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Brazil Oil and Gas Report Q1 2011
Business Monitor International, Nov 2010, Pages: 126
Business Monitor International's Brazil 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 Brazil's oil and gas industry.
The latest Brazil Oil & Gas Report from BMI forecasts that the country will account for 33.57% of Latin American regional oil demand by 2015, while providing 29.53% of supply. Latin American regional use will average an estimated 7.80mn barrels per day (b/d) in 2010. It should rise to 7.96mn b/d in 2011 and reach 8.49mn b/d by 2015. Regional oil production in 2010 should average an estimated 10.02mn b/d. It is set to rise to 11.68mn b/d by 2015. Oil exports have been slipping, because demand growth has exceeded the pace of supply expansion. In 2001, the region was exporting an average of 3.37mn b/d. This total falls to an estimated 2.29mn b/d in 2010 and is forecast to slip further to 2.22mn b/d in 2015. The principal exporters will be Mexico, Venezuela, Colombia and Brazil.
In terms of natural gas, the region in 2010 will consume an estimated 208.5bn cubic metres (bcm), with demand of 263.9bcm targeted for 2015. Production of an estimated 221.0bcm in 2010 should reach 264.3bcm in 2015, and implies 0.4bcm of net imports at the end of the period. Brazil’s share of gas consumption in 2010 is an estimated 10.55%, while its share of production is put at 6.33%. By 2015, its share of gas consumption is forecast to be 14.21%, with the country accounting for 9.08% of supply. For 2011, there is considerable oil demand and oil price uncertainty, but still a very strong possibility that oil will trend higher. Economic growth may have been subdued late in 2010 and into early 2011, but should still support meaningful oil demand increases. Non-OPEC supply is likely to emerge only slightly higher so, with continued OPEC discipline, the foundations have been laid for an oil price rise – albeit falling well short of the improvement seen this year. It seems likely that the 2010 average OPEC basket price will have emerged around the US$77.00 per barrel (bbl) level, representing a year-on-year (y-o-y) gain of approximately 27%. Progress towards at least US$80 is seen as achievable in 2011.
Brazilian real GDP in 2010 is assumed by BMI to rise by 7.2%, with average annual growth of 5.3% forecast in 2010-2015. Partly privatised deepwater specialist Petrobras will continue to team up with international oil companies (IOCs) to support output growth efforts and will dominate domestic production. We are assuming oil and gas liquids production of 3.45mn b/d by 2015, with the country expected to have pumped 2.16mn b/d in 2010. Beyond the weakness of 2009, oil consumption is forecast to increase by around 3.0% per annum to 2015, implying demand of 2.85mn b/d by the end of the forecast period. The net export capability would therefore be 600,000b/d by 2015. Gas production is forecast to increase from an estimated 14bcm in 2010 to 24bcm over the period to 2015, with consumption climbing from an estimated 22bcm to 35bcm.
Between 2010 and 2020, we are forecasting an increase in Brazilian oil production of 109.5%, with crude volumes rising steadily to an estimated 4.53mn b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2020 is set to increase by 25.8%, with growth slowing to an assumed 2.5% per annum towards the end of the period and the country using 3.18mn b/d by 2020. Net export potential rises to 1.35mn b/d during the period. Gas production is expected to rise gradually, from an estimated 14bcm in 2010 to 38bcm by 2020. With demand growth of 118.2%, this provides a net import requirement falling from a forecast peak of 14bcm in 2016 to 10bcm by 2020. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Brazil holds first place in BMI’s composite Business Environment (BE) ratings, which combine upstream and downstream scores. The country has also retained its first place in BMI’s updated upstream Business Environment ratings, although it now shares the position with Peru. Brazil’s score benefits from the size of the oil resource base, output growth prospects, attractive licensing regime and competitive environment. Although some weak points exist in the country’s risk ratings, its position at the head of the regional league table continues to look unassailable. Brazil also holds the top slot of BMI’s downstream Business Environment ratings, two points clear of Colombia. This reflects its region-beating oil demand, substantial refining capacity and competitive environment. We see no obvious threat of Colombia catching Brazil over the medium term.
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