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Iran Oil and Gas Report Q4 2011
Business Monitor International, Oct 2011, Pages: 113
Iran 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 Iran's oil and gas industry.
BMI calculates that Iran’s real GDP grew by 1.5% in 2010, and we forecast average annual growth of 1.9% in 2010-2015. We expect oil demand to rise from an estimated 1.79mn barrels per day (b/d) in 2010 to 1.97mn b/d in 2015. The lack of large-scale international oil company (IOC) investment contributes to modest output growth, with liquids production forecast to increase from an estimated 4.25mn b/d in 2010 to 4.45mn b/d in 2015. Gas production should reach 169bn cubic metres (bcm) by 2015, up from an estimated 139bcm in 2010. Consumption is expected to rise from 137bcm to 146bcm by the end of the forecast period, providing export potential of 23bcm.
Between 2010 and 2020, we forecast Iranian oil production to rise from 4.25mn b/d to 4.92mn b/d. Meanwhile, oil consumption between 2010 and 2020 is set to increase from 1.79mn b/d to 2.2mn b/d. Gas production is expected to climb to 265bcm by the end of the period, with export potential rising to 32bcm by 2020. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
We forecast that Iran will account for 22.5% of Middle East regional oil demand by 2015, while providing 15.6% of supply. Middle East regional oil use rose to an estimated 7.5mn b/d in 2010. It should average 7.8mn b/d in 2011 and then climb to around 8.7mn b/d by 2015. Regional oil production was 24.36mn b/d in 2010. It is set to rise to 29.9mn b/d by 2015. In 2010, the region was exporting an average of 16.88mn b/d and is forecast to export 21.19mn b/d by 2015. Iraq has the greatest export growth potential, followed by Qatar.
In terms of natural gas, the region consumed an estimated 397bn cubic metres (bcm) in 2010, with demand of 517bcm targeted for 2015, representing 30% growth. Production of an estimated 452bcm in 2010 should reach 626bcm in 2015, which implies net export potential rising to 109bcm by the end of the period. Iran's estimated share of gas consumption in 2010 will have been 38.7%, while its share of production is put at 31.0%. By 2015, its share of gas consumption is forecast to be 29.9%, with the country accounting for 28.8% of supply.
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.
In light of the unrest in the Middle East and North Africa (MENA) region in H111, as well as the oil supply effects of the Libyan civil war, we have raised our benchmark OPEC Basket price forecast from US$80 to US$101.9/bbl for 2011 and from US$85 to US$97.50/bbl for 2012. We expect Brent to average US$106/bbl in 2011 and US$101.50/bbl in 2012. We have kept our long-term (2014-20) price assumption of US$90/bbl (OPEC Basket) in place.
Iran now ranks seventh, ahead of Saudi Arabia and Kuwait, in BMI’s composite Business Environment Ratings (BERs) table, which combines upstream and downstream scores. It also holds seventh place in BMI’s updated upstream ratings, despite benefiting from the region’s biggest gas reserves base and a very healthy oil reserves position. Iran is now ranked fourth, between Saudi Arabia and Bahrain, in BMI’s updated downstream ratings, thanks to high scores for refining capacity, oil demand, gas consumption, retail site intensity and population.
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