Ukraine Oil and Gas Report Q1 2011
Business Monitor International, January 2011, Pages: 98
The Ukraine 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 Ukraine's oil and gas industry.
The latest Ukraine Oil & Gas Report from BMI forecasts that the country will account for 5.28% of Central and Eastern European (CEE) regional oil demand by 2015, while providing just 0.54% of supply. CEE regional oil use of 5.42mn barrels per day (b/d) in 2001 will have risen to an estimated 6.05mn b/d in 2010. It should increase to around 6.89mn b/d by 2015. Regional oil production was 8.89mn b/d in 2001 and in 2010 will have averaged an estimated 13.82mn b/d. It is set to rise to 15.08mn b/d by 2015.
Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average of 3.47mn b/d. This total will have risen to an estimated 7.76mn b/d in 2010 and is forecast to reach 8.19mn b/d by 2015. Azerbaijan and Kazakhstan have the greatest production growth potential, although Russia will remain the key exporter.
In terms of natural gas, the region in 2010 will have consumed an estimated 636.3bn cubic metres (bcm), with demand of 747.7bcm targeted for 2015, representing 17.5% growth. Production of an estimated 787.9bcm in 2010 should reach 954.2bcm in 2015, which implies net exports rising from an estimated 151.6bcm in 2010 to 206.5bcm by the end of the period. Ukraine’s share of gas consumption in 2010 is an estimated 7.49%, while its share of production is put at 2.54%. By 2015, its share of demand is forecast to be 7.25%, with the country accounting for 2.10% of 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/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. 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.
Ukraine’s real GDP is assumed by BMI to have risen by 3.8% in 2010. We are forecasting average annual growth of 4.3% in 2010-2015. Beyond the weakness of 2009/10, reasonable and consistent growth in oil consumption seems likely, averaging up to 3.0% per annum. This suggests that the country will be consuming around 363,000b/d of oil by 2015. With oil and liquids production likely to slip closer to 80,000b/d, Ukraine will require imports of at least 282,000b/d by 2015. BMI forecasts that gas demand will rise from an estimated 48bcm in 2010 to 54bcm by 2015. Domestic production, largely in the hands of state-owned Naftogaz Ukrainy but with some international oil company (IOC) involvement, should also increase over the near term, from an estimated 20bcm in 2010 to at least 22bcm in 2011-2012.
Between 2010 and 2020, we forecast a fall in Ukraine oil and gas liquids production of 33.8%, with volumes falling steadily from the estimated 2010 level of 95,000b/d to 63,000b/d by the end of the 10- year forecast period. Oil consumption between 2010 and 2020 is set to increase by 33.7%, with growth slowing to an assumed 3% per annum towards the end of the period and the country using 421,000b/d by 2020. Gas production should peak at around 22bcm in 2011-2012, then fall to 16bcm by 2020. Gas imports are set to reach 45bcm by 2020. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Ukraine now holds seventh place in BMI’s composite Business Environment (BE) ratings table, which combines upstream and downstream scores. The country now shares 13th place with the Czech Republic in BMI’s updated upstream Business Environment ratings, thanks to only modest hydrocarbons resources. Its gas reserves and favourable licensing regime account for much of the upstream score, but country risk factors and privatisation activity are less impressive. Ukraine arguably has the potential to break away from the Czech Republic, and is at little risk from Slovenia below. Ukraine is in the upper half of the league table in BMI’s downstream Business Environment ratings, claiming fourth place below Poland and Turkey. There are a few high scores, but progress further up the rankings is unlikely. There are good scores for refining capacity, oil and gas demand, retail site intensity and population. Romania is four points below it in the regional rankings, so Ukraine should be at little immediate risk.
Executive Summary
SWOT Analysis
Ukraine Political SWOT
Ukraine Economic SWOT
Ukraine Business Environment SWOT
Ukraine Energy Market Overview
Global Oil Market Review
Regaining Momentum
Quarterly Trends
Global Oil Market Outlook
Sitting Comfortably
Oil Price Forecasts
Oil Supply, Demand And Price Outlook
Short-Term Demand Outlook
Table: Global Oil Consumption (000b/d)
Short-Term Supply Outlook
Table: Global Oil Production (000b/d)
Longer-Term Supply And Demand
Oil Price Assumptions
Table: Crude Price Assumptions 2010
Table: Oil Price Forecasts
Regional Energy Market Overview
Oil Supply And Demand
Table: Central/Eastern Europe Oil Consumption (000b/d)
Table: Central/Eastern Europe Oil Production (000b/d)
Oil: Downstream
Table: Central/Eastern Europe Oil Refining Capacity (000b/d)
Gas Supply And Demand
Table: Central/Eastern Europe Gas Consumption (bcm)
Table: Central/Eastern Europe Gas Production (bcm)
Liquefied Natural Gas
Table: Central/Eastern Europe LNG Exports/(Imports) (bcm)
Business Environment Ratings
Central/Eastern Europe Region
Composite Scores
Table: Regional Composite Business Environment Rating
Upstream Scores
Table: Regional Upstream Business Environment Rating
Ukraine Upstream Rating – Overview
Ukraine Upstream Rating – Rewards
Ukraine Upstream Rating – Risks
Downstream Scores
Table: Regional Downstream Business Environment Rating
Ukraine Downstream Rating – Overview
Ukraine Downstream Rating – Rewards
Ukraine Downstream Rating – Risks
Business Environment
Legal Framework
Infrastructure
Labour Force
Foreign Investment Policy
Tax Regime
Security Risk
Industry Forecast Scenario
Oil And Gas Reserves
Oil Supply And Demand
Gas Supply And Demand
LNG
Refining And Oil Products Trade
Revenues/Import Costs
Table: Ukraine Oil And Gas – Historical Data And Forecasts
Other Energy
Table: Ukraine Other Energy – Historical Data And Forecasts
Key Risks To BMI’s Forecast Scenario
Long-Term Oil And Gas Outlook
Oil And Gas Infrastructure
Oil Refineries
Table: Refineries In Ukraine
Oil Pipelines
LNG Terminals
Gas Storage
Gas Pipelines
Macroeconomic Outlook
Table: Ukraine – Economic Activity, 2006-2015
Competitive Landscape
Executive Summary
Table: Key Players – Ukraine Oil And Gas Sector
Overview/State Role
Government Policy
International Energy Relations
Table: Key Upstream Players
Table: Key Downstream Players
Company Monitor
Naftogaz Ukrainy
TNK-BP
Lukoil Ukraine
JKX Oil & Gas
Galnaftogaz
Royal Dutch Shell – Summary
UkrTatNafta – Summary
Tatneft – Summary
Regal Petroleum – Summary
Cadogan Petroleum – Summary
Transeuro Energy – Summary
Oil And Gas Outlook: Long-Term Forecasts
Regional Oil Demand
Table: CEE Oil Consumption (000b/d)
Regional Oil Supply
Table: CEE Oil Production (000b/d)
Regional Refining Capacity
Table: CEE Oil Refining Capacity (000b/d)
Regional Gas Demand
Table: CEE Gas Consumption (bcm)
Regional Gas Supply
Table: CEE Gas Production (bcm)
Ukraine Country Overview
Methodology And Risks To Forecasts
Glossary Of Terms
Oil And Gas Ratings: Revised Methodology
Introduction
Ratings Overview
Table: BMI Oil And Gas Business Environment Ratings: Structure
Indicators
Table: BMI Oil And Gas Business Environment Upstream Ratings: Methodology
Table: BMI Oil And Gas Business Environment Downstream Ratings: Methodology
BMI Methodology
How We Generate Our Industry Forecasts
Energy Industry
Cross checks
Sources
- Naftogaz Ukrainy
- TNK-BP
- Lukoil Ukraine
- JKX Oil & Gas
- Galnaftogaz
- Royal Dutch Shell
- UkrTatNafta
- Tatneft
- Regal Petroleum
- Cadogan Petroleum
- Transeuro Energy
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