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Libya Oil and Gas Report Q4 2010
Business Monitor International, Sep 2010, Pages: 89
Business Monitor International's Libya 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 Libya's oil and gas industry.
The latest Libya Oil & Gas Report from BMI forecasts that the country will account for 7.52% of African regional oil demand by 2014, while providing 15.63% 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 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 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, Libya will consume an estimated 5.13% of the region’s gas, with its market share forecast at 5.80% by 2014. It will have contributed 7.38% to estimated 2010 regional gas production and by 2014 will account for 6.72% of supply.
For 2010 as a whole, we continue to assume an average OPEC basket price of US$83.00/bbl (+36.4% yo- 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. Libyan real GDP is assumed by BMI to have risen by 3.8% in 2010. We are assuming average annual growth of 4.7% in 2010-2014. We expect oil demand to rise from an estimated 279,000b/d in 2010 to 320,000b/d in 2014. State-owned National Oil Corporation (NOC) accounts for some 40% of oil production and all gas production, but it has a growing number of international oil company (IOC) partners contributing to a forecast rise in oil production from an estimated 1.66mn b/d in 2010 to 1.87mn b/d by 2014. The state itself has far more ambitious volume goals that may be frustrated by OPEC quota policy. Gas production should reach 21bcm by 2014, up from an estimated 16bcm in 2010. Consumption is expected to rise from around 6bcm to almost 10bcm by the end of the forecast period, allowing exports of 11bcm.
Between 2010 and 2019, we are forecasting an increase in Libyan oil and gas liquids production of 38.6%, with volumes rising steadily to 2.30mn b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2019 is set to increase by 39.6%, with growth slowing to an assumed 4.0% per annum towards the end of the period and the country using 390,000b/d by 2019. Gas production is expected to rise to 27bcm by the end of the period. With demand rising by 85.4% between 2010 and 2019, there should be export potential increasing to around 15bcm, via pipeline and in the form of LNG. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Libya now shares fifth place with Angola in BMI’s composite Business Environment (BE) ratings table, which combines upstream and downstream scores. It continues to occupy first place, this time shared with Gabon, in our updated upstream Business Environment ratings. The country’s score benefits from its proven oil reserves and a region-topping oil reserves-to-production ratio (RPR). The competitive landscape features numerous non-state companies, and licensing terms are generally good. However, country risk factors undermine some of the hydrocarbons-specific strength. Libya is in the middle of the league table in BMI’s downstream Business Environment ratings, with a few high scores but near-term progress up the rankings unlikely. It is ranked sixth thanks to poor country risk factors, a largely statecontrolled industry and moderate oil and gas demand growth prospects.
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