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Argentina Oil and Gas Report Q3 2010
Management Report
Published: June 2010
Pages: 100
Tables: For full details, please email keithw@cmsinfo.com
From: GBP 353.33 Buy Now!
Research from: Business Monitor International
Sector: Oil & Gas
The latest Argentina Oil & Gas Report from BMI forecasts that the country will account for 6.17% of Latin America regional oil demand by 2014, while providing 6.58% of supply. Latin America regional oil use of 6.93mn barrels per day (b/d) in 2001 reached an estimated 7.92mn b/d in 2009. It should average 8.04mn b/d in 2010 and then rise to around 8.69mn b/d by 2014. Regional oil production was 10.30mn b/d in 2001, and in 2009 averaged an estimated 9.63mn b/d. It is set to rise to 10.65mn b/d by 2014. Oil exports have been slipping, because demand growth has exceeded the pace of supply expansion. In 2001, the region was exporting an average of 3.37mn b/d. This fell to an estimated 1.71mn b/d in 2009 and is forecast to recover to 1.96mn b/d in 2014. The principal exporters will be Mexico, Venezuela, Ecuador and Brazil.
The latest Argentina Oil & Gas Report from BMI forecasts that the country will account for 6.17% of Latin America regional oil demand by 2014, while providing 6.58% of supply. Latin America regional oil use of 6.93mn barrels per day (b/d) in 2001 reached an estimated 7.92mn b/d in 2009. It should average 8.04mn b/d in 2010 and then rise to around 8.69mn b/d by 2014. Regional oil production was 10.30mn b/d in 2001, and in 2009 averaged an estimated 9.63mn b/d. It is set to rise to 10.65mn b/d by 2014. Oil exports have been slipping, because demand growth has exceeded the pace of supply expansion. In 2001, the region was exporting an average of 3.37mn b/d. This fell to an estimated 1.71mn b/d in 2009 and is forecast to recover to 1.96mn b/d in 2014. The principal exporters will be Mexico, Venezuela, Ecuador and Brazil.
In terms of natural gas, the region in 2009 consumed an estimated 202.1bn cubic metres (bcm), with demand of 254.6bcm targeted for 2014. Production of an estimated 216.8bcm in 2009 should reach 272.8bcm in 2014, which implies 18.2bcm of net exports at the end of the period. Argentina’s share of gas consumption in 2009 was an estimated 22.27%, while its share of production was 20.52%. By 2014, its share of gas consumption is forecast to be 19.83%, with the country accounting for 16.72% of supply. We are sticking with our forecast that the OPEC basket of crudes will average US$83.00/bbl in 2010. Wide variations in crude differentials so far in 2010 make forecasting tricky for Brent, West Texas Intermediate (WTI) and Urals, but we believe the three benchmarks will average around US$85.11, US$88.22 and US$83.62/bbl respectively, with Dubai coming in at US$83.14. By 2011, there should be further growth in oil consumption and more room for OPEC to regain market share and reduce surplus capacity through higher production quotas. We are assuming a further increase in the OPEC basket price to an average of US$85.00/bbl. For 2012 and beyond, we continue to use a central case forecast of US$90.00/bbl for the OPEC basket.
For 2010, the BMI assumption for premium unleaded gasoline is an average global price of US$96.83/bbl. The year-on-year (y-o-y) rise in 2010 gasoline prices is estimated at 38%. Gasoil in 2010 is expected to average US$92.45/bbl, with the full-year outturn representing a 37% increase from the 2009 level. For jet fuel in 2010, the annual level is forecast to be US$95.58/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$82.46/bbl, up 39% from the previous year’s level.
Argentina’s real GDP is assumed by BMI to have fallen by 0.3% in 2009, followed by forecast growth of 1.5% in 2010. We are assuming average annual growth of 2.0% in 2010-2014. State entity Enarsa acts as partner to international oil companies (IOCs) in supporting output growth efforts, operating alongside regional heavyweight Repsol YPF and others. We are assuming oil production of no more than 701,000b/d by 2014, with the country expected to pump 645,000b/d in 2010. Beyond the predicted 2009/2010 dip, consumption is forecast to increase by around 1.5% per annum to 2014, implying demand of 536,000b/d by the end of the forecast period. The crude oil export capability would therefore be approximately 165,000b/d by 2014. Gas production is forecast to increase from an estimated 44.5bcm in 2009 to a high of 48.0bcm during the period, resulting in the need for 4.9bcm of net imports by 2014.
Between 2010 and 2019, we are forecasting a decrease in Argentine oil production of 1.03%, with crude volumes peaking in 2013 at 715,000b/d, before falling steadily to 633,000b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2019 is set to increase by 13.21%, with growth slowing to an assumed 1% per annum towards the end of the period and the country using 555,000 b/d by 2019. Gas production is expected to rise gradually, from an estimated 44.5bcm in 2009 to a peak of 48.0bcm in 2012/2013, before slipping back to 35.3bcm by 2019. With demand growth of 21.18%, this provides a need for net imports to rise to 20.5bcm by 2019. Details of BMI’s 10-year forecasts can be found at the end of this report.
Argentina shares third place with Peru and Venezuela in BMI’s composite Business Environment (BE) rating, which combines upstream and downstream scores. The country has a share of fifth place in our updated upstream Business Environment ratings, alongside Trinidad & Tobago. 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. Limited scope exists for Argentina to pull away from Trinidad, but it should be safe from Bolivia some 10 points below. Argentina is well up the league table in BMI’s downstream Business Environment 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 now shares second place with Colombia in the regional rankings.
In terms of natural gas, the region in 2009 consumed an estimated 202.1bn cubic metres (bcm), with demand of 254.6bcm targeted for 2014. Production of an estimated 216.8bcm in 2009 should reach 272.8bcm in 2014, which implies 18.2bcm of net exports at the end of the period. Argentina’s share of gas consumption in 2009 was an estimated 22.27%, while its share of production was 20.52%. By 2014, its share of gas consumption is forecast to be 19.83%, with the country accounting for 16.72% of supply. We are sticking with our forecast that the OPEC basket of crudes will average US$83.00/bbl in 2010. Wide variations in crude differentials so far in 2010 make forecasting tricky for Brent, West Texas Intermediate (WTI) and Urals, but we believe the three benchmarks will average around US$85.11, US$88.22 and US$83.62/bbl respectively, with Dubai coming in at US$83.14. By 2011, there should be further growth in oil consumption and more room for OPEC to regain market share and reduce surplus capacity through higher production quotas. We are assuming a further increase in the OPEC basket price to an average of US$85.00/bbl. For 2012 and beyond, we continue to use a central case forecast of US$90.00/bbl for the OPEC basket.
For 2010, the BMI assumption for premium unleaded gasoline is an average global price of US$96.83/bbl. The year-on-year (y-o-y) rise in 2010 gasoline prices is estimated at 38%. Gasoil in 2010 is expected to average US$92.45/bbl, with the full-year outturn representing a 37% increase from the 2009 level. For jet fuel in 2010, the annual level is forecast to be US$95.58/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$82.46/bbl, up 39% from the previous year’s level.
Argentina’s real GDP is assumed by BMI to have fallen by 0.3% in 2009, followed by forecast growth of 1.5% in 2010. We are assuming average annual growth of 2.0% in 2010-2014. State entity Enarsa acts as partner to international oil companies (IOCs) in supporting output growth efforts, operating alongside regional heavyweight Repsol YPF and others. We are assuming oil production of no more than 701,000b/d by 2014, with the country expected to pump 645,000b/d in 2010. Beyond the predicted 2009/2010 dip, consumption is forecast to increase by around 1.5% per annum to 2014, implying demand of 536,000b/d by the end of the forecast period. The crude oil export capability would therefore be approximately 165,000b/d by 2014. Gas production is forecast to increase from an estimated 44.5bcm in 2009 to a high of 48.0bcm during the period, resulting in the need for 4.9bcm of net imports by 2014.
Between 2010 and 2019, we are forecasting a decrease in Argentine oil production of 1.03%, with crude volumes peaking in 2013 at 715,000b/d, before falling steadily to 633,000b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2019 is set to increase by 13.21%, with growth slowing to an assumed 1% per annum towards the end of the period and the country using 555,000 b/d by 2019. Gas production is expected to rise gradually, from an estimated 44.5bcm in 2009 to a peak of 48.0bcm in 2012/2013, before slipping back to 35.3bcm by 2019. With demand growth of 21.18%, this provides a need for net imports to rise to 20.5bcm by 2019. Details of BMI’s 10-year forecasts can be found at the end of this report.
Argentina shares third place with Peru and Venezuela in BMI’s composite Business Environment (BE) rating, which combines upstream and downstream scores. The country has a share of fifth place in our updated upstream Business Environment ratings, alongside Trinidad & Tobago. 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. Limited scope exists for Argentina to pull away from Trinidad, but it should be safe from Bolivia some 10 points below. Argentina is well up the league table in BMI’s downstream Business Environment 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 now shares second place with Colombia in the regional rankings.