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Norway Oil and Gas Report Q4 2011
Business Monitor International, Sep 2011, Pages: 89
The latest Norway Oil & Gas Report from BMI forecasts that the country will account for 1.78% of regional oil consumption by 2015, while accounting for 55.17% 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 have been 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. Norway's share of gas consumption in 2011 will have been an estimated 1.14%, while it will have accounted for around 64.55% of production. By 2015, its share of gas consumption is forecast to be 1.17%, while its share of production will be 69.49%.
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 last year, while Chinese economic expansion will slow and Japan’s growth will be 1.65%, reflecting the devastating earthquake and tsunami in March 2011. Our oil price assumption for 2011 is US$101.90/bbl for the OPEC basket, falling to US$97.50/bbl in 2012.
BMI assumes that Norwegian real GDP will rise by 2.47% in 2011. We are forecasting 2.34% average annual growth in 2011-2015. We expect the country’s 2011 oil and liquids production to be about 1.99mn b/d, down from an estimated 2.13mn b/d in 2010. By 2015, liquids volumes look set to slip to 1.84mn b/d. Oil demand could rise to 234,000b/d by 2015, implying that net exports will slip from 1.78mn b/d in 2011 to 1.61mn b/d by the end of the period. Estimated 2011 gas production of 153.3bcm should continue to rise towards at least 172.6bcm by 2015. Rising domestic gas consumption, from 5.2bcm to 5.9bcm over 2011-2015, suggests that net exports will rise to 166.7bcm by the end of the forecast period.
Between 2011 and 2020, we forecast a decline in Norwegian oil production of 25.0%, with output slipping steadily from an estimated 1.99mn b/d in 2011 to 1.50mn b/d at the end of the 10-year forecast period. Oil consumption over the period is expected to increase by 15.0%, resulting in a decline in exports from 1.78mn b/d to 1.24mn b/d by 2020. Gas production should rise from153bcm to a peak of 177bcm in 2016, before falling to 170bcm by 2020. Most exports will continue to be in the form of pipeline gas, with some liquefied natural gas (LNG). Details of BMI’s 10-year forecasts can be found in the appendix to this report.
According to BMI’s country risk team, Norway’s long-term political risk score is 98.0 out of 100, 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 71.7, above the Developed Markets average of 67.2 and above the global average of 52.9. There is a partly privatised energy sector, with government majority ownership of the national oil company Statoil, enlarged in 2007 thanks to a merger of Statoil and the oil and gas interests of Norsk Hydro. Norway has a major, but mature and highly competitive, upstream oil and gas segment, featuring most key national and international companies. The downstream oil segment is small, open to competition and deregulated.
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