Annual Report 2015


Report 2015


World Economy

Global growth slowed in 2015, due to a slowdown in emerging economies. The International Monetary Fund’s 3.1% global growth rate estimate is the lowest since the crisis year of 2009. The past decade was about the rise of the Chinese economy, which kept global growth high. However, China now shows signs of slowing: its investment-led growth is coming to an end and it is still an open question how the transition will take place to a more consumption-led growth. China’s 6.9% official growth rate in 2015 was still high, but it is the lowest since the early 1990s. Moreover, manufacturing and industrial output fared weaker than the overall economy.

The Chinese slowdown has caused trouble in many emerging economies, particularly the major commodity exporters, with Russia and Brazil falling in deep recession. The following map of 2015 GDP growth shows that today it is a commodity importer’s world as these countries benefit from cheaper raw material prices (including oil and natural gas).


The picture for advanced economies is diverse, with the United States losing growth momentum recently, while Europe fared somewhat better. The economy of the Unites States experienced lower growth in manufacturing in 2015; however, the gradual decrease of the unemployment rate continued. The Eurozone is cyclically in a good position and it managed to increase its growth to 1.5% in 2015 (as opposed to 0.9% the year before). However, growth is still structurally weak and the new quantitative easing program alone does not seem to be enough to accelerate the region sustainably. Meanwhile, the return to growth and easing of finances have decreased the appetite for structural reforms. In addition to the still unresolved credit issues on its periphery (most importantly in Greece), the European Union has to deal with a new situation by its Eastern borders and with the migration crisis at the same time. The Eurozone’s outlook is therefore still clouded by uncertainty, weak growth and persisting political tensions.

Global Energy markets & Upstream

The most important energy market event of 2015 was the further decrease of the crude oil price. The two main underlying causes of the decline – the United States shale oil boom and the slowdown in China’s economy – still have not disappeared. Shale oil production has proven to be more resilient to lower oil price than most experts predicted: output started to decline mildly only in the second half of the year.

The global oversupply on the oil market continued in 2015, as total supply grew more than demand (2.7 MMbpd vs 1.6 MMbpd). The price of Brent crude averaged USD 52 per barrel in 2015. The demand increase was relatively high, 1.6 MMbpd (International Energy Agency) reaching 94.4 MMbpd, as lower prices stimulated consumption both from OECD countries (0.4 MMbpd growth year-on-year) and Non-OECD countries (1.2 MMbpd growth year-on-year).

Non-OPEC production grew by 1.4 MMbpd, from which US growth was 0.8 MMbpd. In the meantime, OPEC production grew as well: the growth of 1.2 MMbpd was mainly due to Saudi Arabia’s and Iraq’s production growth.

Natural gas prices have decreased and converged on all three main regional markets. The price decrease of liquefied natural gas (LNG) can be attributed to the oil price decrease through oil-linked LNG contracts and the coming oversupply on the market, as many Australian and US producers are coming online in the coming years. These same factors caused European natural gas prices to decline as well.


Sustainable development (technologies, climate change, CO2 quotes)

In December 2015, an important agreement was signed by world leaders in Paris. Among other commitments, almost all countries of the world committed themselves to publish their climate targets for every next 5 years and at the end of each period take on new, stricter targets. Even though the agreement is not legally binding, its consequences can be significant in the fight against climate change. The two largest emitters, China and the US seems to be taking climate change action more seriously, as reflected in bilateral agreements and national programs, too.

Apart from policy changes there have also been important technological developments, which are equally important in tackling climate change. The cost of solar photovoltaic has been decreasing by around 10% annually in recent years. If this decline in cost continues, in a couple of years solar may become one of the cheapest sources of electricity in many parts of the world. Moreover, the cost of batteries have also been declining rapidly, lowering the cost of storing electricity both in stationary applications (like storing intermittent energy from renewables) and electric cars.


Global and European refining have benefitted from the sharp drop in oil prices in 2015. Low oil prices have boosted demand, especially in the case of gasoline, thus refinery margins have also been generally good and refineries’ own consumption and losses decreased.

However, structural issues remain. Globally, downstream is undergoing a profound transformation. More and more unprocessed liquid hydrocarbons are bypassing refineries, while the refinery overhang is still massive, especially in the OECD. European downstream is in an especially difficult position, with generally weak demand prospects and higher energy costs than e.g. in the US.

Low oil prices increased mainly global gasoline demand, whereas diesel demand stayed broadly constant in recent years. Moreover, the current high margin environment delays refinery closures, which means that the refinery overhang will stay longer, pointing towards lower refinery margins than in 2015 in the next years.

Central and East Europe

All Central and East European (CEE) countries experienced GDP growth in 2015. However, there are still distinct regional differences between dynamic markets (such as Poland) and relatively weak economies (such as Croatia). The strengthening of the Eurozone had a positive effect on the region; however, the high share of non-performing loans in the economies still looms over growth.

Due to relatively good economic growth, regional motor fuel demand grew in 2015. Moreover, this may continue in 2016 as low prices could boost demand further.


Hungary was not able to keep up with the exceptionally high growth of 2014 (3.7), still, the 2.7% GDP growth figure is relatively high. This growth is mostly due to the inflow of European Union funds. Medium term growth potential is certainly lower: public debt and spending remain high, bank lending is still lackluster.

Diesel demand grew by 8% and gasoline demand by 3% in 2015, due to lower oil prices, relatively high GDP growth and increased demand by international freight transportation.


Croatia’s economy grew by 1.8% in 2015, the first year of growth since 2008. Improved access to the EU market upon accession, growth in the Eurozone and low commodity prices as well as policy changes such as the income tax cut in the beginning of 2015 were reasons for the return to growth. Still, structural problems remain: high unemployment characterizes the economy (even though employment grew towards the end of 2015 for the first time since 2011) and the budget deficit and public debt will remain too high without corrective policy action. The country experienced a 2% gasoline demand drop in 2015, while diesel consumption grew by 3%.


Slovakia managed to consolidate its government budget since the crisis and do major reforms and austerity measures. Due to these measures, Slovakia experienced 3.5% GDP growth in 2015 (Eurostat). On the flipside, unemployment is still relatively high at around 11.5%. Gasoline demand grew by 1% in 2015, whereas diesel demand grew by a sizable 8%, mainly due to the favorable economic environment and the oil price decline.