Canada to SA) + (Ex Mexico to SA)
NA exports to SA = (769 kbd) + (2 kbd) + (30 kbd)
NA exports to SA = 800 kbd

and, the sum of imports from SA (from the blue box in the “Inter-Area Movements” table)

NA imports from SA = (Ex SA to US) + (Ex SA to Canada) + (Ex SA to Mexico)
NA imports from SA = (2211 kbd) + (91 kbd) + (26 kbd)
NA imports from SA = 2327 kbd

where kbd is defined as thousands of barrels of petroleum per day

Analogous corrections can be made for APr, AF and for EU region, as needed for each of the “Inter-Area Movements” tables supplied in the BP reviews from 2000 to 2010.

Corrected Crude and Product Imports and Exports
For my newly defined regions (NA, EU, AF, APr) the total Crude and Product imports reported in the “Imports and Exports” table cannot be the simple sum of the formerly separate countries now being combined, because this would not exclude intraregional trades.  Further corrections are need.

The data in the “Inter-Area Movements” can provide such a correction, of sorts.  Specifically, the “Inter-Area Movements” table provided the total intra-regional flows for each of my newly defined regions.  For NA, for example (from the red box in the “Inter-Area Movements” table):

Intra-regional Exports = (Ex US to Cd  & Mx) + (Ex Cd to US & Mx) +  (Ex Mx to US & Cd)
Intra-regional Exports = (124 kbd+477 kbd) + (2532 kbd+7kbd) + (1280 kbd + 32 kbd)  
Intra-regional Exports = 4452 kbd

Intra-regional Imports = (Im US from Cd  & Mx) + (Im Cd from US & Mx) +  (Im Mx from US & Cd)
Intra-regional Imports = (2532 kbd+1280 kbd) + (124 kbd+32kbd) + (477 kbd + 7 kbd) 
Intra-regional Imports = 4452 kbd

Of course, the Intra-regional exports and imports are equal to each other, and these represent the correction factor that needs to be applied to the “Imports and Exports” table, as further explained below.

First, we need to recognize that for the “Imports and Exports” table, the sum of Crude and Product exports (or imports), is equal to the total petroleum exports (or imports) as reported in the “Inter-Area Movements.”  For example, for 2010, the USA's total exports in the “Inter-Area Movements” table (orange box in the “Inter-Area Movements” shown above) equals 2154 kbd.  For the USA, Crude Exports and Product Exports reported in the “Imports and Exports” table equal 28 kbd and 2126 kbd, respectively (orange box in the “Crude and Products Imports and Exports table shown above), which sums up to 2154 kbd.

Similarly, for NA the gross sum of Crude and Product exports equals the sums these respective amounts for USA, Canada and Mexico, which for 2010, equals 6292 kbd (violet box in the “Crude and Products Imports and Exports table shown above).  But, we know from the above calculations, that 4452 kbd of this gross sum is due to intra-regional exports.  Therefore, the sum of inter-regional total petroleum exports equals gross exports – intra-regional exports, which in this example is equal to 6292 kbd minus 4452 kbd, or 1840 kbd. 

In other words, of the gross total exports derived from the crude and product export data in the “Imports and Exports” table, only 29.2 percent (i.e., 100x1840/6293) of that corresponds to inter-regional export from NA to elsewhere in the world.  In my analysis to follow in the subsequent posts in the series, I have assumed that this correction factor can be equally applied to estimate the true inter-regional exports of crude and products.  For instance, for NA in 2010, the sum of gross crude and product exports equal 3381 kbd and 2912 kbd, respectively.  I have corrected these values by multiplying each of them by 0.2925 to derived estimate inter-regional crude and product exports of 988 kbd and 852, respectively. 

Analogous correction factors have been estimated and applied to NA as well as the APr, AF and EU regions, as needed for each of the “Imports and Exports” tables in each year of the BP reviews from 2000 to 2010, as needed.

Gross Export and Import Trends from the EIA
The Import and Export data provided by the EIA are more comprehensive than the BP data in that they go back to 1986 and report data for nearly every country in the world.  Therefore it is possible to take the sum of the imports and exports for all of the countries that comprise the corresponding to NA, SA, EU, FS, AF, ME and APr regions identified above.  In fact, except for APr, the EIA provides the sums for these regions already, so it is a relatively simply matter to calculate APr by subtracting the values from the EIA’s “Asia & Oceania” region which corresponds to BP’s “Asia Pacific” region.

But, the EIA import and export data for these regions, is that as the simple sum of the individual countries in each region this is this is the same as what I called the “gross” imports or exports for NA, that is, imports and exports without exclusion of intra-regional movements between the countries within the region. 

As such the EIA data which includes intra-regional and inter-regional movements, presents an interesting counterpoise to the BP data, which specifically excludes intra-region movements.  Indeed for several regions like SA ME and FS the EIA data provides the only estimate of gross exports or imports, since the BP data totally excluded this.  Even the other regions, like APr or AF, don’t give estimates of the total gross imports or exports because the trade within e.g., West, East and Southern Africa or with other Asia Pacifica have presumably excluded any intra-regional trade occurring within these regions. 

I say interesting counterpoise, because the EIA and BP data set overlap in time from 2000 to 2008. The differences between the EIA’s gross exports and imports, and BP’s inter-regional exports and imports should provide insight into the intra-regional imports and exports for each of these regions. 

Alright, my house keeping chores are out of the way, and I am ready to present my results.  I’ve decided to start with a broad overview of global trends for the global flows of petroleum imports and exports.  As you will see these results show that both gross and inter-regional global imports and exports of petroleum and crude oil actually peaked in about 2007.   See you next time.

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