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Republic of Congo Oil and Gas Report Q1 2011
Business Monitor International, Dec 2010, Pages: 67
Business Monitor International's Republic of Congo 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 Republic of Congo's oil and gas industry.
'This latest Republic of Congo Oil & Gas Report from BMI forecasts that the country will account for just0.20% of African regional oil demand by 2015, while providing 2.75% of supply. African regional oil useof 3.06mn b/d in 2001 is forecast to increase to an estimated 3.81mn barrels per day (b/d) in 2010. Itshould average 3.90mn b/d in 2011 and then rise to around 4.40mn b/d by 2015. Regional oil productionwas 7.93mn b/d in 2001, and is expected to average an estimated 10.18mn b/d in 2010. From an estimated10.52mn b/d in 2011, it is set to rise to 12.08mn b/d by 2015. Oil exports are growing steadily, becausedemand growth is lagging behind the pace of supply expansion. In 2001, the region was exporting anaverage 4.87mn b/d. This total is forecast to rise to 6.36mn b/d in 2010 and to reach 7.68mn b/d by 2015.Angola has the greatest production growth potential, with Nigerian exports set to climb if it can resolverecent quasi-political issues.
In terms of natural gas, the region will consume an estimated 123.4bn cubic metres (bcm) in 2010, withdemand of 175.9bcm forecast for 2015. Production of an estimated 219.5bcm in 2010 should reach322.6bcm in 2015, which implies net exports rising from an estimated 96bcm to 147bcm in 2015.
The Republic of Congo makes no significant current contribution to regional gas supply or demand.For 2010 as a whole, we are assuming an average OPEC basket price of US$77.00/bbl (+26.5% y-o-y).The 2010 US WTI price is now put at US$9.16/bbl. BMI is assuming an OPEC basket price of US$80.00/bbl in 2011, with WTI averaging US$82.25, Brent at US$82.46/bbl, Urals delivering aroundUS$81.21 and the Dubai average being US$80.74/bbl. Our central assumption for 2012 is an OPEC priceaveraging US$85.00/bbl, delivering WTI at about US$87.40 and Brent at US$87.60/bbl. From 2013onwards, we are using an average OPEC price of US$90.00/bbl.
For the whole of 2010, the BMI assumption for the global gasoline price is an average US$87.49/bbl,representing a year-on-year (y-o-y) rise of 24.7%. The global gasoil forecast is for an average price ofUS$88.00/bbl, probably peaking in December 2010 at more than US$95/bbl. The full-year outturnrepresents a 27.6% increase from the 2009 level. For 2010, the annual jet price level is forecast to beUS$89.500/bbl, compared with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI atUS$77.65/bbl, up almost 31% from the previous year’s level.
We assume that the Republic of Congo’s real GDP will rise by 11.9% in 2010 and forecast averageannual growth of 4.6% from 2010-2015. We see oil demand rising from an estimated 6,900b/d in 2010 to8,900b/d in 2015. State oil company Société Nationale des Pétroles du Congo (SNPC) operates inpartnership with various international oil companies (IOCs). Around a third of the oil produced goesdirectly to the government and is sold by SNPC on behalf of the state. Thanks to higher recent IOCinvestment, combined oil and gas liquids output is forecast to increase from 274,000b/d in 2009 to a peakof 360,000b/d in 2011, before easing to 332,000b/d in 2015. Gas production should reach 2.0bcm by2014/15. Consumption is expected to track the production trend.
Between 2010 and 2020 we forecast an 11.7% fall in the Republic of Congo’s oil and gas liquidsproduction, with volumes peaking at 360,000b/d in 2011 before falling steadily to 300,000b/d by the endof the 10-year forecast period. Oil consumption between 2010 and 2020 is set to increase by 62.9%, withgrowth slowing to an assumed 5.0% per annum towards the end of the period and the country using11,300b/d by 2020. Gas production is expected to rise to 3bcm by the end of the period. With demandmoving in line, there is unlikely to be any need for imports or potential for net exports. Details of BMI’s10-year forecasts can be found in the appendix to this report.
RoC is now ranked ninth in BMI’s composite Business Environment Ratings (BER) table, whichcombines upstream and downstream scores. It also takes ninth place, behind Egypt, in BMI’s updatedupstream Business Environment ratings. The county’s score benefits from reasonable oil and gas outputgrowth prospects, respectable reserves to production ratios (RPR) and relatively attractive licensingterms. The risk environment is shaky, but this is hardly uncommon in Africa. RoC is at the bottom of theleague table in BMI’s updated downstream Business Environment ratings, with no high scores andprogress further up the rankings unlikely. It now holds last place, behind even Cameroon, EquatorialGuinea and Gabon, thanks to low scores for refining capacity, oil and gas demand, likely refiningcapacity expansion, nominal GDP and forecast GDP per capita growth. The growth outlook for oilconsumption and the country’s low retail site intensity are relatively strong suits.'
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