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Kazakhstan Oil and Gas Report Q3 2009
Business Monitor International, July 2009, Pages: 89
Business Monitor International's Kazakhstan Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kazakhstan's oil and gas industry
The latest Kazakhstan Oil & Gas Report from BMI forecasts that the country will account for 4.64% of Central and Eastern European (CEE) regional oil demand by 2013, while providing 16.33% of supply. CEE regional oil use of 4.65mn barrels per day (b/d) in 2001 rose to an estimated 5.39mn b/d in 2008. It should average 5.33mn b/d in 2009 and then rise to around 5.85mn b/d by 2013. Regional oil production was 8.83mn b/d in 2001, and in 2008 averaged an estimated 12.93mn b/d. It is set to rise to 14.39mn b/d by 2013. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average 4.18mn b/d. This total had risen to an estimated 7.54mn b/d in 2008 and is forecast to reach 8.54mn b/d by 2013.
As regards natural gas, the region in 2008 consumed an estimated 636.7bn cubic metres (bcm), with demand of 737.8bcm targeted for 2013, representing 13.0% growth. Production of an estimated 778.7bcm in 2008 should reach 906.1cm in 2013, which implies net exports rising from 141.9bcm in 2008 to 168.3bcm by the end of the period. Kazakhstan’s share of gas consumption in 2008 was an estimated 3.83%, while its share of production is put at 5.20%. By 2013, its share of demand is forecast to be 4.64%, with the country accounting for 8.28% of supply.
In terms of the OPEC basket of crudes, the average price in Q109 was an estimated US$45.78 per barrel (bbl), down 13% from the US$52.51/bbl recorded during the previous three months. During the second quarter, there has been little change to their view of oil market developments. BMI is forecasting an average OPEC basket price of US$51.30/bbl, with the March gains being retained in April, before further recovery to a possible US$57.00 is seen by June. For 2009, the publisher is still assuming an average OPEC basket price of US$52.00/bbl (-45% year-on-year). The BMI full year forecast implies Brent crude at US$53.73, WTI averaging US$54.90/bbl and Urals at US$52.66 for 2009.
For the whole of 2009, the BMI assumption for gasoline is an average US$56.89/bbl, with the price peaking at a forecast monthly average of US$64.75 in December 2009. The overall y-o-y fall in 2009 gasoline prices is put at 44.1%. For gasoil in 2009, the BMI forecast is for an average price of US$69.35/bbl, assuming a monthly high of US$94.48/bbl in December. The full-year outturn represents a 42.8% fall from the 2008 level. The monthly average jet fuel price is forecast to range from US$53.75 in February to US$96.76/bbl in December, proving an annual level of US$71.78/bbl. This compares with US$124.95/bbl in 2008.
Kazakhstan’s real GDP is forecast by BMI to contract by 1.9% in 2009, compared with growth of 3.0% in 2008. The publisher is assuming 2.4% growth in 2010, 5.5% in 2011, followed by 6.6% in 2012 and 6.7% in 2013. Consumption growth, beyond the likely weakness of 2009, should keep pace with the growing economy, but is unlikely to have much negative impact on export potential. The publisher is forecasting domestic oil demand reaching 272,000b/d by 2013. State-owned KazMunaiGaz (KMG) accounts for more than 10% of oil production and participates in joint venture (JV) projects with international oil companies (IOCs), which should deliver rapid volume growth after the Karachaganak field builds up to full output in excess of 200,000b/d. Expansion of the Tengiz field and activation of the offshore Kashagan project should push Kazakh production towards 2.35mn b/d by 2013. This implies that oil exports should rise from an estimated 1.27mn b/d in 2008 to 2.08mn b/d by the end of the forecast period.
Between 2008 and 2018, the publisher is forecasting an increase in Kazakh oil and gas liquids production of 48.4%, with volumes reaching a peak of 2.6mn b/d in 2014, before falling to 2.3mn b/d by the end of the 10-year forecast period. Oil consumption between 2008 and 2018 is set to increase by 52.1%, with growth slowing to an assumed 5.0% per annum towards the end of the period and the country using 347,000b/d by 2018. Gas production should rise from the estimated 2008 level of 35bcm to 95bcm by 2018. Gas demand rising 76.9% provides export potential increasing to 50.8bcm. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Kazakhstan still occupies first place in BMI’s updated Upstream Business Environment rating, having remained just ahead of neighbour Azerbaijan. Its oil and gas production growth outlook, asset immaturity, high reserves to production ratios (RPR) and competitive landscape work in the country’s favour, but are undermined by a relatively unappealing risk environment. The country is just above the mid-point of the league table in BMI’s updated Downstream Business Environment rating, although there are few particularly high scores and progress further up the rankings from fifth place seems unlikely. The low level of retail site intensity represents a strong suit, along with region-leading oil demand growth prospects. Azerbaijan is just a point behind it in the regional rankings, but there is little chance of its moving ahead over the medium term.
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