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Uzbekistan Oil and Gas Report Q4 2010
Business Monitor International, Oct 2010, Pages: 77
The Uzbekistan 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 Uzbekistan's oil and gas industry.
This new Uzbekistan Oil & Gas Report forecasts that the country will account for 1.93% of Central and Eastern European (CEE) regional oil demand by 2014, while providing 0.66% of supply. CEE regional oil use of 5.42mn b/d in 2001 is forecast to 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 is expected 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 expected to consume an estimated 638.6bcm 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. Uzbekistan’s share of consumption in 2010 is an estimated 7.75%, while its share of production is put at 8.24%. By 2014, its share of demand is forecast to be 7.50%, with the country accounting for 8.92% 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 is expected to average US$93.23/bbl in 2010. 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, compared 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 forecasts Uzbekistan’s real GDP rising by 8% in 2010. We are assuming average annual growth of 7.7% from 2010-2014. By 2014, the country is estimated to be using 129,000b/d of oil. The majority of the known oil fields are operated by state-owned oil and gas group Uzbekneftegaz. It is forming partnerships with international companies under production sharing terms. While there is limited scope to halt the decline in oil production from around 105,000b/d, gas output is capable of rising 33% to almost 84bcm by 2014. Gas exports should therefore virtually double from 15.5bcm to almost 29.0bcm during the period.
Between 2010 and 2019, we are forecasting a decrease in Uzbek oil and gas liquids production of 16.6%, with volumes falling steadily to 88,000b/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 averaging an assumed 5.0% per annum towards the end of the period and the country using 165,000b/d by 2019. Gas production should rise from the estimated 2010 level of 65bcm to 100bcm by 2019, providing export potential increasing from an estimated 15.5bcm to 38.2bcm. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Uzbekistan now shares 10th place with Hungary in BMI’s composite Business Environment Ratings (BERs) table, which combines upstream and downstream scores. It now has a share of eighth place with Croatia and Turkmenistan in BMI’s updated upstream Business Environment Ratings, ahead of Slovakia and Ukraine. Its gas production growth outlook, gas reserves, and gas asset immaturity work in the country’s favour, but are undermined by an underwhelming risk environment. Scope exists for Uzbekistan to break away from its non-Caspian rival and move further up the table. Uzbekistan is near the bottom of the league table in BMI’s downstream Business Environment Ratings, ranked 11th above Slovenia and Slovakia, with few particularly high scores and progress further up the rankings unlikely over the next few quarters. Gas demand growth prospects represent a strong suit and Uzbekistan should be able to keep its Central European rivals at bay.
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