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Oman Oil and Gas Report Q1 2011
Business Monitor International, Jan 2011, Pages: 92
The Oman 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 Oman's oil and gas industry.
This latest Oman Oil & Gas Report from BMI forecasts that the country will account for just 0.99% of Middle East (ME) regional oil demand by 2015, while providing 3.13% of supply. Middle East regionaloil use of 4.98mn barrels per day (b/d) in 2001 is expected to rise to 7.40mn b/d in 2010. It shouldaverage 7.70mn b/d in 2011 and then rise to around 8.70mn b/d by 2015. Regional oil production was22.83mn b/d in 2001 and is forecast to average 24.96mn b/d in 2010. After reaching an estimated25.22mn b/d in 2011, it is set to rise to 27.24mn b/d by 2015. Oil exports are growing steadily, becausedemand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average17.85mn b/d. This total will ease to an expected 17.55mn b/d in 2010 and is forecast to reach 18.54mn b/dby 2015. Iraq has the greatest export growth potential, followed by Qatar.
In terms of natural gas, the region will consume a forecast 391bn cubic metres (bcm) in 2010, with demand of 483bcm targeted for 2015, representing 23.7% growth. Production of an estimated 467bcm in2010 should reach 614bcm in 2015 (+31.4%), which implies net exports rising to 130bcm by the end ofthe period. In 2010, Oman will consume an estimated 3.84% of the region’s gas, with its market shareforecast at 4.34% by 2015. It is expected to contribute an estimated 5.67% to 2010 regional gasproduction, and by 2015 will account for 5.70% of supply.
For 2010 as a whole, we assume 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$79.16/bbl. BMI is assuming an OPEC basket price ofUS$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 approximately US$87.40 and Brent at US$87.60/bbl. From2013 onwards, we are using an average OPEC price of US$90.00/bbl.
For the whole of 2010, BMI’s assumption for the global gasoline price is an average US$87.49/bbl, representing a y-o-y rise of 24.7%. The global gasoil forecast is for an average price of US$88.00/bbl,probably peaking in December 2010 at more than US$95/bbl. The full-year outturn represents a 27.6%increase from the 2009 level. For 2010, the annual jet price level is forecast to be US$89.50/bbl. Thiscompares with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$77.65/bbl,up almost 31% from the previous year’s level.
Oman’s real GDP is assumed by BMI to have risen by 4.5% in 2010, with average annual growth of 2.7% forecast in 2010-2015. We expect oil demand to rise from an estimated 67,000b/d in 2010 to86,000b/d in 2015. Partly state-owned Petroleum Development Oman (PDO) accounts for more than80% of the oil and gas produced in the country, but relies on international oil companies (IOCs) tomaintain volumes. Our estimates assume 754,000b/d of 2010 production, before volumes climb to920,000b/d by 2012, then ease to 854,000b/d at the end of the forecast period. Gas production shouldreach 35.0bcm by 2015, up from an estimated 26.5bcm in 2010. Consumption is expected to rise from anestimated 15.0bcm to 21.0bcm by the end of the forecast period, allowing net exports of 14.0bcm.
Between 2010 and 2020, we are forecasting a decrease in Omani oil production of 24.1%, with crude volumes peaking at 920,000b/d in 2012, before falling steadily to 660,000b/d by the end of the 10-yearforecast period. Oil consumption between 2010 and 2020 is set to increase by 62.9%, with growthslowing to an assumed 5.0% per annum towards the end of the period and the country using 109,000b/dby 2020. Gas production is expected to reach 40bcm by 2018-2020. With 2010-2020 demand growth of78.3%, this provides an export capability peaking at 15.7bcm in 2018. Details of BMI’s 10-year forecastscan be found in the appendix to this report.
Oman now shares seventh place with Saudi Arabia in BMI’s composite Business Environment ratings (BER) table, which combines upstream and downstream scores. The country holds seventh place, aheadof Kuwait, in BMI’s updated upstream ratings. Its score benefits from a sound country risk profile, goodlicensing terms and a healthier privatisation trend than that seen elsewhere in the region. It is capable,over the longer term, of challenging Iran, which is currently just two points above it. Oman is below themiddle of the league table in BMI’s updated downstream ratings, with a few high scores and furtherprogress up the rankings a medium-term possibility. It is ranked equal seventh alongside Kuwait, owingto low scores for refining capacity, oil demand, retail site intensity and gas demand growth outlook.
Healthy country risk factors, oil demand growth potential and moves towards deregulation and privatisation help bolster the overall score.
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