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Ecuador Oil and Gas Report Q1 2010
Business Monitor International, Dec 2009, Pages: 68
The Ecuador 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 Ecuador's oil and gas industry.
The latest Ecuador Oil & Gas Report forecasts that the country will account for 2.48% of Latin America regional oil demand by 2014, while providing 4.87% 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 consumed an estimated 201.2bn cubic metres (bcm) in 2009, 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. Ecuador’s share of regional gas production and consumption will remain insignificant. For 2009 as a whole, the publisher has 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 the publisher was using in the previous quarter. For 2010, they 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 author 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 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 the author at US$52.66/bbl, down 39.7% from the previous year’s level. Ecuador’s real GDP in 2009 is estimated by the author to have fallen by 2.1%, compared with growth of 6.5% in 2008. The publisher is assuming average annual 1.2% growth in 2010-2014. State-owned Petroecuador cooperates with several international oil companies (IOCs) and they have between them delivered a greater volume of crude over the past couple of years. They are assuming oil and gas liquids production of no more than 525,000b/d by 2014, with the country expected to pump 495,000b/d in 2010. Beyond 2009/10, consumption is forecast to increase by around 3% per annum, implying demand of 213,000b/d by the end of the forecast period. The net export capability would therefore be approximately 312,000b/d by 2014. Between 2009 and 2019, the publisher is forecasting a decrease in Ecuador’s oil production of 12.2%, with crude volumes rising from an estimated 490,000b/d in 2009 to a 2014 peak of 525,000b/d, before slipping to 430,000b/d by the end of the 10-year forecast period. Oil consumption between 2009 and 2019 is set to increase by 34.4%, with growth slowing to an assumed 3.0% per annum towards the end of the period and the country using 247,000 b/d by 2019. Gas production and consumption will grow only slowly from a very low base over the period. Details of the 10-year forecasts can be found in the appendix to this report.
Ecuador now ranks seventh in the updated Upstream Business Environment rating, well ahead of Bolivia. Scores are mid-table or higher for proven oil reserves, oil and gas output growth and reserves-to production ratios (RPR). However, country risk is high and the privatisation trend is unattractive, with increasing state involvement in upstream activities. The country ranks equal seventh alongside Venezuela in the Downstream Business Environment rating, reflecting its unusually high country risk, regulatory concerns, state ownership of assets and a less than stellar growth outlook. The score falls three points short of Mexico, and Ecuador is two points ahead of Chile, leaving it vulnerable to attack during the next few quarters.
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