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Turkmenistan Oil and Gas Report Q4 2010
Business Monitor International, Oct 2010, Pages: 79
Turkmenistan 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 Turkmenistan's oil and gas industry.
The new Turkmenistan Oil & Gas Report from BMI forecasts that the country will account for 2.25% of Central and Eastern European (CEE) regional oil demand by 2014, while providing 2.42% of supply. CEE regional oil use of 5.42mn barrels per day (b/d) in 2001 will rise to an estimated 6.02mn b/d in 2010. It should increase to around 6.68mn b/d by 2014. Regional oil production was 8.89mn b/d in 2001, and in 2010 will average an estimated 13.67mn b/d. It is set to rise to 14.44mn 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 of 3.47mn b/d. This total will rise to an estimated 7.65mn b/d in 2010 and is forecast to reach 7.76mn b/d by 2014. Azerbaijan and Kazakhstan have the greatest production growth potential, although Russia will remain the key exporter.
In terms of natural gas, the region in 2010 consumed an estimated 638.6bn cubic metres (bcm), with demand of 728.8bcm targeted for 2014, representing 14.1% growth. Production of an estimated 788.4bcm in 2010 should reach 936.4bcm in 2014, which implies net exports rising from an estimated 149.8bcm in 2010 to 207.5bcm by the end of the period. Turkmenistan’s share of consumption in 2010 is an estimated 3.33%, while its share of production is put at 8.24%. By 2014, its share of demand is forecast to be 3.90%, with the country accounting for 9.61% 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.
Turkmen real GDP is assumed by BMI to have risen by 8.5% in 2010. We are assuming average annual growth of 9.9% in 2010-2014. Domestic consumption trends can be expected to return to a strong growth tack in 2010, estimated at an average of 5.0% per annum. By 2014, the country could be using 150,000b/d of oil. Turkmenistan has traditionally been protective of its onshore basins, allowing international oil companies (IOCs) to participate only in offshore developments. Offshore activity should help raise national crude and gas liquids output from an estimated 220,000b/d in 2010 to 350,000b/d by 2014. Gas production is expected to increase from an estimated 65bcm to 90bcm between 2010 and 2014.
Between 2010 and 2019, we are forecasting an increase in Turkmen oil and gas liquids production of 57.2%, with volumes peaking at 375,000b/d in 2015, before falling to 346,000b/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 192,000b/d by 2019. Gas production should rise from the estimated 2010 level of 65bcm to 125bcm by 2019, providing export potential increasing from an estimated 44bcm to 84bcm. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Turkmenistan now takes ninth place in BMI’s composite Business Environment (BE) ratings table, which combines upstream and downstream scores. It now shares eighth place with Croatia and Uzbekistan in BMI’s updated upstream Business Environment ratings. Its oil and gas production growth outlook, gas reserves, and asset immaturity work in the country’s favour, but are undermined by an unappealing risk environment. Scope exists for Turkmenistan to break away from its immediate rivals and to move further up the table. Turkmenistan is in the lower half of the league table in BMI’s downstream Business Environment ratings, with few particularly high scores and progress further up the rankings unlikely over the next few quarters. Oil and gas demand growth prospects represent strong suits, putting the country in 10th place, ahead of Uzbekistan. Medium-term scope exists for Turkmenistan to challenge Hungary above it.
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