Global oil and gas transactions review 2013

Downstream activity decreases

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Downstream activity is still cautious in mature markets.

The downstream segments saw a sharp decline in transaction activity in 2013, with the number of deals (109) down by almost 45% compared to 2012. Activity was down in almost all of the sub-regions, particularly so in the two sub-regions that typically dominate downstream activity — the US and Europe.

Companies still remain cautious with regard to oil demand growth prospects, particularly so in Europe which is just now starting to see some positive economic growth.

Total disclosed deal value in the downstream segments reached just over $14 billion in 2013, a decline of almost 70% compared to 2012. In terms of transaction value, the gas distribution sub-segment accounted for 34% of the downstream total, while terminals and refining accounted for 29% and 10%, respectively.

Top 10 downstream transactions in 2013 based on disclosed value

EY’s chart top 10 downstream transactions in 2013

Top 10 downstream transactions in 2013 based on disclosed value


EY’s chart top 10 downstream transactions in 2013

*This deal does not include $294m of working capital

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Refining margins were generally off slightly year-on-year in most markets, with US average margins continuing to be substantially higher than those in Europe and in Asia. Refiners broadly kept utilization under control in 2013, but oil demand worries, particularly in Europe, remain in the forefront, especially given the surge in new refining capacity coming out of the Middle East and Asia in the next few years, with much of that capacity relatively complex.

As a result of the looming capacity imbalance, combined with increasingly stringent environmental and product quality standards, we expect that there will be increasing pressures once again on the marginal European refiners, potentially opening opportunities for transaction activity.