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Argentina Oil and Gas Report Q1 2010
Business Monitor International, Nov 2009, Pages: 89
Argentina 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 Argentina's oil and gas industry.
The latest Argentina Oil & Gas Report forecasts that the country will account for 6.10% of Latin America regional oil demand by 2014, while providing 6.59% of supply. Latin America regional oil use of 6.93mn barrels per day (b/d) in 2001 reached an estimated 7.74mn b/d in 2009. It should average 7.90mn b/d in 2010 and then rise to around 8.61mn b/d by 2013. Regional oil production was 10.30mn b/d in 2001, and in 2009 averaged an estimated 9.67mn b/d. It is set to rise to 10.78mn b/d by 2014. Oil exports have been slipping, because demand growth has exceeded the pace of supply expansion. In 2001, the region was exporting an average 3.37mn b/d. This total had fallen to an estimated 1.92mn b/d in 2009 and is forecast to recover to 2.17mn b/d in 2014. The principal exporters will be Mexico, Venezuela, Ecuador and Brazil.
In terms of natural gas, the region in 2009 consumed an estimated 201.2bn cubic metres (bcm), with demand of 256.4bcm targeted for 2014, representing 27.4% growth. Production of an estimated 217.5bcm in 2009 should reach 299.0bcm in 2014, and implies 42.6bcm of net exports the end of the period. Argentina’s share of gas consumption in 2009 was an estimated 22.37%, while its share of production was 20.46%. By 2014, its share of gas consumption is forecast to be 20.29%, with the country accounting for 15.25% 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 in 2011 and to US$90.00/bbl in 2012 and beyond.
For 2009, the authors have 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 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 at US$52.66/bbl, down 39.7% from the previous year’s level. Argentina’s real GDP is estimated to have fallen by 1.0% in 2009, compared with 7.0% growth in 2008. We are assuming average annual growth of 1.2% in 2010-2014. State entity Enarsa acts as partner to international oil companies (IOCs) in supporting output growth efforts, operating alongside regional heavyweight Repsol YPF and others. We are assuming oil production of no more than 711,000b/d by 2014, with the country expected to pump 690,000b/d in 2010. Beyond the predicted 2009/2010 dip, consumption is forecast to increase by around 1.5% per annum to 2014, implying demand of 525,000b/d by the end of the forecast period. The crude oil export capability would therefore be approximately 185,000b/d by 2014. Gas production is forecast to increase from an estimated 44.5bcm in 2009 to 45.6bcm over the period, resulting in the need for 6.4bcm of net imports by 2014. Between 2009 and 2019, we are forecasting a decrease in Argentine oil production of 6.2%, with crude volumes peaking in 2013 at 725,000b/d, before falling steadily to 642,000b/d by the end of the 10-year forecast period. Oil consumption between 2009 and 2019 is set to increase by 14.3%, with growth slowing to an assumed 1% per annum towards the end of the period and the country using 555,000 b/d by 2019. Gas production is expected to rise gradually, from an estimated 44.5bcm in 2009 to a peak of 48bcm in 2012/13, before slipping back to 35.3bcm by 2019. With demand growth of 27.6%, this provides a need for net imports rising to 22.1bcm by 2019. Details of the 10-year forecasts can be found at the end of this report.
Argentina now shares fifth place in the updated Upstream Business Environment rating, alongside Trinidad & Tobago. Its gas resources, largely privatised oil sector, licensing regime and competitive landscape work in the country’s favour, but are undermined by an absence of growth potential, asset maturity and unappealing risk environment. Limited scope exists for Argentina to pull away from Trinidad, but it should be safe from Ecuador below. The country is well up the league table in the Downstream Business Environment rating, reflecting its privatised refining and marketing segment, substantial capacity and competitive environment, offset by only moderate growth potential and a relatively high level of retail site intensity. Argentina holds third place in the regional rankings, having remained ahead of Trinidad and Peru, with a slim one-point lead. The countries below pose a mediumterm threat.
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