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Japan Oil and Gas Report Q1 2011
Business Monitor International, Nov 2010, Pages: 57
Business Monitor International's Japan 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 Japan's oil and gas industry.
The latest Japan Oil & Gas Report from BMI forecasts that the country will account for 13.46% of Asia Pacific regional oil demand by 2014, while not contributing significantly to regional supply. Regional oil use of 21.42mn barrels per day (b/d) in 2001 will reach an estimated 27.11mn b/d in 2010, then rises to around 30.64mn b/d by 2015. Regional oil production was around 8.35mn b/d in 2001, and will average an estimated 8.91mn b/d in 2010. It is set to decrease slightly to 8.89mn b/d by 2015. Oil imports are growing rapidly, because demand growth is outstripping the pace of supply expansion. In 2001, the region was importing an average of 13.07mn b/d. This total will rise to an estimated 18.20mn b/d in 2010, and is forecast to reach 21.75mn b/d by 2015. The principal importers will be China, Japan, India and South Korea. By 2015 the only net exporter will be Malaysia.
In terms of natural gas, in 2010 the region is expected to consume 489bn cubic metres (bcm) and demand of 633bcm is targeted for 2015. Production of an estimated 412bcm in 2010 should reach 548bcm in 2015, implying net imports rising from around 77bcm to 84bcm. This is thanks to many Asian gas producers being major exporters. Japan’s share of gas consumption in 2010 will have been an estimated 18.11%, while it provides no meaningful share of production. By 2015, it is expected to be consuming 14.20% of the region’s gas.
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. Japanese real GDP is forecast by BMI to increase by 2.9% in 2010, and we foresee average annual growth of 1.5% in 2010-2015. There is little domestic upstream activity, with local state and private firms concentrating on international exploration efforts. The outlook for domestic oil and gas production therefore remains poor. Oil consumption is forecast to fall between 2010 and 2015, implying demand of 4.13mn b/d by the end of the forecast period. The country should be consuming almost 90bcm of gas by 2015, all of which will be imported in the form of liquefied natural gas (LNG).
Between 2010 and 2020, we are forecasting a reduction in Japanese oil consumption of 6.57%, with demand slipping steadily to the end of the period and the country using 4.05mn b/d by 2020. Gas consumption is expected to rise from an estimated 88.5bcm in 2010 to 91.2bcm by 2020. All of Japan’s gas will continue to be imported in the form of LNG. Details of BMI’s 10-year forecasts, which provide regional and country-specific projections, can be found to the rear of this report. Japan now shares seventh place with Indonesia in BMI’s composite Business Environment (BE) league table. The country ranks 11th, behind Thailand, in BMI’s updated upstream Business Environment ratings, thanks to a virtual absence of hydrocarbon resources. The score reflects the limited involvement of the government in upstream oil activities and an exceptionally healthy country risk profile, which counter the lack of reserves and output growth potential. Japan now holds third place, above Singapore, in BMI’s downstream Business Environment ratings, reflecting its high levels of oil and gas consumption, increasing gas demand and the established modern refining capability. However, it is held back by a high level of retail site intensity and a poor oil demand growth outlook.
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