Fuel Price Check on South-East Asia: An Overview

Today, Southeast Asia is some of the most active area of offshore exploration in the world. The impetus behind this in recent decades can be largely attributed to three phenomena: technological innovations in the industry, political developments in Southeast Asia and the Middle east, and the emergence of Japan as a hot-spot for petroleum trade operations.

Oil and Natural Gas Prices

At this moment, Southeast Asia produces nearly 2 million barrels per day (as well as 500 million cub feet natural gas). However, the region's main oil producers, Indonesia, Malaysia and Vietnam, are planning for a future as oil importers as their oil output declines and domestic demand rises. As Indonesia became a net importer of oil, the country declared its own suspension from OPEC in 2008.

Here are some facts about major oil refiners in Southeast Asia.

SINGAPORE

Singapore is a key regional supply and trading center. Major refineries in Singapore are operated by global oil firms such as Exxon Mobil (XOM.N) and Royal Dutch Shell (RDSa.L).

Exxon Mobil's Singapore Refinery operates at two sites with a combined capacity of 605,000 barrels per day (bpd).

Shell's 500,000 bpd Bukom refinery is the largest Shell refinery in the world in terms of crude distillation capacity.

MALAYSIA

Malaysia has five active oil refineries with the single largest site belonging to Shell, holding a licensed capacity of 156,000 bpd.

But refineries owned by state oil company Petroliam Nasional Bhd (Petronas)PETR.UL dominate the refining business, operating three sites on the east and west coasts of the country's main peninsula.

Oil refining activity in Malaysia is licensed and controlled by Petronas, which has been vested with the country's oil and gas assets, and is marketed to both domestic and overseas buyers. Exports of oil and gas accounted for 43.3 percent of total exports to Japan in 2010.

THAILAND

Thailand has seven oil refineries with a combined refining capacity of 1.23 million bpd. State-controlled PTT PTT.BK has stakes in five of them, giving it about 36 percent of total refining capacity by equity holdings.

Thai Oil TOP.BK operates a complex refinery with capacity of 275,000 bpd. It is Thailand's biggest refiner with about 22 percent of the country's refining capacity. It also runs a paraxylene petrochemical plant, with annual capacity of 900,000 tones of diversified aromatics products.

INDONESIA

State oil firm Pertamina owns Cilacap refinery, which has a total capacity of 348,000 bpd.

Excluding the facilities of ExxonMobil and Shell in Singapore, Pertamina's Cilacap refinery is Southeast Asia's largest in terms of capacity.

Indonesia, Asia's largest gasoline buyer, does not have enough refineries to meet its fuel needs and relies on gasoline and diesel imports.

THE PHILIPPINES

Petron Corp (PCOR.PS), the country's top oil firm, operates a 180,000 bpd refinery in Bataan, northwest of Manila. Petron, with a market value of $3.2 billion and controlled by local conglomerate San Miguel Corp (SMC.PS), buys most of its crude from Saudi Arabia.

Petron Corporation: The largest oil refining in the Philippines

VIETNAM

Vietnam has one refinery, Dung Quat, owned by state oil monopoly Petrovietnam. It has capacity of 130,500 bpd.

Vietnam is aiming for fuel self-sufficiency by developing total annual refining capacity of 25 million to 30 million tones (about 600,000 bpd) by 2020.

Cheapest Petrol in Asia: Brunei, Malaysia, Indonesia, Myanmar

The survey of fuel prices at petrol stations, conducted in 172 countries and territories around the world, took place in mid-November, 2010, and provides a snapshot of global fuel prices. Not surprisingly, the cheapest petrol is in energy-rich countries, with Brunei offering the cheapest fuel in the region to its consumers, with petrol costing just $0.39 a litre, followed by Malaysia ($0.59), Indonesia ($0.79), Myanmar ($0.80), Pakistan ($0.86) and Vietnam ($0.88).

Most Expensive Petrol in Asia: Hong Kong, Tahiti, Nauru, Japan

The report includes surveys of some specific territories in addition to countries, and so while Mainland China offers petrol at $1.11, the survey found that the most expensive gasoline in Asia was in Hong Kong at $1.92 a litre, followed by Tahiti ($1.70), Nauru ($1.60), Japan ($1.60), South Korea ($1.52), New Zealand ($1.47), Singapore and Thailand ($1.41). The price of petrol in Taiwan was less than in mainland China - $1.00.

Petrol Prices for Other Countries in Asia

A number of other countries were surveyed and were found to have similar pricing, including Samoa ($1.03), Philippines ($1.05), Bhutan ($1.08), Bangladesh ($1.09), India and Cambodia ($1.15), Nepal ($1.18), Sri Lanka ($1.19), Laos ($1.26), Australia ($1.27) and East Timor ($1.40).


What Affects Fuel-Pricing

Actually, it matters about the supply and demand principle.

The marketplace forces of supply and demand determine the price of fuel. If demand grows or if a disruption in supply occurs, there will be upward pressure on prices. By the same token, if demand falls or there is an oversupply of product in the market, there will be downward pressure on prices.

Those principles apply at the service station level as well. If a retailer prices its gasoline too high, and without regard to competition, the retailer's customers may take their business to another station with lower prices. If a retailer loses enough volume, the retailer may then reduce prices in order to retain its customers.

Competition among retail outlets thus affects pricing. You may notice that sometimes there are price differences between two gasoline stations on a busy street corner and between those outlets and the only station on a long stretch of highway. More choices generally mean more competition for business.

And although retail outlets may sell gasoline carrying the brand of a major oil company, most dealerships are owned and operated by independent business people who are free to set the prices for their products and services.