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Home > Industrial Markets > Energy > Oil/Gas
Equatorial Guinea Oil and Gas Report Q4 2009
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The new Equatorial Guinea Oil & Gas Report from BMI forecasts that the country will account for just0.03% of African regional oil demand by 2013, while providing 3.55% of supply. African regional oil useof 2.98mn barrels per day (b/d) in 2001 rose to 3.60mn b/d in 2008. It should average 3.58mn b/d in 2009and then rise to around 3.96mn b/d by 2013. Regional oil production was 7.84mn b/d in 2001, and in2008 averaged 10.20mn b/d. It is set to rise to 11.98mn b/d by 2013. Oil exports are growing steadily,because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting anaverage 4.86mn b/d. This total had risen to 6.60mn b/d in 2008 and is forecast to reach 8.02mn b/d by2013. Angola has the greatest production growth potential, with Nigerian exports set to soar if it canresolve recent quasi-political issues.
In terms of natural gas, the region in 2008 consumed 115bn cubic metres (bcm), with demand of 181bcmtargeted for 2013. Production of 211bcm in 2008 should reach 354bcm in 2013, which implies net exportsrising from 96bcm in 2008 to 173bcm by the end of the period. Equatorial Guinea in 2008 consumed1.28% of the region’s gas, with its market share set to be 1.04% by 2013. It contributed 3.17% to 2008regional gas production and, by 2013, will account for 1.86% of supply.
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.
In 2009, GDP is now forecast by BMI to fall by 4.5%, following growth of 10.1% in 2008. The predicted2010 decline is 0.5%, followed by growth of 3.2% in 2011, 3.5% in 2012 and 3.7% in 2013. We expectoil demand to rise from an estimated 1,050b/d in 2008 to 1,340b/d in 2013. State oil companyGEPetrol’s primary focus is to manage the interest stakes of the government in various productionsharing contracts (PSCs) and joint ventures (JVs) with international oil companies (IOCs). Thanks to IOCinvestment, oil output is forecast to increase from 361,000b/d in 2008 to 425,000b/d in 2013, beforegoing into decline. Gas production should ease to 6.6bcm by 2013, down from 6.7bcm in 2008.
Consumption is expected to rise from 1.5bcm to 1.9bcm by the end of the forecast period, providingexports of 4.7bcm - in the form of LNG.
Between 2008 and 2018, we are forecasting an increase in Equatorial Guinea oil and gas liquidsproduction of 6.4%, with volumes peaking at 425,000b/d in 2013, before falling steadily to 384,000b/d bythe end of the 10-year forecast period. Oil consumption between 2008 and 2018 is set to increase by62.9%, with growth slowing to an assumed 5.0% per annum towards the end of the period and the countryusing 1,710b/d by 2018. Gas production is expected to rise to 7.1bcm by the end of the period. Withdemand rising by 62.9% between 2008 and 2018, there is scope for exports of around 4.7bcm. Details ofBMI’s 10-year forecasts can be found in the appendix to this report.
Equatorial Guinea now occupies 10th and last place in BMI’s updated Upstream Business Environmentrating, and is one point behind Sudan. It is in a reasonable position to move higher over the medium term.
The country’s score benefits from moderate oil and gas output growth prospects and attractive licensingterms. The country’s risk environment is somewhat shaky, but this is hardly uncommon in the Africanregion. The country is also at the bottom of the league table in BMI’s updated Downstream BusinessEnvironment rating, with no high scores and progress further up the rankings unlikely unless the energymarket grows rapidly or refineries are built. It is ranked 10th thanks to low scores for refining capacity,oil and gas demand, likely refining capacity expansion, nominal GDP and population. Gabon is fourpoints ahead of it in the regional rankings.
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