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Norway Oil and Gas Report Q1 2011
Business Monitor International, Jan 2011, Pages: 94
Norway 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 Norway's oil and gas industry.
The latest Norway Oil & Gas Report from BMI forecasts that the country will account for just 1.68% of Developed European regional oil demand by 2015, while contributing 52.81% to supply. In Developed Europe, overall oil consumption will have been an estimated 13.02mn barrels per day (b/d) in 2010. It is set to recover to around 13.24mn b/d by 2015. Developed Europe regional oil production was 6.96mn b/d in 2001, and in 2010 will have averaged an estimated 4.44mn b/d. It is set to fall to just 3.50mn b/d by 2015. Oil imports are growing steadily because supply is contracting and demand is rising, albeit slowly.
In 2010, net crude imports will have been an estimated 8.58mn b/d. By 2015, they are expected to have reached 9.73mn b/d. Norway will remain the only major net exporter, with the UK a net importer.
As regards natural gas, the Developed Europe region in 2010 will have consumed an estimated 419.5bn cubic metres (bcm), with demand of 470.7bcm targeted for 2015, representing 12.2% growth. Production of an estimated 259.3bcm in 2010 is set to fall to 253.0bcm in 2015, which implies net imports rising from the estimated 2010 level of 160.2bcm to some 217.7bcm by the end of the period. Norway’s share of gas consumption in 2010 will have been an estimated 0.98%, while it will have contributed around 42.43% to production. By 2015, its share of gas consumption is forecast to be 0.95%, with a 45.45% contribution to regional supply.
For 2010 as a whole, we assume an average OPEC basket price of US$77.00/bbl, +26.5% year-on-year (y-o-y). The 2010 US WTI price is now put at US$79.16/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 around US$81.21 and the Dubai average being US$80.74/bbl. Our central assumption for 2012 is an OPEC price averaging US$85.00/bbl, delivering WTI at approximately US$87.40 and Brent at US$87.60/bbl. From 2013 onwards, 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 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$89.500/bbl. This compares 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.
BMI expects Norwegian real GDP to have risen by 0.1% in 2010. We are forecasting 2.3% average annual growth in 2010-2015. Recent (September 2010) Norwegian oil and liquids production has averaged 2.01mn b/d. We expect the country’s 2011 oil and liquids production to be about 2.07mn b/d, down from an estimated 2.16mn b/d in 2010. By 2015, liquids volumes look set to slip to 1.85mn b/d. Oil demand could rise to 222,000b/d by 2015, implying that net exports will slip from an estimated 1.86mn b/d in 2010 to 1.63mn b/d by the end of the period. Estimated 2010 gas production of 110bcm should continue to rise towards at least 120bcm by 2012-2014. Rising domestic gas consumption, from an estimated 4.1bcm to 4.5bcm over 2010-2015, suggests that net exports will rise to 115.6bcm before the end of the forecast period.
Between 2010 and 2020, we forecast a decline in Norwegian oil production of 28.24%, with output slipping steadily from an estimated 2.16mn b/d in 2010 to 1.55mn b/d at the end of the 10-year forecast period. Given a mere 1.90% increase in oil consumption over the period, exports slide from 1.95mn b/d to 1.34mn b/d by 2020. Gas production should rise from the estimated 2010 level of 110bcm to a peak of 120bcm in 2012-2014, before falling to 100bcm by 2020. Most exports will continue to be in the form of pipeline gas, with some liquefied natural gas (LNG). Details of BMI’s 10-year forecasts can be found in the appendix to this report.
According to BMI’s country risk team, Norway’s long-term political risk score is 99 out of 100, compared with the Developed Markets average of 86.7 and the global average of 63.0. Our long-term economic rating for the country is 73, above the Developed Markets average of 66.6 and above the global average of 52.8. There is a partly privatised energy sector, with government majority ownership of the national oil company Statoil, formed in 2007 through a merger of Statoil and the oil and gas interests of Norsk Hydro. Norway has a major, but mature and highly competitive, upstream oil and gas segment, featuring most key national and international companies. The downstream oil segment is small, open to competition and deregulated.
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