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Home > Industrial Markets > Energy > Oil/Gas
Hungary Oil and Gas Report Q4 2009
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The latest Hungary Oil & Gas Report from BMI forecasts that the country will account for 3.05% ofCentral and Eastern European (CEE) regional oil demand by 2013, while providing just 0.13% of supply.
CEE regional oil use of 4.65mn barrels per day (b/d) in 2001 rose to 5.41mn b/d in 2008. It shouldaverage 5.15mn b/d in 2009 and then rise to 5.63mn b/d by 2013. Regional oil production was 8.83mn b/din 2001, and in 2008 averaged 12.91mn b/d. It is set to rise to 14.37mn b/d by 2013. Oil exports aregrowing steadily because demand growth is lagging the pace of supply expansion. In 2001, the regionwas exporting an average of 4.18mn b/d. This total rose to 7.51mn b/d in 2008 and is forecast to reach8.74mn b/d by 2013.
In terms of natural gas, CEE consumed 592.7bn cubic metres (bcm) in 2008, with demand of 663.4bcmtargeted for 2013, representing 12.3% growth. Production of 754.6bcm in 2008 should reach 906.1cm in2013, which implies net exports rising from 161.9bcm in 2008 to 242.7bcm by the end of the period.
Hungary’s share of consumption in 2008 was 1.95%, which is forecast to rise to 2.03% by 2013. Itscontribution to gas production is not significant, with no improvement expected over the forecast period.
For 2009 as a whole, we forecast an average OPEC basket price of US$55.00 per barrel (bbl), a 41.5%decline year-on-year (y-o-y). This is an upgrade from the US$52 forecast we have stuck with during thepast three quarters. Our OPEC basket assumption delivers likely Brent, WTI, Urals and Dubai prices ofUS$56.30/bbl, US$57.50/bbl, US$55.60/bbl and US$55.60/bbl respectively. For 2010, we expect to see arecovery to US$60.00/bbl for the OPEC price (up from our previous forecast of US$58), gaining furtherground to US$65.00 in 2011 and US$70.00/bbl in 2012. Our post-2010 forecasts are unchanged and wecontinue to use the long-term price assumption of US$70.00 for 2013-2018.
In 2009, BMI assumes a global average gasoline price of US$62.12/bbl, with the fuel having peaked inJune. The overall y-o-y fall in 2009 gasoline prices is put at 40.0%. The BMI gasoil forecast is for anaverage price of US$68.62/bbl, assuming a monthly high of US$92.49/bbl in December. The full-yearoutturn is a 43.4% fall from the 2008 level. The annual jet price level for 2009 is forecast to beUS$65.17/bbl. This compares with US$124.95/bbl in 2008. The 2009 average naphtha price is put atUS$49.06/bbl by BMI, down by 43.9% from the previous year’s level.
Hungarian real GDP is estimated by BMI to contract by 6.4% in 2009, following 0.5% growth in 2008.We forecast 0.1% growth in 2010 and 2.6% in 2011, followed by 3.1% in 2012 and 3.9% in 2013.
Hungarian oil consumption fell from 198,000b/d in 1990 to a low of 138,000b/d in 2003. It has sincerecovered slowly, reaching 169,000b/d in 2008. We are expecting a gradual ongoing recovery, held backby the near-term economic outlook, with consumption reaching no more than 172,000b/d by 2013.
Domestic production, largely in the hands of former state company MOL, is not expected to recover fromthis decline, with steady slippage leading to higher import volumes, reaching 154,000b/d by 2013. Gasdemand is forecast to increase from 12.0bcm in 2008 to around 13.5bcm in 2013 - implying that net gasimports will reach 11.5bcm by the end of the forecast period.
Between 2008 and 2018, we forecast an increase in Hungarian oil consumption of 14.8%, with importvolumes rising steadily from 169,000b/d to 185,000b/d by the end of the 10-year forecast period. Gasconsumption is expected to rise from 9.0bcm to 14.1bcm by 2018, met largely by imports. Details ofBMI’s 10-year forecasts can be found in the appendix to this report.
Hungary occupies 11th place in BMI’s updated Upstream Business Environment ratings, ahead of Croatiaand Turkmenistan. Its minimal oil and gas reserves and poor production outlook work against the country,but are offset by privatisation progress, the competitive/regulatory environment and reasonable countryrisk factors. There is a slight chance of Hungary challenging the Czech Republic, just one point above it,but Turkmenistan is capable of catching Hungary and then pulling away. Hungary is below the mid-pointof the league table in BMI’s Downstream Business Environment ratings, with a few high scores but noreason to expect near-term progress further up the ratings. It is in ninth place, behind Turkmenistan.
Refining capacity is among the region’s lowest, with low scores for likely capacity expansion and oil andgas demand growth. Population and GDP per capita also work against Hungary. The presence of Bulgariabelow it could pose a long-term threat.
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