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Venezuela Oil and Gas Report Q1 2011
Business Monitor International, Nov 2010, Pages: 105
Business Monitor International's Venezuela 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 Venezuela's oil and gas industry.
The latest Venezuela Oil & Gas Report forecasts that the country will account for 7.67% of Latin American oil demand by 2015, while providing 26.54% of supply. Latin American regional use will average an estimated 7.80mn barrels per day (b/d) in 2010. It should rise to 7.96mn b/d in 2011 and reach 8.49mn b/d by 2015. Regional oil production in 2010 will average an estimated 10.02mn b/d. It is set to rise to 11.68mn b/d by 2015. Oil exports have been slipping, because demand growth has exceeded the pace of supply expansion. In 2001, the region was exporting an average of 3.37mn b/d. This total falls to an estimated 2.29mn b/d in 2010 and is forecast to slip further to 2.22mn b/d in 2015. The principal exporters will be Mexico, Venezuela, Colombia and Brazil.
In terms of natural gas, the region in 2010 will consume an estimated 208.5bn cubic metres (bcm), with demand of 263.9bcm targeted for 2015. Production of an estimated 221.0bcm in 2010 should reach 264.3bcm in 2015, and implies 0.4bcm of net imports at the end of the period. Venezuela will have contributed an estimated 14.63% to 2010 regional gas consumption, while producing around 13.12%. By 2015, it is expected to consume 13.25% of the region’s gas, while contributing 15.13% to supply. 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.
Venezuelan real GDP in 2010 is assumed by BMI to fall by 3.8%, with an average annual increase of 1.8% expected in 2010-2015. State-owned Petróleos de Venezuela (PdVSA) works in cooperation with numerous international oil company (IOC) partners in conventional and heavy oil projects. Although recent renationalisation moves, changes in taxation and alterations to the licensing system have reduced foreign involvement, several key players appear committed to the country’s heavy oil schemes. We are assuming oil and gas liquids production of 3.10mn b/d by 2015, with the country expected to pump 2.52mn b/d in 2010. Consumption beyond the economic weakness of 2009/10 is forecast to increase by up to 2% per annum to 2015, implying demand of 651,000b/d by this point. The export capability would thus be about 2.45mn b/d by 2015. Gas production is forecast to rise from an estimated 29bcm in 2010 to 40bcm over the period, providing 5bcm of export potential in 2015.
Between 2010 and 2020, we are forecasting an increase in Venezuelan oil production of 59.1%, with liquids volumes averaging 2.52mn b/d in 2010 before rising steadily to 4.00mn b/d by 2018-2020. Oil consumption between 2010 and 2020 is set to increase by 11.2%, with growth slowing to an assumed 1.0% per annum towards the end of the period and the country using 684,000b/d by 2020. Gas production is expected to rise steadily, from an estimated 29bcm in 2010 to 54.0bcm in 2020. With demand growth of 29.8%, this implies export potential rising to 14.4bcm by 2020. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Venezuela now shares fourth place with Argentina in BMI’s composite Business Environment (BE) rating, which combines upstream and downstream scores. It now lags Brazil and Peru in third place in BMI’s updated upstream Business Environment ratings, having held much of its ground thanks to its vast hydrocarbons resource base. Although just two points behind Brazil and Peru, its position is far from secure unless the overall risk situation improves dramatically. As well as high scores for reserves, production growth potential and reserves-to-production ratios (RPR), Venezuela benefits from the number of international companies active within its upstream industry. Venezuela now shares eighth place with Chile in BMI’s downstream Business Environment ratings, reflecting its refining capacity, retail site intensity and growth in GDP per capita. Only Bolivia is now below the country, but it is not capable of challenging Venezuela during the next few quarters.
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