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Egypt Oil and Gas Report Q4 2011
Business Monitor International, Sep 2011, Pages: 109
The latest Egypt Oil & Gas Report from BMI forecasts that the country will account for 20.67% of African regional oil demand by 2015, while providing 5.28% of supply. African regional oil use is put by BMI at 3.61mn barrels a day (b/d) in 2010. It should average 3.59mn b/d in 2011 and then rise to around 4.10mn b/d by 2015. Regional oil production was 10.74mn b/d in n 2010. After dropping to an estimated 9.66mn b/d in 2011 because of the loss of Libyan volumes, it is set to rise to 12.91mn b/d by 2015. Oil exports are growing steadily, because demand growth is lagging behind the pace of supply expansion. This total rose to 7.13mn b/d in 2010 and is forecast to reach 8.80mn b/d by 2015. Nigeria has the greatest production growth potential, with Angolan exports also set to climb significantly.
In terms of natural gas, the region in 2010 consumed 124.1bn cubic metres (bcm), with demand of 165.2bcm forecast for 2015. Production of 213.7bcm in 2010 should reach 300.2bcm in 2015, which implies net exports rising from 89.5bcm to 134.9bcm in 2015. In 2011, Egypt will have consumed an estimated 36.19% of the region’s gas, with its market share forecast at 33.30% by 2015. It will have contributed an estimated 30.49% to 2011 regional gas production and by 2015 will account for 25.65% of supply.
Global GDP growth in 2011 is forecast at 3.2%, down from 4.3% in 2010. Growth in the eurozone should be marginally higher than 2010, while US and Chinese economic expansion will slow and Japan’s growth will be negative, reflecting the devastating earthquake and tsunami in March 2011. Our oil price assumption for 2011 is US$101.90 per barrel (bbl) for the OPEC basket, falling to US$97.50/bbl in 2012. Egyptian real GDP is forecast to rise by 0.5% in 2011, with average annual growth of 4.35% assumed in 2011-2015. We expect oil demand to rise from an estimated 736,000b/d in 2011 to 848,000b/d in 2015, subject to national efforts to conserve oil and increase the use of gas. State oil company Egyptian General Petroleum Corporation (EGPC) operates in partnership with various international oil companies (IOCs), and alone accounts for just 20% of the country’s oil output. Combined oil and gas liquids output is forecast to increase from an estimated 680,000b/d in 2011 to 681,000b/d in 2015. Gas production should reach 77bcm by 2015, up from an estimated 66bcm in 2011. Consumption is expected to rise from an estimated 47bcm to 55bcm by the end of the forecast period, providing exports of 22bcm.
Between 2011 and 2020, BMI forecast a fall in Egyptian oil and gas liquids production of 11.8%, with volumes slipping steadily to 600,000b/d by the end of the 10-year forecast period. Oil consumption between 2011 and 2020 is set to increase by 35.1%, with growth slowing to an assumed 3% per annum towards the end of the period and the country using 975,000b/d by 2020. Gas production is expected to rise to 95bcm by the end of the period. With demand increasing by 48.6% between 2010 and 2020, there should be export potential increasing to almost 25bcm, largely in the form of LNG. Details of BMI’s 10- year forecasts can be found in the appendix to this report.
Egypt now holds second place, behind only South Africa, in BMI’s composite Risk/Reward ratings table, which combines upstream and downstream scores. It now shares fifth place with Republic of Congo in BMI’s updated upstream ratings. The country’s score benefits from healthy proven gas reserves, an established competitive landscape, a reasonable gas reserves-to-production ratio (RPR) and attractive licensing terms. Egypt is comfortably near the top of the league table in BMI’s downstream ratings, with some high scores but progress further up the rankings unlikely. It is ranked outright second, behind South Africa, thanks to high scores for refining capacity, oil and gas demand, retail site intensity, population and GDP per capita growth. The growth outlook for oil/gas consumption and refining capacity is a relatively weak suit.
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