Iran Oil and Gas Report Q3 2009
Business Monitor International, July 2009, Pages: 95
The Iran 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 Iran's oil and gas industry.
The author forecasts that Iran will account for 15.00% of Middle East (ME) regional oil demand by 2013, while providing 15.68% of supply. Regional oil use of 8.24mn barrels per day (b/d) in 2001 rose to an estimated 10.86mn b/d in 2008. It should average 11.09mn b/d in 2009 and then rise to around 12.08mn b/d by 2013. Regional oil production was 22.87mn b/d in 2001, and in 2008 averaged an estimated 25.94mn b/d.
It is set to rise to 28.99mn 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 14.63mn b/d. This total had risen to an estimated 15.18mn b/d in 2008 and is forecast to reach 16.58mn b/d by 2013. Iraq has the greatest production growth potential, followed by Qatar.
As regards natural gas, the region in 2008 consumed an estimated 386bn cubic metres (bcm), with demand of 511bcm targeted for 2013, representing 32.3% growth. Production of an estimated 407bcm in 2008 should reach 625bcm in 2013 (+53.8%), which implies net exports rising to 115bcm by the end of the period. Iran in 2008 consumed an estimated 30.83% of the region’s gas, with its market share forecast at 29.06% by 2013. It contributed an estimated 31.97% to 2008 regional gas production and, by 2013, will account for 34.68% 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 recorded during the previous three months. During the second quarter, there has been little change to our view of oil market developments. The author 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% y-o-y). The 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 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 gasoline in 2009, the author 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.
Iranian real GDP growth is estimated by the author at 2.4% for 2009, following an estimated 4.7% in 2008. We are assuming 3.7% growth in 2010, 4.8% in 2011, followed by 3.8% in 2012 and 3.4% in 2013. We expect oil demand to rise from an estimated 1.68mn b/d in 2008 to 1.77mn b/d in 2013, failing to match the underlying rate of economic expansion. State-owned National Iranian Oil Company (NIOC) is responsible for all upstream oil and gas activities, although there is some small-scale participation by international oil companies (IOCs) on a sub-contractor basis. The lack of large-scale IOC investment contributes to modest output growth, with crude production forecast to increase from an estimated 4.30mn b/d in 2008 to 4.45mn b/d in 2013, subject to OPEC quotas and the possible impact of any sanctions resulting from the nuclear energy debate. Gas production should reach 190bcm by 2013, up from an estimated 130bcm in 2008. Consumption is expected to rise from 119bcm to 148bcm by the end of the forecast period, providing exports of 42bcm.
Between 2008 and 2018, we are forecasting an increase in Iranian oil production of 8.1%, with crude volumes rising towards 4.65mn b/d by the end of the 10-year forecast period, although there will be an OPEC-induced dip in 2009. Oil consumption between 2008 and 2018 is set to increase by 16.8%, with growth slowing to an assumed 2.0% per annum towards the end of the period and the country using 1.96mn b/d by 2018. Gas production is expected to climb to 280bcm by the end of the period. With 2008-2018 demand growth of 51.7%, this provides export potential rising to almost 100bcm by 2018. Details of the author’s 10-year forecasts can be found in the appendix to this report.
Iran now holds fifth place behind Turkey in the author’s updated Upstream Business Environment rating. It is three points clear of Oman and is likely to keep the smaller Gulf state at bay for the foreseeable future.
The country’s score benefits from the region’s biggest gas reserves base and a very healthy oil reserves position. Reserves-to-production ratios (RPRs) are high, but strict government control of the upstream industry prevents Iran’s achieving a better overall score. The country is below the middle of the league table for the author’s updated Downstream Business Environment rating, with some high scores but progress further up the rankings unlikely. It is now ranked equal seventh with Bahrain, thanks to high scores for refining capacity, oil demand, gas consumption, retail site intensity and population. The growth outlooks for oil/gas consumption and refining capacity represent relatively weak suits. Kuwait is immediately behind it in the regional rankings, and there is some long-term risk of it challenging for Iran’s seventh place.
Executive Summary
SWOT Analysis
Iran Political SWOT
Iran Economic SWOT
Iran Business Environment SWOT
Iran Energy Market Overview
Regional Energy Market Overview
Oil Supply And Demand
Table: Middle East Oil Consumption (000b/d)
Table: Middle East Oil Production (000b/d)
Oil: Downstream
Table: Middle East Oil Refining Capacity (000b/d)
Gas Supply And Demand
Table: Middle East Gas Consumption (bcm)
Table: Middle East Gas Production (bcm)
Liquefied Natural Gas
Table: Middle East LNG Exports/(Imports) (bcm)
Business Environment Ranking
Middle East Region
Composite Scores
Table: Regional Upstream Business Environment Rating
Table: Regional Downstream Business Environment Rating
Upstream Scores
Downstream Scores
Iran Upstream Rating – Overview
Iran Upstream Rating – Potential Returns
Iran Upstream Rating – Risks To Potential Returns
Iran Downstream Rating – Overview
Iran Downstream Rating – Potential Returns
Iran Downstream Rating – Risks To Potential Returns
Business Environment
Legal Framework
Infrastructure
Labour Force
Foreign Investment Policy
Tax Regime
Security Risk
Industry Forecast Scenario
Oil & Gas Reserves
Oil Supply & Demand
Gas Supply & Demand
LNG
Refining & Oil Products Trade
Revenues/Import Costs
Table: Iran Oil & Gas – Historical Data & Forecasts
Other Energy
Table: Iran Other Energy – Historical data & Forecasts
Key Risks To the Forecast Scenario
Long-Term Oil & Gas Outlook
Macroeconomic Outlook
Table: Iran - Economic Activity
Competitive Landscape
Executive Summary
Table: Key Players – Iranian Oil & Gas Sector
Overview/State Role
Table: Key Upstream Operators – Iran Oil & Gas Sector
Table: Key Downstream Operators – Iran Energy Sector
Company Monitor
National Iranian Oil Company (NIOC)
National Iranian Oil Refining and Distribution Company (NIORDC)
Eni Iran
Total Iran
Shell Development Iran
StatoilHydro – Summary
Inpex – Summary
Lukoil – Summary
CNPC – Summary
CNOOC – Summary
PTTEP – Summary
ONGC/OVL – Summary
OMV – Summary
BP – Summary
Sinopec – Summary
Gazprom – Summary
Glossary of Terms
Oil & Gas Ratings: Revised Methodology
Introduction
Ratings Overview
Table: The Oil & Gas Business Environment Ratings: Structure
Indicators
Table: The Oil & Gas Business Environment Upstream Ratings: Methodology
Table: The Oil & Gas Business Environment Downstream Ratings: Methodology
Oil & Gas Outlook: Long-Term Forecasts
Regional Oil Demand
Table: Middle East Oil Consumption (000b/d)
Regional Oil Supply
Table: Middle East Oil Production (000b/d)
Regional Refining Capacity
Table: Middle East Oil Refining Capacity (000b/d)
Regional Gas Demand
Table: Middle East Gas Consumption (bcm)
Regional Gas Supply
Table: Middle East Gas Production (bcm)
Iran Country Overview
Methodology & Risks To Forecasts
The Forecast Modelling
How we generate our industry forecasts
Energy Industry
Cross checks
Sources
- National Iranian Oil Company (NIOC)
- National Iranian Oil Refining and Distribution Company (NIORDC)
- Eni Iran
- Total Iran
- Shell Development Iran
- StatoilHydro
- Inpex
- Lukoil
- CNPC
- CNOOC
- PTTEP
- ONGC/OVL
- OMV
- BP
- Sinopec
- Gazprom
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