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France Oil and Gas Report Q3 2010
Business Monitor International, July 2010, Pages: 74
The latest France Oil & Gas Report from BMI forecasts that the country will account for 14.33% of developed European regional oil demand by 2014, while making a 0.24% contribution to supply. In Developed Europe, overall oil consumption was an estimated 13.28mn barrels per day (b/d) in 2009. It is set to recover to around 13.44mn b/d by 2014. Developed Europe regional oil production was 6.96mn b/d in 2001, and in 2009 averaged an estimated 4.73mn b/d. It is set to fall to just 3.71mn b/d by 2014. Oil imports are growing steadily, because supply is contracting and demand is rising, albeit slowly. In 2009, net crude imports were an estimated 9.18mn b/d. By 2014, they are expected to have reached 9.73mn b/d. Norway will remain the only major net exporter, with the UK a net importer.
As regards natural gas, the Developed Europe region, in 2009, consumed an estimated 426bn cubic metres (bcm), with demand of 473bcm targeted for 2014, representing 9.6% growth. Production of an estimated 265bcm in 2009 is set to fall to 263bcm in 2014, which implies net imports rising from the estimated 2009 level of 161bcm to some 210bcm by the end of the period. France’s share of gas consumption in 2009 was an estimated 10.09%, while it has no appreciable share of production. By 2014, its share of gas consumption is forecast to be 9.47%.
We are sticking with our forecast that the OPEC basket of crudes will average US$83.00/bbl in 2010. Wide variations in crude differentials so far in 2010 make forecasting tricky for Brent, West Texas Intermediate (WTI) and Urals, but we believe the three benchmarks will average around US$85.11, US$88.22 and US$83.62/bbl respectively, with Dubai coming in at US$83.14. By 2011, there should be further growth in oil consumption and more room for OPEC to regain market share and reduce surplus capacity through higher production quotas. We are assuming a further increase in the OPEC basket price to an average US$85.00/bbl. For 2012 and beyond, we continue to use a central case forecast of US$90.00/bbl for the OPEC basket.
For 2010, the BMI assumption for premium unleaded gasoline is an average global price of US$96.83/bbl. The year-on-year (y-o-y) rise in 2010 gasoline prices is put at 38%. Gasoil in 2010 is expected to average US$92.45/bbl, with the full-year outturn representing a 37% increase from the 2009 level. For jet fuel in 2010, the annual level is forecast to be US$95.58/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$82.46/bbl, up 39% from the previous year’s level.
French real GDP is assumed by BMI to have fallen by 2.2% in 2009, followed by forecast growth of 1.5% in 2010. We are assuming 1.8% average annual growth in 2010-2014. Oil consumption is set to stagnate in spite of increased economic activity, with demand of an estimated 1.89mn b/d in 2009 expected to rally to 1.93mn b/d by 2013/14. Crude oil imports are expected to have reached 1.92mn b/d by 2014, with domestic crude oil production falling from an estimated 18,000b/d to just 9,000b/d over the period. Gas demand is expected to rise more quickly than for oil, with new sources of supply being lined up by GDF Suez, which has signed import agreements with Egypt, Russia, Norway, Algeria and the Netherlands. Gas consumption is likely to have reached 44.7bcm by 2014. Production is negligible, so imports could rise to 42.7bcm.
Between 2010 and 2019, we are forecasting an increase in French oil and gas liquids consumption of 1.60%, with estimated 2010 demand of 1.88mn b/d rising slowly to a peak of 1.93mn b/d in 2013/14. By 2019, we are forecasting French consumption of 1.91mn b/d. Production is set to fall from around 18,000b/d to just 5,000b/d during the same period. Gas demand should rise from the estimated 2010 level of 43.4bcm to a peak of 45.4bcm in 2017, based on liquefied natural gas (LNG) and pipeline imports. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
According to BMI’s Country Risk team, France’s long-term political risk score is 84.0, compared with the Developed Markets average of 86.7 and the global average of 63.7. Our long-term economic rating for the country is 65.5, below the Developed Markets average of 67.0 and above the global average of 53.7. France has a fully privatised and competitive oil and gas industry. State holdings have been reduced greatly in electricity and gas suppliers EdF and GDF Suez. The upstream and downstream oil segments are privatised and deregulated, with considerable IOC involvement in refining and distribution, even though former state company Total has the greatest market share.
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