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Chile Oil and Gas Report Q3 2011

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Table of Contents

Management Report
Published: July 2011
Pages: 87
Tables: For full details, please email keithw@cmsinfo.com
From: GBP 330.00  Buy Now!
Research from: Business Monitor International
Sector: Oil & Gas

The Chile Oil and Gas Report has been researched at source and features Business Monitor International (BMI)'s independent forecasts to end-2015 for Chile including major indicators for oil, gas and LNG, covering all major indicators including reserves, production, consumption, refining capacity, prices, export volumes and values. The report includes full analysis of industry trends and prospects, multinational and national companies, and changes in the regulatory environment.

BMI's Chile Oil and Gas Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and competitive intelligence on the Chilean oil and gas industry.

This latest Chile Oil & Gas Report from BMI forecasts that the country will account for 3.85% of Latin American regional oil demand by 2015, while making no meaningful contribution to supply. Latin American regional use averaged an estimated 8.41mn barrels per day (b/d) in 2010. It should rise to 8.63mn b/d in 2011 and reach 9.30mn b/d by 2015. Regional oil production in 2010 averaged an estimated 9.92mn b/d. It is set to rise to 12.47mn b/d by 2015. Oil exports have been slipping, because demand growth has exceeded the pace of supply expansion. In 2001, the region was exporting an average of 3.24mn b/d. This total fell to an estimated 1.52mn b/d in 2010 and is forecast to rebound to 3.05mn b/d in 2015. The principal exporters will be Mexico, Venezuela, Colombia and Brazil.

In terms of natural gas, the region in 2010 consumed an estimated 189.5bn cubic metres (bcm), with demand of 230.8bcm targeted for 2015. Production of an estimated 203bcm in 2010 should reach 254bcm in 2015, and implies more than 20bcm of net exports at the end of the period. Chile’s estimated share of gas consumption in 2010 was 1.8%, while it has around 0.89% of production. By 2015, its share of gas consumption is forecast to be 3.2%, with Chile making a contribution of just 0.51% to production.

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/barrel (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.

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 slump to 0.7% as a result of the devastating earthquake and tsunami in March 2011. BMI has assumed a rise of 5.2% in Chile’s 2010 real GDP, with an average annual increase of 4.2% forecast through to 2015.

State oil and gas company Empresa Nacional del Petróleo (ENAP) is responsible for all domestic oil and gas production, with volumes in decline. We are assuming oil and gas liquids production of no more than 5,700b/d by 2015, with the country expected to pump an average of 8,660b/d in 2011. Consumption beyond 2009 is forecast to increase by up to 2% per annum to 2015, implying demand of 358,000b/d by the end of the forecast period. The import requirement would therefore be around 352,000b/d by 2015. Gas production is forecast to decrease from an estimated 1.8bcm peak in 2010 to 1.3bcm in 2015, with net imports of 6.2bcm required by 2015.

Between 2010 and 2020, we are forecasting an increase in Chilean oil consumption of 13.43%, with demand rising steadily from an estimated 335,000b/d to 380,000b/d. The annual growth rate is expected to slow to 1% towards the end of the period. Gas production is expected to have peaked at around 1.8bcm in 2010, before declining steadily to 1.0bcm by 2020. With demand growth of 170% to 9.7bcm, the import requirement will also rise during the 10-year period, from an estimated 1.8bcm to 8.7bcm. Details of BMI’s 10-year forecasts can be found in the appendix to this report.

Chile holds last place in BMI’s composite Business Environment ratings (BERs), which combine upstream and downstream scores. It is also ranked last, alongside Mexico, in BMI’s updated upstream BERs, despite an investor-friendly country risk profile. There is little likelihood of a move much further up the ratings, but Chile may be able to overtake Mexico during the next few quarters. Chile fares a little better in BMI’s downstream BERs, taking seventh place, above Ecuador, reflecting its weak oil demand growth outlook, regulatory environment and attractive country risk rating. It should be able to keep Ecuador at bay during coming quarters.

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