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Brazil Oil and Gas Report Q1 2010
Business Monitor International, Dec 2009, Pages: 99
Brazil 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 Brazil's oil and gas industry.
The latest Brazil Oil & Gas Report from BMI forecasts that the country will account for 32.47% of Latin American regional oil demand by 2014, while providing 28.76% 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. Brazil’s share of gas consumption in 2009 was an estimated 12.78%, while its share of production was 6.90%. By 2014, its share of gas consumption is forecast to be 12.67%, with the country accounting for 9.37% 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, 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.
Brazilian real GDP in 2009 is estimated by BMI to have fallen by 0.6%, compared with growth of 5.1% in 2008. We are assuming average annual 3.9% growth in 2010- 2014. Partly-privatised deepwater specialist Petrobras will continue to partner international oil companies (IOCs) in supporting output growth efforts, while dominating domestic production. We are assuming oil and gas liquids production of at least 3.10mn b/d by 2014, with the country expected to pump 2.35mn b/d in 2010. Beyond the expected weakness of 2009, consumption is forecast to increase by around 3.0% per annum to 2014, implying demand of 2.80mn b/d by the end of the forecast period. The net export capability would therefore be approximately 0.84mn b/d by 2014. Gas production is forecast to increase from an estimated 15.0bcm in 2009 to 28.0bcm over the period to 2014, with consumption climbing from 25.7bcm to 32.5bcm.
Between 2009 and 2019, we are forecasting an increase in Brazilian oil production of 113.6%, with crude volumes rising steadily to an estimated 4.40mn b/d by the end of the 10-year forecast period. Oil consumption between 2009 and 2019 is set to increase by 30.5%, with growth slowing to an assumed 2.5% per annum towards the end of the period and the country using 3.13mn b/d by 2019. Net export potential rises from 0.17mn b/d to 1.81mn b/d during the period. Gas production is expected to rise gradually, from an estimated 15bcm in 2009 to 36bcm by 2019. With demand growth of 53.8%, this provides a net import requirement falling from almost 11bcm in 2009 to less than 4bcm by 2019. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Brazil this quarter retains outright first place in BMI’s updated Upstream Business Environment rating, ahead of Venezuela and Peru, thanks to the size of the oil resource base, output growth prospects, attractive licensing regime and competitive environment. While some weak points exist in terms of the country’s risk ratings and only mid-table reserves-to-production ratios (RPR), its position at the head of the regional league table continues to look unassailable. The country now holds the top slot of BMI’s updated Downstream Business Environment rating, pulling clear of Colombia. This reflects its regionbeating oil demand, substantial refining capacity and competitive environment. Colombia is now three points behind and we see no obvious threat of it catching Brazil over the medium term.
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