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Home > Industrial Markets > Energy > Oil/Gas
Czech Republic Oil and Gas Report Q4 2009
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The latest Czech Republic Oil & Gas Report from BMI forecasts that the country will account for 3.95%of Central and Eastern European (CEE) regional oil demand by 2013, while making no materialcontribution to supply. CEE regional oil use of 4.65mn barrels per day (b/d) in 2001 rose to 5.41mn b/d in2008. It should average 5.15mn b/d in 2009 and then rise to around 5.63mn b/d by 2013. Regional oilproduction was 8.83mn b/d in 2001, and in 2008 averaged 12.91mn b/d. It is set to rise to 14.37mn b/d by2013. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion.
In 2001, the region was exporting an average 4.18mn b/d. This total had risen to 7.51mn b/d in 2008 andis forecast to reach 8.74mn b/d by 2013.
In terms of natural gas, the region in 2008 consumed 592.7bn cubic metres (bcm), with demand of663.4bcm targeted for 2013, representing 12.3% growth. Production of 754.6bcm in 2008 should reach906.1cm in 2013, which implies net exports rising from 161.9bcm in 2008 to 242.7bcm by the end of theperiod. The Czech Republic’s share of gas consumption in 2008 was 1.59%, with no meaningfulcontribution to regional supply. Its share of demand is forecast to be 1.63% by the end of the forecastperiod.
For 2009 as a whole, we are now assuming an average OPEC basket price of US$55.00 per barrel (bbl), a41.5% decline year-on-year (y-o-y). This represents an upgrade from the US$52 forecast we have stuckwith during the past three quarters. Our OPEC basket assumption delivers likely Brent, WTI, Urals andDubai prices of US$56.30, US$57.50, US$55.60 and US$55.60/bbl respectively. For 2010, we expect tosee a recovery to US$60.00/bbl for the OPEC price (up from our previous forecast of US$58), gainingfurther ground to US$65.00 in 2011 and to US$70.00/bbl in 2012. Our post-2010 forecasts are unchangedand we are continuing to use a long-term price assumption of US$70.00 for 2013-2018.
In 2009, BMI is now assuming a global average gasoline price of US$62.12/bbl, with the fuel havingpeaked in June. The overall y-o-y fall in 2009 gasoline prices is put at 40.0%. The BMI gasoil forecast isfor an average price of US$68.62/bbl, assuming a monthly high of US$92.49/bbl in December. The fullyearoutturn represents a 43.4% fall from the 2008 level. The annual jet price level for 2009 is forecast tobe US$65.17/bbl. This compares with US$124.95/bbl in 2008. The 2009 average naphtha price is put byBMI at US$49.06/bbl, down 43.9% from the previous year’s level.
Czech real GDP is forecast by BMI to fall by 3.1% in 2009, compared with 3.2% growth in 2008. We areassuming 1.1% growth in 2010, 3.2% in 2011, followed by 4.0% in 2012 and 3.6% in 2013. Assuming anaverage post-2009 rise in consumption of 1.5% per annum, below the CEE norm, oil demand will reach223,000b/d in 2013 - implying imports of at least 220,000b/d. In spite of a privatised oil industry, there isvery limited international oil company (IOC) involvement in the upstream segment to boost domesticsupply of oil or gas. BMI is assuming gas demand will rise by an annual 4.0% from 8.7bcm in 2008 toaround 10.8bcm by 2013.
Between 2008 and 2018, we are forecasting an increase in Czech oil consumption of 15.23%, with importvolumes rising steadily from 206,000b/d to 241,000b/d by the end of the 10-year forecast period. Gasconsumption is expected to rise from 8.7bcm to 12.9bcm by 2018, met by imports. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
The Czech Republic occupies 10th place in BMI’s updated Upstream Business Environment rating, justahead of Hungary. Its minimal oil and gas reserves and poor production outlook work against the country,but are offset somewhat by privatisation progress, the competitive/regulatory environment and reasonablecountry risk factors. The country is just in the lower half of the league table in BMI’s DownstreamBusiness Environment rating, with a few high scores but no reason to expect near-term progress furtherup the rankings. It takes seventh place ahead of Turkmenistan. Refining capacity is among the region’slowest, with low scores for likely capacity expansion and for oil and gas demand growth. Population andGDP per capita also work against the country. Kazakhstan is likely to move further out of reach above it.
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