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Colombia Oil and Gas Report Q2 2010
Business Monitor International, March 2010, Pages: 102
Colombia 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 Colombia's oil and gas industry.
The latest Colombia Oil & Gas Report from BMI forecasts that the country will account for 3.11% of Latin American regional oil demand by 2014, while providing 8.30% of supply. Latin American regional oil use of 6.93mn barrels per day (b/d) in 2001 reached an estimated 7.78mn b/d in 2009. It should average 7.92mn b/d in 2010 and then rise to around 8.631mn b/d by 2014. Regional oil production was 10.30mn b/d in 2001, and in 2009 averaged an estimated 9.69mn b/d. It is set to rise to 10.79mn 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 of 3.37mn b/d. This total had fallen to an estimated 1.91mn b/d in 2009 and is forecast to recover to 2.15mn 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 200.6bn cubic metres (bcm), with demand of 263.9bcm targeted for 2014, representing 31.6% growth. Production of an estimated 216.8bcm in 2009 should reach 293.0bcm in 2014, and implies 29.1bcm of net exports the end of the period. Colombia’s estimated share of gas consumption in 2009 was 3.99%, while its share of production was 4.29%. By 2014, its share of gas consumption is forecast to be 3.46%, with the country accounting for 3.93% of supply.
For 2009 as a whole, we have assumed an average OPEC basket price of US$60.70 per barrel (bbl), a 35.5% decline year-on-year (y-o-y). 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.
In 2010, BMI is forecasting premium unleaded gasoline prices to average US$97.00, up from US$70.22/bbl in 2009. We are assuming an average global jet fuel price for 2010 of US$97.58/bbl, compared with US$70.63 in 2009. For gasoil, the 2010 price estimate is for an average of US$97.40/bbl, compared with US$70.50 in 2009. The FY10 naphtha price average, estimated at US$81.58/bbl compares with US$59.07 in FY09.
Colombian real GDP in 2009 is assumed by BMI to have fallen by 0.4%, compared with growth of 2.4% in 2008. We are assuming average annual growth of 3.2% in 2010-2014. The government is working hard to encourage international oil company (IOC) investment and boost near-term domestic oil production, aided by state-owned Ecopetrol. These efforts have been proving successful and we are now assuming oil and gas liquids production of 895,000b/d by 2014, with the country expected to pump 755,000b/d in 2010. Consumption beyond 2009 is forecast to increase by 3-4% per annum to 2014, implying demand of 269,000b/d by this time. The country’s export capability should therefore reach 626,000b/d by 2014. Gas consumption is forecast to increase from an estimated 8.0bcm in 2009 to 9.1bcm over the period, met by rising domestic production, which will also provide modest exports to Venezuela.
Between 2009 and 2019, we are forecasting an increase in Colombian oil production of 38.7%, with crude volumes peaking at 975,000b/d in 2017, before declining to 950,000b/d by the end of 2019. Oil consumption between 2009 and 2019 is set to increase by 35.3%, with growth slowing to an assumed 3.0% per annum towards the end of the period and the country using 311,000 b/d by 2019. Gas production is expected to rise gradually, from an estimated 9.3bcm in 2009 to 15.0bcm in 2018/19. With demand growth of 32.1%, this implies peak export potential of 4.7bcm by 2018. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Colombia ranks fourth behind Peru in BMI’s updated Upstream Business Environment Rating, well ahead of Trinidad and Argentina. While the absolute resource base is modest, the competitive environment is attractive and licensing terms have improved to become some of the best in the region. Country risk is moderate and Colombia is well placed to retain its strong position in the league table. The country ranks second behind Brazil in BMI’s updated Downstream Business Environment Rating, reflecting its oil demand growth outlook, refining capacity expansion plans, moderate country risk and low retail site intensity. Argentina holds third place, but arguably lacks the potential to challenge Colombia.
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