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Turkey Oil and Gas Report Q1 2011
Business Monitor International, Jan 2011, Pages: 87
The Turkey 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 Turkey's oil and gas industry.
The latest Turkey Oil & Gas Report from BMI forecasts that the country will account for 10.96% of Central and Eastern European (CEE) regional oil demand by 2015, while making no meaningful contribution to supply. CEE regional oil use of 5.42mn barrels per day (b/d) in 2001 rose 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 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 rose 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 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. Turkey’s share of gas consumption in 2010 is an estimated 5.34%, while it makes no meaningful contribution to production. By 2015, its share of demand is forecast to be 6.69%.
For 2010 as a whole, we assume an average OPEC basket price of US$77.00 per barrel (bbl), +26.5% year-on-year (y-o-y) increase. 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/bbl, Brent at US$82.46/bbl, Urals delivering around US$81.21/bbl 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/bbl 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 estimate 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 estimated 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.
BMI estimates that Turkish GDP will have risen by 6.9% in 2010. We are assuming average annual growth of 4.9% in 2011-2015. We expect oil demand to rise from an estimated 640,000b/d in 2010 to 755,000b/d in 2015. State upstream company TPAO and some international oil companies (IOCs) are attempting to raise domestic oil output, but our estimates assume 52,000b/d of oil and liquids production in 2010, sinking to 41,000b/d by the end of the forecast period. Imports therefore rise from an estimated 588,000b/d to 714,000b/d. Gas production will remain insignificant, but consumption is expected to rise from an estimated 34bcm to 50bcm by the end of the forecast period, requiring imports of 48bcm.
Between 2010 and 2020 we forecast an increase in Turkish oil consumption of 32.8%, with demand rising steadily from an estimated 640,000b/d to 850,000b/d by the end of the 10-year forecast period. Refining capacity between 2010 and 2020 is set to increase by 164.8%, reaching 1.62mn b/d by 2020. Gas consumption is expected to climb from an estimated 34bcm to 62bcm, depending largely on imports. LNG imports are expected to virtually double from an estimated 6.5bcm to 12.0bcm during the forecast period. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Turkey now shares fourth place with Russia in BMI’s composite Business Environment (BE) ratings table, which combines upstream and downstream scores. It is now ranked fourth, behind Poland, in BMI’s updated upstream Business Environment ratings, in spite of the virtually non-existent oil and gas resource base. Russia is just one point behind and likely to challenge Turkey over the near term. Turkey’s score reflects an established licensing framework and largely encouraging country risk factors. Turkey is now joint second, alongside Poland and behind only Russia, in BMI’s updated downstream Business Environment ratings, with several high scores but some longer-term threat from Ukraine below. It is ranked three points behind Russia, thanks largely to high scores for oil demand, retail site intensity, nonstate competition, deregulation and nominal GDP.
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