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Italy Oil and Gas Report Q4 2011
Business Monitor International, Sep 2011, Pages: 80
The latest Italy Oil & Gas Report from BMI forecasts that the country will account for 11.64% of regional oil consumption by 2015, while accounting for 5.41% of supply. In Developed Europe, overall regional oil demand will be an estimated 12.71mn barrels per day (b/d) in 2011 and is set to reach 13.17mn b/d by 2015. Developed Europe regional oil production will be an estimated 3.83mn b/d in 2011, falling potentially to just 3.34mn b/d in 2015. Regional net imports are set to rise from an estimated 8.88mn b/d in 2011 to 9.83mn b/d by the end of the forecast period. Norway will remain the only major net exporter, with the UK a growing net importer.
In terms of natural gas, the Developed Europe region will have consumed an estimated 457bn cubic metres (bcm) in 2011, with demand of 498bcm targeted for 2015, representing 9.0% growth. Production of an estimated 238cm in 2011 is set to rise to 248bcm in 2015, which implies net imports rising from the estimated 2011 level of 219bcm to some 250bcm by the end of the period. Italy's share of gas consumption in 2011 will have been an estimated 17.53%, while it will have accounted for 2.95% of production. By 2015, its share of gas consumption is forecast to be 17.21%, while its share of production will be 2.82%.
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.
Italian real GDP is forecast by BMI to rise by 1.09% in 2011. We are assuming 1.51% average annual growth in 2011-2015. By 2015, we expect to see the country consuming 1.53mn b/d of oil. A rise in nearterm domestic oil output is also expected. We are assuming oil production of 180,000b/d in 2015, but imports are set to reach 1.35mn b/d. Use of gas in power generation is the key to demand growth and consumption looks set to reach 85.7bcm by 2015. Imports are likely to hit 78.7bcm at this stage.
Between 2011 and 2020, we are forecasting an increase in Italian oil production of 14.2%, with output peaking at 192,000b/d in 2013 before slipping to 137,000b/d at the end of the 10-year forecast period.
Given that oil consumption is forecast to increase by just 5.44%, imports can also be expected to rise from an estimated 1.38mn b/d in 2011 to 1.44mn b/d by the end of the forecast period. Gas demand should rise from the estimated 2011 level of 80.1bcm to 91.5bcm by 2020. Production of an estimated 7bcm in 2011 is expected to fall to 5bcm by 2020, requiring imports up from 73.1bcm to 86.5bcm, in the form of pipeline gas and LNG. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
According to BMI’s country risk team, Italy’s long-term political risk score is 80.3, compared with the Developed Markets average of 87.1 and the global average of 63.0. Our long-term economic rating for the country is 61.6, below the Developed Markets average of 67.3, and above the global average of 52.9. Italy has a privatised energy sector operating under EU guidelines. There is a significant upstream oil and gas segment featuring domestic and foreign operators. Downstream oil is highly competitive and involves a mixture of international oil companies (IOCs) and domestic companies. Both the gas and power markets are privatised and open to competition.
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