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Kazakhstan Oil and Gas Report Q1 2010
Business Monitor International, Jan 2010, Pages: 91
Business Monitor International's Kazakhstan 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 Kazakhstan's oil and gas industry.
The latest Kazakhstan Oil & Gas Report from BMI forecasts that the country will account for 4.75% of Central and Eastern European (CEE) regional oil demand by 2014, while providing 16.18% of supply. CEE regional oil use of 4.65mn barrels per day (b/d) in 2001 rose to an estimated 5.18mn b/d in 2009. It should average 5.25mn b/d in 2010 and then rise to around 5.81mn b/d by 2014. Regional oil production was 8.83mn b/d in 2001, and in 2009 averaged an estimated 13.18mn b/d. It is set to rise to 14.53mn b/d by 2014. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average of 4.18mn b/d. This total had risen to an estimated 8.01mn b/d in 2009 and is forecast to reach 8.72mn b/d by 2014.
In terms of natural gas, the region in 2009 consumed an estimated 589.2bn cubic metres (bcm), with demand of 677.2bcm targeted for 2014, representing 14.9% growth. Production of an estimated 767.2bcm in 2009 should reach 934.2bcm in 2014, which implies net exports rising from 177.9bcm in 2009 to 257.1bcm by the end of the period. Kazakhstan’s share of gas consumption in 2009 was an estimated 3.65%, while its share of production is put at 5.48%. By 2014, its share of demand is forecast to be 4.56%, with the country accounting for 8.56% of supply.
For 2009 as a whole, BMI 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 BMI BMI re using in the previous quarter. For 2010, BMI 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. Kazakhstan’s real GDP is estimated by BMI to have fallen by 1.9% in 2009, compared with 3.0% growth in 2008. BMI are assuming average annual growth of 4.5% in 2010-2014. Consumption growth, beyond the likely BMI akness of 2009, should keep pace with the growing economy, but is unlikely to have much negative impact on export potential. BMI are forecasting domestic oil demand reaching 276,000b/d by 2014. State-owned KazMunaiGaz (KMG) accounts for more than 10% of oil production and participates in joint venture (JV) projects with international oil companies (IOCs), which should deliver rapid volume growth after the Karachaganak field builds up to full output in excess of 200,000b/d. Expansion of the Tengiz field and activation of the offshore Kashagan project should push Kazakh production towards 2.35mn b/d by 2014. This implies that oil exports should rise from an estimated 1.32mn b/d in 2009 to 2.07mn b/d by the end of the forecast period.
BetBMI en 2009 and 2019, BMI are forecasting an increase in Kazakh oil and gas liquids production of 50.0%, with volumes reaching a peak of 2.55mn b/d in 2016, before falling to 2.31mn b/d by the end of the 10-year forecast period. Oil consumption betBMI en 2009 and 2019 is set to increase by 56.3%, with growth slowing to an assumed 5.0% per annum towards the end of the period and the country using 352,000b/d by 2019. Gas production should rise from estimated 2009 level of 42bcm to 95bcm by 2019. Gas demand rising 83.3% provides export potential increasing to 56bcm. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Kazakhstan still occupies first place in BMI’s updated Upstream Business Environment rating, having remained ahead of neighbour Azerbaijan. Its oil and gas production growth outlook, asset immaturity, high reserves to production ratios (RPR) and competitive landscape work in the country’s favour, but are undermined by a relatively unappealing risk environment. The country is just above the mid-point of the league table in BMI’s updated Downstream Business Environment rating. Although there are few particularly high scores, progress further up the rankings from sixth place seems possible. The low level of retail-site intensity represents a strong suit, along with region-leading oil demand growth prospects. Azerbaijan is just two points ahead of it in the regional rankings, and there is therefore some chance of Kazakhstan moving ahead over the medium term.
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