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Algeria Oil and Gas Report Q4 2010
Business Monitor International, Sep 2010, Pages: 95
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 9.36% of African regional oil demand by 2014, while providing 18.02% of supply. African regional oil use of 3.06mn barrels per day (b/d) in 2001 rose to 3.75mn b/d in 2009. It should average 3.81mn b/d in 2010 and then rise to around 4.26mn b/d by 2014. Regional oil production was 7.93mn b/d in 2001, and in 2009 averaged 9.67mn b/d. From a projected 10.23mn b/d in 2010, it is set to rise to 11.93mn b/d by 2014. Oil exports are growing steadily, because demand growth is lagging behind the pace of supply expansion. In 2001, the region was exporting an average of 4.87mn b/d. This total had risen to 5.92mn b/d in 2009 and is forecast to reach 7.67mn b/d by 2014. Angola has the greatest production growth potential, with Nigerian exports set to climb if it can resolve recent quasi-political issues.
In terms of natural gas, the region in 2010 will have consumed an estimated 122.9bn cubic metres (bcm), with demand of 165.6bcm forecast for 2014. Production of an estimated 219.5bcm in 2010 should reach 305.2bcm in 2014, which implies net exports rising from 97bcm to 140bcm in 2014. In 2010, Algeria’s share of regional gas supply is an estimated 37.82%, rising to 38.17% by 2014. The country’s share of demand in 2010 is an estimated 18.44%, with 18.02% predicted by 2014.
For 2010 as a whole, we continue to assume an average OPEC basket price of US$83.00/bbl, +36.4% year-on-year (y-o-y). Risk is now clearly on the downside, thanks to the slow progress made during June. However, a full-year outturn in excess of US$80 remains a strong possibility and we see no need to review our assumptions at this point. The 2010 US WTI price is now put at US$87.63/bbl. BMI is assuming an OPEC basket price of US$85.00/bbl in 2011, with WTI averaging US$89.74. Our central assumption for 2012 and beyond is an OPEC price averaging US$90.00/bbl, delivering WTI at just over US$95.00.
For 2010, the BMI assumption for premium unleaded gasoline is an average global price of US$95.45/bbl. The overall y-o-y rise in 2010 gasoline prices is put at 36%. Gasoil in 2010 is expected to average US$93.23/bbl. The full-year outturn represents a 35% increase from the 2009 level. For 2010, the annual jet price level is forecast to be US$95.90/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$83.53/bbl, up 41% from the previous year’s level. Algeria’s real GDP is assumed by BMI to have risen by 3.1% in 2010, with forecast average annual growth in 2010-2014 put at 4.0%. We expect estimated oil demand of 341,000b/d in 2010 to rise by up to 4.0% per annum to 399,000b/d in 2014. State oil company Sonatrach dominates the industry, operating in partnership with various international oil companies (IOCs), and accounts 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 1.89mn b/d in 2010 to 2.15mn b/d in 2014, with exports heading towards 1.75mn b/d. The country’s OPEC membership and assigned production quota could frustrate volume growth ambitions. Gas production of an estimated 83bcm in 2010 should reach 117bcm by 2014. Consumption of an estimated 28bcm in 2010 is expected to rise to 34bcm by the end of the forecast period, providing exports of 83bcm.
Between 2010 and 2019 we are forecasting an increase in Algerian oil and gas liquids production of 37.9%, with volumes rising steadily from an estimated 1.89mn b/d in 2010 to 2.60mn b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2019 is set to increase by 42.3%, with growth slowing to an assumed 4.0% per annum towards the end of the period and the country using 485,000b/d by 2019. Gas production is expected to rise to 135bcm by the end of the period. With demand rising by 55.1% between 2010 and 2019, export potential should rise from 56bcm to 92bcm, 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 takes second place in BMI’s composite Business Environment (BE) ratings table, which combines upstream and downstream scores. It now holds sixth place in the updated upstream Business Environment ratings, sandwiched between Angola and Egypt. 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. Algeria is near the top of the league table in BMI’s updated downstream Business Environment ratings, with some high scores but progress further up the rankings unlikely. It is ranked third behind Egypt, thanks to high scores for gas consumption, nominal GDP, likely refining capacity expansion and oil demand growth.
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