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Angola Oil and Gas Report Q4 2010
Business Monitor International, Sep 2010, Pages: 93
Business Monitor International's Angola 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 Angola's oil and gas industry.
The latest Angola Oil & Gas Report from BMI forecasts that the country will account for 4.20% of African regional oil demand by 2014, while providing 20.12% 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 consume 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 Angola will consume an estimated 4.07% of the region’s gas, while producing around 2.28%. By 2014, we expect its share of consumption to be 5.59%, with a 5.34% contribution to regional gas production.
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. We forecast that Angola’s real GDP will rise by 9.5% in 2010, with average annual growth of 8.3% expected in 2010-2014. Healthy economic growth is exceeded by spectacular oil demand growth, albeit from a low base. Consumption is set to rise from an estimated 94,000b/d in 2010 to 179,000b/d by 2014. State oil company Sonangol operates in partnership with various international oil companies (IOCs) and now accounts for less than 40% of the country’s oil output. Thanks largely to IOC investment, oil output is forecast to increase from an estimated 1.89mn b/d in 2010 to 2.40mn b/d in 2014, with exports heading towards 2.22mn b/d. Angola’s new-found OPEC membership is posing some problems in terms of production quotas. Gas production of an estimated 5.0bcm in 2010 is projected to reach 16.3bcm by 2014. Consumption is expected to rise to 9.3bcm by the end of the forecast period, providing export potential of around 7.0bcm.
Between 2010 and 2019 we forecast an increase in Angolan oil and gas liquids production of 11.1%, with volumes peaking at 2.55mn b/d in 2015, before slipping steadily to 2.10mn b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2019 is set to increase by 302.6%, with growth slowing to an assumed 15.0% a year towards the end of the period and the country using 378,000b/d by 2019. Gas production is expected to rise to 33.6bcm by the end of the period. With demand rising 272% between 2010 and 2019, there should be export potential increasing to 15.0bcm, in the form of LNG. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Angola takes fifth place in BMI’s updated upstream Business Environment ratings, and is just one point behind neighbouring Nigeria. The country’s score benefits from an excellent oil and gas output growth outlook, respectable proven reserves, a large number of non-state companies active in the upstream sector and decent licensing terms. Country risk factors continue to plague the country and lower its score. Any improvement here means a rapid rise up the rankings. Angola is still in the upper half of the league table in BMI’s updated downstream Business Environment ratings with a few high scores, but progress further up the ratings is unlikely over the near term. It now shares fourth place with Nigeria in spite of low scores for refining capacity, oil and gas consumption, and private company competition in the downstream segment.
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