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Equatorial Guinea Oil and Gas Report Q4 2010
Business Monitor International, Oct 2010, Pages: 70
Business Monitor International's Equatorial Guinea 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 Equatorial Guinea's oil and gas industry.
The new Equatorial Guinea Oil & Gas Report from BMI forecasts that the country will account for just 0.03% of African regional oil demand by 2014, while providing 3.75% of supply. African regional oil use of 3.06mn 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 forecast 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 122.9bcm, 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. Equatorial Guinea will consume an estimated 1.32% of the region’s gas in 2010, with its market share set to be 1.19% by 2014. It will contribute 2.92% to estimated 2010 regional gas production and, by 2014, will account for 2.20% of supply.
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. Equatorial Guinea’s real GDP is estimated by BMI to rise by 3.5% in 2010. We are assuming average annual growth of 2.9% in 2010-2014. We expect oil demand to rise from an estimated 1,100b/d in 2009 to 1,400b/d in 2014. State oil company GEPetrol’s primary focus is to manage the interest stakes of the government in various production sharing contracts (PSCs) and joint ventures (JVs) with international oil companies (IOCs). Thanks to IOC investment, oil output is forecast to increase from an estimated 335,000b/d in 2010 to 447,000b/d in 2014. Gas production should be around 6.7bcm by 2014. Consumption is expected to rise from 1.6bcm to 2.0bcm by the end of the forecast period, providing exports of 4.7bcm – in the form of LNG.
Between 2010 and 2019, we are forecasting an increase in Equatorial Guinea oil and gas liquids production of 25.3%, with volumes peaking at 455,000b/d in 2015, before falling steadily to 420,000b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2019 is set to increase by 55.1%, with growth slowing to an assumed 5.0% per annum towards the end of the period and the country using 1,800b/d by 2019. Gas production is expected to rise to 7.3bcm by the end of the period. With demand rising by 55.1% between 2010 and 2019, there is scope for exports of around 4.8bcm. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Equatorial Guinea holds 10th place, ahead only of Sudan, in BMI’s composite Business Environment (BE) ratings table, which combines upstream and downstream scores. It holds 10th place, above only Sudan, in BMI’s updated upstream Business Environment ratings and is in a reasonable position to move higher over the medium term. The country’s score benefits from moderate oil and gas output growth prospects and attractive licensing terms. The country’s risk environment is somewhat shaky, but this is hardly uncommon in the African region. Equatorial Guinea is near the bottom of the league table in BMI’s updated downstream Business Environment ratings, with no high scores and progress further up the rankings unlikely unless the energy market grows rapidly or refineries are built. It is ranked equal eighth with Gabon, thanks to low scores for refining capacity, oil and gas demand, likely refining capacity expansion, nominal GDP and population.
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