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Home > Industrial Markets > Energy > Oil/Gas
Venezuela Oil and Gas Report Q4 2008
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The latest Venezuela Oil & Gas Report forecasts that the country will account for 8.40% of LatinAmerica regional oil demand by 2012, while providing 26.15% of supply. Latin America regional oil useof 6.66mn barrels per day (b/d) in 2001 reached 7.47mn b/d in 2007. It should average 7.59mn b/d in2008 and then rise to around 8.23mn b/d by 2012. In terms of natural gas, the region in 2007 consumed183bn cubic metres (bcm), with demand of 254bcm targeted for 2012, representing 39% growth.
Production of 196bcm in 2007 should reach 279bcm in 2012, and implies 25bcm of net exports by theend of the period. Venezuela contributed 15.52% to 2007 regional gas consumption, while producing14.48%. By 2012, it is expected to consume 20.33% of the region’s gas, while contributing 20.08% tosupply.
In Q208, we estimate that the OPEC basket price averaged just under US$115 per barrel (bbl) - uparound 24% from the Q108 level. The OPEC basket price had exceeded US$127/bbl on the 22nd of May,slipping back towards US$121/bbl later in the month. In June, we assumed an average of aroundUS$120/bbl, to deliver our quarterly estimate of US$114.98/bbl. The estimated Q208 average prices forthe main marker blends are now US$118.63/bbl for Brent, US$119.61/bbl for WTI and US$115.89/bblfor Russian Urals (Mediterranean delivery). Our projections for 2008 as a whole have been revisedupwards from the last quarterly report. We are now assuming an OPEC basket price average ofUS$106/bbl for 2008, compared with the US$81/bbl estimate provided by our last quarterly report. Basedon recent price differentials, this implies Brent at US$109.71/bbl, WTI averaging US$110.64/bbl, andUrals at US$106.88/bbl.
Real GDP growth is forecast at 5.8% for 2008, down from 8.4% in 2007. We are assuming 3.0% growthin 2009, 3.2% in 2010, followed by, 3.3% in 2011 and 3.5% in 2012. State-owned Petróleos deVenezuela (PdVSA) works in co-operation with numerous international oil company (IOC) partners inconventional and heavy oil projects. While recent re-nationalisation moves, changes in taxation andalterations to the licensing system have reduced foreign involvement, several key players appearcommitted to the country. We are assuming oil and gas liquids production of 2.93mn b/d by 2012, withthe country expected to pump 2.75mn b/d in 2008. Consumption is forecast to increase by around 3% perannum to 2012, implying demand of 691,000b/d by this point. The export capability would thus be about2.24mn b/d by 2012. Gas production is forecast to rise from 28.5bcm in 2007 to 56.0bcm over the period,allowing 4bcm of exports by 2012.
Between 2007 and 2018, we are forecasting an increase in Venezuelan oil production of 28.2%, withliquids volumes rising steadily from 2.61mn b/d to 3.35mn b/d. Oil consumption between 2007 and 2018is set to increase by 38.4%, with growth slowing to an assumed 3.0% per annum towards the end of theperiod and the country using 825,000b/d by 2018. Gas production is expected to rise steadily, fromaround 28bcm in 2007 to 78bcm in 2018. With demand growth of 145%, this implies export potentialrising to more than 8bcm by 2018. Details of the new BMI 10-year forecasts can be found in theAppendix of this report, which provides global, regional and country-specific projections.
Venezuela now ranks second in BMI’s newly revised Upstream Business Environment rating, havingovertaken Peru thanks to its vast hydrocarbons resource base. It lags just one point behind Brazil, but isunlikely to take the regional lead unless the overall risk situation was to improve dramatically. Peru isonly two points behind. As well as high scores for reserves, production growth potential and reserves-toproductionratios (RPR), Venezuela benefits from the substantial (but decreasing) number of internationalcompanies active within its upstream industry. The country now ranks eighth in BMI’s updatedDownstream Business Environment rating, reflecting its refining capacity, retail site intensity and growthin GDP per capita. Mexico, above, is within reach, but Ecuador - some five points behind - is in noposition to challenge for eighth place.
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