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Norway Oil and Gas Report Q3 2009
Business Monitor International, July 2009, Pages: 67
Norway 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 Norway's oil and gas industry
The latest Norway Oil & Gas Report from BMI forecasts that the country will account for just 1.61% of Developed European regional oil demand by 2013, while contributing 50.87% to supply. In Developed Europe, overall oil consumption reached an estimated 13.75mn barrels per day (b/d) in 2008. It is set to rise to around 13.88mn b/d by 2013. Developed Europe regional oil production was 6.97mn b/d in 2001, and in 2008 averaged an estimated 5.06mn b/d. It is set to fall to just 3.77mn b/d by 2013. Oil imports are growing steadily, because supply is contracting and demand is rising, albeit slowly. In 2008, net crude imports were an estimated 8.70mn b/d. By 2013, they are expected to have reached 10.11mn b/d. Norway will remain the only major net exporter, with the UK becoming a net importer.
As regards natural gas, the Developed Europe region in 2008 consumed an estimated 440bn cubic metres (bcm), with demand of 490bcm targeted for 2013, representing 11.2% growth. Production of an estimated 269bcm in 2007 should rise to 279bcm in 2013, which implies net imports rising from the estimated 2008 level of 171bcm to some 211bcm by the end of the period. Norway’s share of gas consumption in 2008 was an estimated 1.01%, while it contributed 35.31% to production. By 2013, its share of gas consumption is forecast to be 1.00%, with a 42.96% contribution to regional 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 our 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, we are 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.
Norwegian real GDP is now forecast by BMI to fall by 2.4% in 2009, compared with growth of 2.0% in 2008. We are assuming average annual growth of 0.7% between 2009 and 2013. Recent (April 2009) Norwegian oil and liquids production has averaged 2.26mn b/d. We expect the country’s 2009 oil and liquids production to be about 2.20mn b/d, down from 2.47mn b/d in 2008. By 2013, liquids volumes look set to have slipped to 1.92mn b/d. Oil demand could rise to just 223,000b/d by 2013, implying net exports slipping from an estimated 2.22mn b/d in 2008 to 1.70mn b/d by the end of the period. The estimated 2008 gas production of 95bcm should continue to rise towards at least 120bcm in 2012/13. Domestic gas consumption rising from 4.4bcm to 4.9bcm over the period 2008-2013 suggests that net exports will rise to 115.1bcm by the end of the forecast period.
Between 2008 and 2018, we forecast a decrease in Norwegian oil production of 26.3%, with output slipping steadily from an estimated 2.47mn b/d in 2008 to 1.82mn b/d at the end of the 10-year forecast period. Given forecast unchanged oil consumption over the period, exports slide from an estimated 2.25mn b/d to 1.60mn b/d during the forecast period. Gas production should rise from the estimated 2008 level of 95bcm to a peak of 120bcm in 2012-2014, before falling to 100bcm by 2018. Most exports will continue to be in the form of pipeline gas, with some LNG. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
BMI’s long-term political risk rating for Norway is 99.0, well above the Developed Markets average of 85.8; and the highest among our universe of developed countries. Our long-term economic rating is 74.2, which compares with a Developed Markets average of 69.3, making Norway the highest-scoring country in developed Europe. There is a partly-privatised energy sector, with government majority ownership of key company StatoilHydro, formed in 2007 from Statoil and the oil and gas interests of Norsk Hydro. Norway has a major, but mature and highly competitive upstream oil and gas segment, featuring most key national and international companies. The downstream oil segment is small, open to competition and deregulated.
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