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Czech Republic Oil and Gas Report Q3 2009
Business Monitor International, July 2009, Pages: 69
The Czech Republic 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 the Czech Republic's oil and gas industry.
The latest Czech Republic Oil & Gas Report from the author forecasts that the country will account for 3.83% of Central and Eastern European (CEE) regional oil demand by 2013, while making no material contribution to 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 636.7bcm, with demand of 737.8bn cubic metres (bcm) 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. The Czech Republic’s share of gas consumption in 2008 was an estimated 1.44%, with no meaningful contribution to regional supply. Its share of demand is forecast to be 1.50% by the end of the forecast period.
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. 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% year-on-year). The author’s 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 author’s 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 author’s 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. Czech real GDP is forecast by the author to fall by 2.1% in 2009, down from 3.2% growth in 2008. We are assuming 1.1% growth in 2010, 3.3% in 2011, followed by 4.0% in 2012 and 3.7% in 2013. Assuming an average rise in consumption of 1.5% per annum, below the CEE norm, oil demand will reach 224,000b/d in 2013 – implying imports of at least 221,000b/d. In spite of a privatised oil industry, there is very limited international oil company (IOC) involvement in the upstream segment to boost domestic supply of oil or gas. The author is assuming gas demand will rise by an annual 4.0% from an estimated 9.2bcm in 2008 to around 11.1bcm by 2013.
Between 2008 and 2018, we are forecasting an increase in Czech oil consumption of 15.7%, with import volumes rising steadily from an estimated 209,000b/d to 242,000b/d by the end of the 10-year forecast period. Gas consumption is expected to rise from an estimated 9.2bcm to 13.3bcm by 2018, met by imports. Details of the author’s 10-year forecasts can be found in the appendix to this report.
The Czech Republic now occupies 10th place in the author’s updated Upstream Business Environment rating, just ahead of Hungary. Its minimal oil and gas reserves and poor production outlook work against the country, but are offset somewhat by privatisation progress, the competitive/regulatory environment and reasonable country risk factors. The country is just in the lower half of the league table in the author’s Downstream Business Environment rating, with a few high scores but no reason to expect near term progress further up the rankings. It takes seventh place ahead of Hungary. Refining capacity is among the region’s lowest, with low scores for likely capacity expansion and for oil and gas demand growth. Population and GDP per capita also work against the country. Azerbaijan is likely to move further out of reach above it.
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