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Bahrain Oil and Gas Report Q4 2010
Business Monitor International, Oct 2010, Pages: 82
Bahrain 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 Bahrain's oil and gas industry.
In this report, we forecast that Bahrain will account for 0.59% of Middle East regional oil demand by 2014, while providing 0.31% of supply. Regional oil use of 4.98mn barrels per day (b/d) in 2001 rose to 7.15mn b/d in 2009. It is forecast to average 7.42mn b/d in 2010 and then rise to around 8.38mn b/d by 2014. Regional oil production was 22.83mn b/d in 2001 and averaged 24.41mn b/d in 2009. After a projected 24.86mn b/d in 2010, it is set to rise to 26.67mn b/d by 2014. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average 17.85mn b/d. This total will ease to an estimated 17.44mn b/d in 2010 and is forecast to reach 18.30mn b/d by 2014. Iraq has the greatest export growth potential, followed by Qatar.
In terms of natural gas, the region consumed 379.2bn cubic metres (bcm) in 2009, with demand of 481.4bcm targeted for 2014, representing 22.1% growth. Production of 407.2bcm in 2009 should reach 588.9bcm in 2014 (+26.2%), which implies net exports rising to 108.0bcm by the end of the period. Bahrain’s estimated share of gas consumption in 2010 is 3.35%, while its share of production is put at 2.83%. By 2014, its share of gas consumption is forecast to be 3.46%, with the country accounting for 2.70% 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. Bahrain’s real GDP is forecast by BMI to rise by 1.3% in 2010, with average annual growth of 5.0% in 2010-2014. Consumption of oil is set to rise with the moderate growth of the economy, reaching a maximum of 49,000b/d by 2014. The state accounts for all domestic oil and gas production, as well as the refining and distribution segment. International oil company (IOC) involvement is very limited. Thanks to a lack of significant resource potential and the absence of large-scale IOC upstream ventures, crude and liquids output is now averaging approximately 55,000b/d, with growth potential to reach 82,000b/d by 2014. Gas output is set to increase slightly from an estimated 13.2bcm in 2010 to 15.9bcm by 2014, with imports of 0.8bcm required by the end of the forecast period.
Between 2010 and 2019, we are forecasting an increase in Bahrain oil production of 81.8%, with crude volumes doubling to 100,000b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2019 is set to increase by 30.5%, with growth at an assumed 3.0% per annum towards the end of the period and the country using 57,000 b/d by 2019. Gas production is expected to climb towards 18bcm by 2019. With 2010-2019 demand growth of 69.0%, this provides an import requirement of around 4.6bcm by 2019. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Bahrain ranks sixth, behind Iran, in BMI’s composite Business Environment (BE) ratings table, which combines upstream and downstream scores. The country this quarter retains fifth place in BMI’s updated upstream Business Environment ratings, three points above Iran. It has held this position in spite of its very modest oil and gas reserves thanks to an improving production growth outlook. There are low reserves-to-production ratios (RPR) and modest non-state involvement in the upstream segment. The country’s risk environment is very sound, but this may prove insufficient to help Bahrain move further up the league table. Bahrain now shares eighth and last place in BMI’s updated downstream Business Environment ratings, with few high scores and only modest progress further up the rankings likely. It scores 43 points, below Kuwait, thanks to modest refining capacity, oil and gas demand, population and the privatisation trend. The growth prospects for oil/gas consumption and refining capacity also represent relatively weak suits, along with the pedestrian increase in GDP per capita.
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