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Vietnam Oil and Gas Report Q3 2011
Business Monitor International, June 2011, Pages: 94
Vietnam 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 Vietnam's oil and gas industry.
The latest Vietnam Oil & Gas Report from BMI forecasts that the country will account for 1.38% of Asia Pacific regional oil demand by 2015, while providing 4.80% of supply. Regional oil use of 20.6mn barrels per day (b/d) in 2001 reached an estimated 26.4mn b/d in 2010 and is forecast to rise to around 29.6mn b/d by 2015. Regional oil production was around 7.6mn b/d in 2001 and averaged an estimated 8.0mn b/d in 2010. It is set to increase to 8.2mn 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 12.99mn b/d. This total rose to an estimated 18.37mn b/d in 2010 and is forecast to reach 21.41mn 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 consumed around 511.5bn cubic metres (bcm) and demand of 653.9bcm is targeted for 2015. Production of an estimated 405.8bcm in 2010 should reach 556.7bcm in 2015, implying net imports falling from around 105.7bcm to 97.2bcm.Vietnam’s estimated share of gas consumption in 2010 was an estimated 1.58%, while its share of production is put at 2.01%. By 2015, its share of gas consumption is forecast to be 2.44%, with the country accounting for 3.77% of supply.
Global GDP growth in 2011 is forecast at 3.6%, down from 4.3% in 2010. Growth in both the US and eurozone should be marginally higher than 2010, while Chinese economic expansion will slow and Japan’s growth will slump to 0.7% as a result of the devastating earthquake and tsunami in March 2011.
Our oil price forecast for 2011 is US$98.90/bbl for the OPEC Basket, giving Brent at US$103/bbl and West Texas Intermediate (WTI) at US$92.30, although these differentials are subject to change. Vietnamese real GDP growth in 2010 was an estimated 6.8%, with a forecast average annual 7.0% increase in 2011-2015. Exploration success has been on the rise in Vietnam, with a growing number of international oil companies (IOCs) teaming up with PetroVietnam and finding and developing hydrocarbon resources – particularly gas. We expect that oil and gas liquids production of 373,000b/d in 2010 will peak at just under 407,000b/d in 2011, before easing back to 395,000b/d by 2015. Beyond 2010, consumption is forecast to increase by around 5-7% per annum to 2015, implying demand of 408,000b/d by the end of the forecast period. Gas production is forecast to increase from the estimated 2010 figure of 8.1bcm to 21.0bcm by 2015 – providing a basis for exports.
Between 2010 and 2020, we are forecasting a decline in Vietnamese oil production of 16.1%, with crude volumes peaking at just under 407,000b/d in 2011, before slipping to 313,000b/d by 2020. Oil consumption between 2010 and 2020 is set to increase by 78.2%, with growth beyond 2009 ranging from 5-7% per annum and the country using 554,000 b/d by 2020. Gas production is expected to rise from an estimated 8.1bcm in 2010 to 24.0bcm in 2020. We see Vietnam’s net gas export potential turning into modest imports by the end of the period on the back of rising demand and steady output in the period 2016-20. Details of BMI’s 10-year forecasts which provide regional and country-specific projections can be found at the end of this report.
Vietnam now shares third place with China in BMI’s composite Business Environment (BE) league table, which reflects largely its strong upstream position. The country holds third place, behind India, in BMI’s updated upstream Business Environment ratings, with its ranking reflecting a reasonable resource position, better-than-average growth outlook, attractive licensing terms and an IOC-friendly competitive environment. There is a four-point gap between Vietnam and fourth-placed Papua New Guinea, and we believe Vietnam is safe from any near-term challenges. Vietnam shares ninth place with Pakistan in BMI’s downstream Business Environment ratings, reflecting its modest (but growing) refining capacity, above-average oil and gas demand growth outlook, and low level of retail site intensity.
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