|
|
 |
|
Viewing report
|
|
|
|
Venezuela Oil and Gas Report Q4 2011
Business Monitor International, Oct 2011, Pages: 99
Business Monitor International's Venezuela Oil & Gas Report provides industry professionals and strategists, corporate analysts, government departments and regulatory bodies with independent forecasts and competitive intelligence on Venezuela's Oil & Gas industry.
This latest Venezuela Oil & Gas Report from BMI concludes that high oil prices will sustain investment in the country’s Orinoco Belt heavy oil projects, setting the stage for a decade of strong production growth despite a difficult operating environment.
BMI forecasts that after years of declining output, new heavy oil volumes in the OPEC country will see production rise from 2.34mn barrels per day (b/d) in 2010 to 3.1mn b/d in 2015. Over the same period, consumption is expected to rise modestly, from 746,000b/d to 784,000b/d, implying net production available for export will rise from 1.6mn b/d to 2.3mn b/d.
Closer political ties and a series of major oilfor- loans deals mean that an increasing amount of these exports will be diverted away from the US, which has traditionally been Venezuela’s primary export market, to China.
A high degree of uncertainty surrounds Venezuela’s gas sector. The government has set out ambitious export plans and exploration success has shown an ample resource base. Nevertheless, regulatory uncertainty and an apparent reluctance on the part of investors to commit to gas projects raises doubts over whether or not the government’s targets can be achieved.
BMI forecasts strong growth in the sector, with gas production rising from 22.9bcm in 2010 to 33bcm in 2015. Gas consumption, however, is also expected to rise rapidly, from 25.08bcm in 2010 to 30.96ncm.
The supply and demand trends imply that 2015 will be the first year in which the country has surplus volumes available for export, though even then it will only be a modest 2.04bcm. Regional variations in supply and demand may mean that the country exports LNG from gas projects off the east coast while continuing imports from Colombia into the west of the country.
Over the long term, we forecast that the country will continue to ramp up oil production for the Orinoco Belt and could become a major gas exporter. We forecast oil production rising rapidly over the second half of the decade, with output reaching a plateau of 4mn b/d between 2018 and 2020. Consumption is expected to hit 824,000b/d by 2020, implying net exports of over 3.1mn b/d at the end of the decade.
While we are sceptical that Venezuela will meet it short-term gas export goals, a strong resource base and rising investment should see export volumes rise sharply towards the end of the decade. Gas production is expected to nearly double between 2010 and 2020, when it is forecast to reach 44bcm. Demand growth is expected to lag production over the second half of the decade, with significant volumes available for export from 2019.
If development is accelerated at major gas finds in the east of the country and at the major Perla gas find, this timeline could be accelerated, though these projects have already seen delays and without a clear monetisation strategy in place we see further delays over the coming years.
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.
BMI's oil price assumption for 2011 is US$101.90/bbl for the OPEC basket, falling to US$97.50/bbl in 2012; US$106/bbl for Brent in 2011 falling to US$97.62/bbl in 2012; and US$95.30/bbl in 2011 rising to US$97.39/bbl in 2012. Prices at these levels should be sufficient to support Venezuela’s investmentintensive heavy oil projects in spite of a difficult operating environment and unfavourable fiscal regime.
State-owned Petróleos de Venezuela (PdVSA) works in cooperation with numerous international oil company (IOC) partners in conventional and heavy oil projects.
Although recent renationalisation moves, changes in taxation and alterations to the licensing system have reduced foreign involvement, several key players appear committed to the country’s heavy oil schemes and fellow national oil companies (NOCs) from China, Russia and other countries will play an increasingly important role in Venezuela’s oil and gas sector.
In spite of a strong production growth outlook and the region’s largest resource base, the challenges outlined above mean that Venezuela performs relatively poorly in BMI’s composite Business Environment Ratings (BERs), which combines upstream and downstream scores. With a score of 44.4, Venezuela sits in sixth position, just ahead of Mexico. This reflects the country’s fifth place in BMI's updated upstream ratings, behind T&T, and ninth place position in BMI'sdownstream ratings.
In the upstream sector, strong resource potential and production growth is offset by strong state control of the sector, the threat of nationalisation, and a fiscal regime that in some areas verges on punitive, such as, for instance, the institution of a 95% windfall tax on revenue from oil prices higher than US$100/bbl.
Product samples
A sample for this product is available. Please Login/Register to download this sample.
|
|
|
|
