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Romania Oil and Gas Report Q4 2010
Business Monitor International, Oct 2010, Pages: 91
The Romania 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 Romania's oil and gas industry.
This latest Romania Oil & Gas Report from BMI forecasts that the country will account for 3.63% of Central and Eastern European (CEE) regional oil demand by 2014, while providing just 0.53% of supply. CEE regional oil use of 5.42mn barrels per day (b/d) in 2001 is expected to rise to an estimated 6.02mn b/d in 2010 and increase to around 6.68mn b/d by 2014. Regional oil production was 8.89mn b/d in 2001, and is forecast to average an estimated 13.67mn b/d in 2010. 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 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 is forecast to consume an estimated 638.6bn cubic metres (bcm) in 2010, 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. Romania’s estimated share of 2010 regional gas consumption is 2.25%, while its share of production is put at 1.33%. By 2014, its share of demand is forecast to be 2.28%, with the country accounting for 0.92% 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 fullyear 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. BMI calculates Romanian real GDP rising by 1.1% in 2010. We are assuming average annual growth of 3.8% in 2010-2014. Beyond the weakness of 2009/2010, oil demand could potentially grow at 3.0% per annum, rising to 242,000b/d by 2014. In spite of greater efforts by the OMV-backed national oil company Petrom, we see domestic oil production slipping from an estimated 92,000b/d in 2010 to 77,000b/d by 2014. This implies rising import levels, with volumes up to 165,000b/d by 2014. Natural gas consumption of an estimated 14.4bcm in 2010 can be expected to reach 16.6bcm by 2014. Romania’s gas production is forecast to slip to no more than 8.6bcm by 2014, providing an import requirement of at least 8.0bcm. Between 2010 and 2019, we are forecasting an increase in Romanian oil consumption of 31.7%, with import volumes rising steadily from an estimated 121,000b/d to 228,000b/d by the end of the 10-year forecast period. Domestic production is forecast to fall from an estimated 92,000b/d to 53,000b/d during the period. Gas consumption is expected to rise to 19.7bcm by 2019, which will be met by 13.0bcm of imports. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Romania now shares sixth place with Ukraine in BMI’s composite Business Environment Ratings (BERs) table, which combines upstream and downstream scores. It has seventh place behind Bulgaria in BMI’s updated upstream Business Environment Ratings. Its gas production growth outlook, asset maturity and under-developed competitive landscape work against the country and are exacerbated by poor country risk factors. There is some scope for Romania to catch up with Bulgaria in the rankings, but Russia and Turkey are likely to remain out of reach. Romania is above the mid-point of the table in BMI’s downstream Business Environment Ratings, with a few high scores but progress from its current joint fifth-place ranking (shared with Azerbaijan) rather unlikely. The country achieves decent scores for refining capacity, oil and gas demand and retail site intensity. Azerbaijan is capable of pulling ahead of Romania over the medium term.
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