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Argentina Oil and Gas Report Q4 2011
Business Monitor International, Oct 2011, Pages: 95
The latest Argentina Oil & Gas Report from BMI highlights the challenges facing the country’s energy sector.
BMI forecasts that oil production will fall from 748,650 barrels per day (b/d) in 2010 to 714,050b/d in 2015, while oil consumption is expected grow quickly on the back of strong economic growth to just over 716,000b/d in 2015. The oil supply and demand trends mean that Argentina will go from being a net exporter of about 130,650b/d of oil in 2010 to a small net importer by 2015.
The country’s gas sector faces similar challenges. Gas production is forecast to be roughly flat, falling just slightly from 41.36bcm to38bcm in 2015. Gas consumption, meanwhile, is expected to grow rapidly from 43.46bcm in 2010 to nearly 52bcm by 2015, requiring imports to quadruple from 3.38bcm in 2010 to 13.86bcm in 2015.
The long-term trends do not look any more favourable as Argentina’s oil and gas import dependence is forecast to grow over the latter half of the decade, with oil output falling steadily to 645,450b/d by 2020. While production is expected to continue its decline, oil consumption is forecast to continue rising to 756,630b/d in 2020, implying an import requirement of just over 111,000b/d in 2020.
Gas import requirements are also expected to increase in the latter half of the decade. Gas production is expected to rise slightly, hitting a high of 41bcm in 2019 before falling back to 40bcm in 2020, but will not keep up with consumption. With demand set to rise to around 63bcm by 2020, 45% higher than 2010, net imports are expected to rise to almost 23bcm by 2020. Details of BMI’s 10-year forecasts can be found at the end of this report.
Argentina’s size means that it will continue to be an important player in the region. The country is forecast to account for 6.92% of Latin America regional oil demand by 2015, while providing 5.73% of supply. Argentina’s share of Latin America regional gas consumption in 2010 was an estimated 23.45%, while its share of production is put at 21.2%. By 2015, its share of gas consumption is forecast to be 23.42%, with the country accounting for 19.69% 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/bbl for the OPEC basket, falling to US$97.50/bbl in 2012.
Argentina now takes fourth place, above Chile and Mexico, in BMI’s composite Business Environment Ratings (BERs), which combine upstream and downstream scores. This reflects the country’s fourth place in our updated upstream ratings, behind Brazil (T&T). Its gas resources, largely privatised oil sector, licensing regime and competitive landscape work in the country’s favour, but are undermined by an absence of growth potential, asset maturity and unappealing risk environment. Medium-term scope exists for Argentina to overtake Trinidad, and it should be safe from Venezuela some seven points below.
Argentina is well up the league table in BMI’s downstream ratings, reflecting its privatised refining and marketing segment, substantial capacity and competitive environment, offset by only moderate growth potential and a relatively high level of retail site intensity. It holds third place, behind Chile, in the regional rankings.
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