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Algeria Oil and Gas Report Q2 2010
Business Monitor International, March 2010, Pages: 91
Business Monitor International's Algeria 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 Algeria's oil and gas industry.
The latest Algeria Oil & Gas Report from BMI forecasts that the country will account for 8.89% of African regional oil demand by 2014, while providing 18.09% of supply. African regional oil use of 2.93mn barrels per day (b/d) in 2001 rose to an estimated 3.57mn b/d in 2009. It should average 3.63mn b/d in 2010 and then rise to around 4.08mn b/d by 2014. Regional oil production was 7.77mn b/d in 2001, and in 2009 averaged an estimated 9.64mn b/d. It is set to rise to 11.83mn 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 4.83mn b/d. This total had risen to an estimated 6.07mn b/d in 2009 and is forecast to reach 7.75mn b/d by 2014.
In terms of natural gas, in 2009 Africa consumed an estimated 123bn cubic metres (bcm), with demand of 194bcm targeted for 2014. Production of an estimated 248bcm in 2009 should reach 385bcm in 2014, which implies net exports rising from 125bcm in 2009 to 191bcm by the end of the period. In 2009, Algeria’s share of regional gas supply was an estimated 40.39%, easing to 36.37% by 2014. The country’s share of demand in 2009 was an estimated 21.24%, with 17.41% predicted by 2014. 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.
For 2010 BMI is now forecasting premium unleaded gasoline prices at an 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 2010 naphtha price average, estimated at US$81.58/bbl, compares with US$59.07 in FY09.
Algeria’s real GDP is assumed by BMI to have risen by 2.3% in 2009, compared with a 3.5% decline in 2008. We expect estimated oil demand of 305,000b/d in 2009 to rise by up to 4.0% per annum to 368,000b/d in 2014. State oil company Sonatrach dominates the industry, operating in partnership with various international oil companies (IOCs), but accounting for 60% of the country’s oil output. Thanks largely to IOC investment, combined oil and gas liquids output is forecast to increase from an estimated 1.87mn b/d in 2009 to 2.15mn b/d in 2014, with exports heading towards 1.78mn b/d. The country’s OPEC membership and assigned production quota could frustrate volume growth ambitions. Gas production of an estimated 100bcm in 2009 should reach 140bcm by 2014. Consumption of an estimated 26bcm in 2009 is expected to rise to 34bcm by the end of the forecast period, providing exports of 106bcm.
Between 2009 and 2019 we are forecasting an increase in Algerian oil and gas liquids production of 39.4%, with volumes rising steadily from an estimated 1.87mn b/d in 2009 to 2.60mn b/d by the end of the 10-year forecast period. Oil consumption between 2009 and 2019 is set to increase by 46.6%, with growth slowing to an assumed 4.0% per annum towards the end of the period and the country using 447,000b/d by 2019. Gas production is expected to rise to 185bcm by the end of the period. With demand rising by 63.4% between 2009 and 2019, there should be export potential increasing from 74bcm to 142bcm, in the form of LNG and by pipeline. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Algeria now shares third place with Nigeria and Angola in BMI’s updated Upstream Business Environment Rating. The country’s score benefits from healthy oil and gas reserves, a large number of non-state companies active in the upstream sector and decent licensing terms. However, it may be left behind by Angola during the next few quarters. The country is near the top of the league table in our updated Downstream Business Environment rating, with some high scores but progress further up the rankings unlikely. It is ranked third, behind South Africa and Egypt, thanks to high scores for gas consumption, nominal GDP, likely refining capacity expansion and oil demand growth.
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