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Australia Oil and Gas Report Q1 2011
Business Monitor International, Nov 2010, Pages: 129
Australia 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 Australia's oil and gas industry.
The latest Australia Oil & Gas Report from BMI forecasts that the country will account for 3.20% of Asia Pacific regional oil demand by 2015, while providing 6.70% of supply. Regional oil use of 21.42mn barrels per day (b/d) in 2001 will reach an estimated 27.11mn b/d in 2010, then rises to around 30.64mn b/d by 2015. Regional oil production was around 8.35mn b/d in 2001, and will average an estimated 8.91mn b/d in 2010. It is set to decrease slightly to 8.89mn b/d by 2015. Oil imports are growing rapidly because demand growth is outstripping the pace of supply expansion. In 2001, the region was importing an average of 13.07mn b/d. This total will rise to an estimated 18.20mn b/d in 2010 and is forecast to reach 21.75mn b/d by 2015. The principal importers will be China, Japan, India and South Korea. By 2015 the only net exporter will be Malaysia.
In terms of natural gas, in 2010 the region is expected to have consumed 489bn cubic metres (bcm) and demand of 633bcm is targeted for 2015. Production of an estimated 412bcm in 2010 should reach 548bcm in 2015, implying net imports rising from around 77bcm to 84bcm. This is thanks to many Asian gas producers being major exporters. Australia’s share of gas consumption in 2010 will have been an estimated 5.53%, while its share of production is put at 12.14%. By 2015, its share of gas consumption is forecast to be 4.92%, with the country accounting for 14.78% 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 average around US$77.00 per barrel (bbl), representing a year-on-year (y-o-y) gain of approximately 27%. Progress towards at least US$80 is seen as achievable in 2011.
Australian real GDP is assumed by BMI to increase by 2.3% in 2010. They are now predicting average annual GDP growth of 2.5% between 2010 and 2015. There is no state oil industry, but domestic and leading international companies are investing heavily in gas production and exports to help offset declining oil output. BMI are assuming oil and gas liquids production peaking at 640,000b/d in 2013 then falling to 595,000b/d by 2015. Consumption is forecast to increase by less than 1.0% per annum to 2014, implying demand of 979,000b/d by the end of the forecast period. The import requirement would therefore be about 384,000b/d by 2015.
Between 2010 and 2020, the authors are forecasting a decrease in Australian oil production of 29.21%, with crude volumes peaking in 2013 at 640,000b/d, before falling steadily to 395,000b/d by the end of the period. Oil consumption between 2010 and 2020 is set to increase by 6.16%, with growth slowing to an assumed 0.5% per annum towards the end of the period and the country using 1mn b/d by 2020. Gas production is expected to rise rapidly, from an estimated 50bcm in 2010 to a possible 110bcm by 2020. With 10-year demand growth of 30.52%, this provides export potential rising from an estimated 23bcm to 75bcm, all in the form of LNG. Details of BMI’s long-term oil and gas outlook can be found at the end of this report, including regional and country-specific forecasts to 2020.
Australia is again at the head of BMI’s composite Business Environment (BE) league table, thanks to its leading position in the updated upstream BE rating that reflects its balance of strong gas production/export potential, world-class regulatory structure and solid risk environment. However, the 16-point upstream rating gap between it and second-placed India flatters Australia as it is due largely to the poorer country risk environment in India. Indeed, given the greater potential for more rapid growth in both Vietnam and India, the gap should narrow over the medium term, particularly as the country risk environment improves in both countries. Australia is further down the league table in BMI’s downstream Business Environment ratings, reflecting its status as a mature, deregulated and competitive energy market with limited growth potential. It now shares sixth place out of 15 with Indonesia. It could slip further down the rankings as country risk improves elsewhere in the region.
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