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India Oil and Gas Report Q1 2010
Business Monitor International, Nov 2009, Pages: 104
India 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 India's oil and gas industry.
The latest India Oil & Gas Report from BMI forecasts that the country will account for 13.19% of Asia Pacific regional oil demand by 2014, while providing 10.48% of supply. Asia Pacific regional oil use of 21.40mn barrels per day (b/d) in 2001 reached an estimated 25.44mn b/d in 2009. It should average 25.93mn b/d in 2010, then rise to around 28.99mn b/d by 2014. Regional oil production was just under 8.41mn b/d in 2001, and averaged an estimated 8.50mn b/d in 2009. It is set to increase to 8.59mn b/d by 2014. In 2001, the region was importing an average 12.99mn b/d of oil. This total had risen to an estimated 16.94mn b/d in 2009, and is forecast to reach 20.41mn b/d by 2014. The principal importers will be China, Japan, India and South Korea. By 2014, the only net exporter will be Malaysia In terms of natural gas, in 2009 the region consumed an estimated 459bn cubic metres (bcm) and demand of 582bcm is targeted for 2014. Production of an estimated 378bcm in 2009 should reach 509bcm in 2014, but implies net imports easing from an estimated 81bcm in 2009 to 73bcm in 2013. This is in spite of many Asian gas producers being major exporters. India’s share of gas consumption in 2009 was an estimated 9.37%, while its share of production is put at 9.00%. By 2014 its share of gas consumption is forecast to be 9.79%, with the country accounting for 10.81% of supply.
For 2009 as a whole, we have assumed an average OPEC basket price of US$59.00 per barrel (bbl), a 37.3% decline year-on-year (y-o-y). This represents an upgrade from the US$55.00/bbl forecast we were using in the previous quarter. For 2010, we expect to see a significant oil price recovery to US$83.00/bbl for the OPEC basket price, gaining further ground to US$85.00/bbl in 2011 and to US$90.00/bbl in 2012 and beyond.
For 2009, BMI has assumed a global average gasoline price of US$67.46/bbl, with the fuel having peaked in June at almost US$80.00/bbl. The overall y-o-y fall in 2009 gasoline prices is put at 33.7%. The BMI gasoil forecast is for an average price of US$70.59/bbl, assuming a monthly high above US$94/bbl in December 2009. The full-year outturn represents a 41.8% y-o-y fall. The annual jet price level for 2009 is estimated at US$68.45/bbl. This compares with US$124.95/bbl in 2008. The 2009 average naphtha price is put by BMI at US$52.66/bbl, down 39.7% from the previous year’s level.
Indian real GDP growth is estimated by BMI at 6.1% in 2009, down from 6.7% in 2008. We are assuming an annual average 6.8% growth in 2010-2014. State oil firm Oil & Natural Gas Corporation (ONGC) is charged with maximising domestic oil production, which in 2009 averaged an estimated 755,000b/d. Thanks to its efforts and those of UK-based Cairn Energy, we see production peaking at around 950,000b/d by 2012. Oil consumption is forecast to increase by 4-5% per annum to 2014, implying demand of 3.83mn b/d by 2014. The import requirement would therefore be approximately 2.93mn b/d by the end of the forecast period. Gas consumption is set to rise from an estimated 43bcm in 2008 to 57bcm, with domestic supply up from around 34bcm in 2009 to at least 55bcm by 2014.
Between 2009 and 2019, we are forecasting an increase in Indian oil production of 12.58%, with crude volumes peaking in 2012 at 950,000b/d, then falling steadily to 850,000b/d in 2019. Oil consumption between 2009 and 2019 is set to increase by 49.35%, with growth slowing to an assumed 3.0% per annum towards the end of the period and the country using 4.48mn b/d by 2019. Gas production is expected to rise from an estimated 34bcm in 2009 to a possible 70bcm by 2019. With demand growth of 69.17%, India is likely to be importing up to 2.7bcm per annum of gas by the end of the period, largely in the form of LNG. Details of BMI’s 10-year forecasts can be found later in this report, which provide regional and country-specific projections.
India ranks third, behind Vietnam, in BMI’s updated Upstream Business Environment rating, with a strong resource position being offset somewhat by extensive state involvement, a limited competitive landscape and only a moderate risk environment. The country sits well ahead of Malaysia and China, but nine points behind Australia and just one behind Vietnam. The country is second and just one point behind China in BMI’s updated Downstream Business Environment rating, reflecting its status as a highgrowth energy market with strongly positive population and demand trends, plus a low level of retail site intensity. It is four points ahead of Japan, with scope to pull further away from the more mature Asian energy economy.
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