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Colombia Oil and Gas Report Q1 2011
Business Monitor International, Dec 2010, Pages: 103
The Colombia 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 Colombia's oil and gas industry.
The latest Colombia Oil & Gas Report from BMI forecasts that the country will account for 2.60% of Latin American regional oil demand by 2015, while providing 10.49% 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. Colombia’s estimated share of gas consumption in 2010 is 4.32%, while its share of production is put at 4.98%. By 2015, its share of gas consumption is forecast to be 3.95%, with the country accounting for 4.54% 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.
Colombian real GDP in 2010 is assumed by BMI to rise by 3.9%, and we are assuming an average annual increase of 4.6% in 2010-2015. The government is working successfully to encourage international oil company (IOC) investment and boost near-term domestic oil production, aided by state-owned Ecopetrol. These efforts have been proving highly effective, and we are now assuming oil and gas liquids production of 1.23mn b/d by 2015, with the country expected to pump 801,000b/d in 2010. Consumption beyond 2009 is forecast to increase by 2-3% per annum to 2015, implying demand of 221,000b/d by this time. The country’s export capability should therefore reach 1.11mn b/d by 2015. Gas consumption is forecast to increase from an estimated 9.0bcm in 2010 to 10.4bcm over the period, met by rising domestic production, which will also provide modest exports.
Between 2010 and 2020, we are forecasting an increase in Colombian oil production of 51.7%, with crude volumes peaking at 1.47mn b/d in 2018, before declining to 1.22mn b/d by 2020. Oil consumption between 2010 and 2020 is set to increase by 26.8%, with growth averaging an assumed 2.5% per annum towards the end of the period and the country using 250,000 b/d by 2020. Gas production is expected to rise gradually, from an estimated 11bcm in 2009 to 15bcm in 2018-2020. With demand growth of 34.4%, this implies peak export potential of 3.6bcm by 2018. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Colombia holds second place, behind only Brazil, in BMI’s composite Business Environment (BE) ratings, which combines upstream and downstream scores. It ranks fourth, behind Venezuela, in BMI’s updated upstream Business Environment ratings, well ahead of Trinidad & Tobago in fifth. Although the absolute resource base is currently modest, the competitive environment is attractive and licensing terms have improved to become some of the best in the region. Country risk is moderate, and Colombia is well placed to retain its strong position in the league table. Colombia holds second place, ahead of Argentina and behind only Brazil, in BMI’s downstream Business Environment ratings, reflecting its oil demand growth outlook, refining capacity expansion plans, moderate country risk and low retail site intensity. Argentina is well behind in the regional rankings and lacks the near-term potential to challenge Colombia.
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