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Greece Oil and Gas Report Q2 2011
Business Monitor International, April 2011, Pages: 69
Business Monitor International's Greece 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 Greece's oil and gas industry.
The latest Greece Oil & Gas Report from BMI forecasts that the country will account for 3.44% of Developed European regional oil demand by 2015, while making no appreciable contribution to supply. In Developed Europe, overall oil consumption in 2010 was an estimated 13.02mn barrels per day (b/d). It is set to recover to around 13.18mn b/d by 2015. Developed Europe regional oil production was 6.96mn b/d in 2001, and in 2010 averaged an estimated 4.40mn b/d. It is set to fall to just 3.53mn b/d by 2015.
Oil imports are growing steadily because supply is contracting and demand is rising, albeit slowly. In 2010, net crude imports were an estimated 8.62mn b/d. By 2015, they are expected to have reached 9.65mn b/d. Norway will remain the only major net exporter, with the UK a growing net importer. As regards natural gas, the Developed Europe region in 2010 consumed an estimated 416.5bn cubic metres (bcm), with demand of 457.1bcm targeted for 2015, representing 9.7% growth. Production of an estimated 255.7bcm in 2010 is set to fall to 254.0bcm in 2015, which implies net imports rising from the estimated 2010 level of 160.8bcm to some 203.1bcm by the end of the period. The Greek share of gas consumption in 2010 was an estimated 0.86%, while the country makes no meaningful contribution to production. By 2015, its share of gas consumption is forecast to be 1.14%.
The 2010 full-year outturn was US$77.45/bbl for OPEC crude, which delivered an average for North Sea Brent of US$80.34/bbl and for West Texas Intermediate (WTI) of US$79.61/bbl. The BMI price target of US$77 was reached thanks to the early onset of particularly cold weather, which drove up demand for and the price of heating oil during the closing weeks of the year.
We set our 2011 supply, demand and price forecasts in early January, targeting global oil demand growth of 1.53% and supply growth of 1.91%. With OECD inventories at the top of their five-year average range, we set a price forecast of US$80/bbl average for the OPEC basket in 2011. The unprecedented wave of popular uprisings in the Middle East and North Africa (MENA) that followed the removal of Tunisian President Ben Ali on January 14 has obviously fundamentally altered our outlook, particularly since the unrest spread to Libya in mid-February.
Taking into account the risk premium that has been added to crude prices in response to actual and perceived threats to supply, we have now raised our benchmark OPEC basket price forecast from US$80 to US$90/bbl for 2011 and from US$85 to US$95/bbl for 2012. Based on our expectations for differentials, this gives a forecast for Brent at US$94/bbl in 2011 and US$99/bbl in 2012. We have kept our long-term price assumption of US$90/bbl (OPEC basket) in place for the time being while we wait to see what path events in the MENA region take. We have also retained our existing supply and demand forecasts until the scheduled quarterly revision at the start of April.
Greek real GDP is assumed by BMI to have declined by 4.0% in 2010. We are forecasting a 0.5% average annual GDP growth in 2011-2015. While there is still some limited scope for medium- to longGreece term growth in domestic oil production, there is considerable uncertainty over the scale and the timing of new field development. Meanwhile, the country’s oil consumption is expected to reach 453,000b/d in 2015. By 2015, our estimates suggest gas consumption of at least 5.2bcm, all of which will be imported. Between 2010 and 2020, we are forecasting an increase in Greek oil and gas liquids consumption of 15.5%, with volumes rising steadily from an estimated 423,000b/d in 2010 to 488,000b/d at the end of the 10-year forecast period. Overall crude oil and gas liquids production is set to be around 7,000b/d in 2011- 2014, before easing to 5,000b/d in 2020. Gas demand should rise from the estimated 2010 level of 3.6bcm to 6.6bcm by 2020, relying on pipeline and LNG imports. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
According to BMI’s country risk team, Greece’s long-term political risk score is 77.5, compared with the Developed Markets average of 87.8 and the global average of 62.9. Our long-term economic rating for the country is 57.5, below the Developed Markets average of 67.2 and above the global average of 52.9. Greece has a partly privatised energy sector operating under EU guidelines. There is a small upstream oil and gas segment, featuring domestic companies and foreign exploration companies. Downstream oil is dominated by partly state-owned Hellenic Petroleum (HP). International oil companies (IOCs) have largely sold their operations. The gas and power sectors are still heavily state-influenced.
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