Thursday, March 3, 2011

Greece Oil and Gas Report Q1 2011


Greece Oil and Gas Report Q1 2011

The latest Greece Oil & Gas Report from BMI forecasts that the country will account for 3.43% of Developed European regional oil demand by 2015, while making no appreciable contribution to supply. In Developed Europe, overall oil consumption was an estimated 13.02mn barrels per day (b/d) in 2010. It is set to recover to around 13.24mn b/d by 2015. Developed Europe regional oil production was 6.96mn b/d in 2001, and in 2010 averaged an estimated 4.44mn b/d. It is set to fall to just 3.50mn b/d by 2015. Oil imports are growing steadily because supply is contracting and demand is rising, albeit slowly. In 2010, net crude imports were an estimated 8.58mn b/d. By 2015, they are expected to have reached 9.73mn b/d. Norway will remain the only major net exporter, with the UK a net importer.
As regards natural gas, the Developed Europe region in 2010 consumed an estimated 419.5bn cubic metres (bcm), with demand of 470.7bcm targeted for 2015, representing 12.2% growth. Production of an estimated 259.3bcm in 2010 is set to fall to 253.0bcm in 2015, which implies net imports rising from the estimated 2010 level of 160.2bcm to some 217.7bcm by the end of the period. The Greek share of gas consumption in 2010 was an estimated 0.86%, while the country makes no meaningful contribution to production. By 2015, its share of gas consumption is forecast to be 1.11%.
For 2010 as a whole, we assume an average OPEC basket price of US$77.00 per barrel (bbl), +26.5% year-on-year (y-o-y). The 2010 US WTI price is now put at US$79.16/bbl. BMI is assuming an OPEC basket price of US$80.00/bbl in 2011, with WTI averaging US$82.25, Brent at US$82.46/bbl, Urals delivering around US$81.21 and the Dubai average being US$80.74/bbl. Our central assumption for 2012 is an OPEC price averaging US$85.00/bbl, delivering WTI at approximately US$87.40 and Brent at US$87.60/bbl. From 2013 onwards, we are using an average OPEC price of US$90.00/bbl.
For the whole of 2010, the BMI assumption for the global gasoline price is an average US$87.49/bbl, representing a y-o-y rise of 24.7%. The global gasoil estimate is for an average price of US$88.00/bbl, probably peaking in December 2010 at more than US$95/bbl. The full-year outturn represents a 27.6% increase from the 2009 level. For 2010, the annual jet price level is estimated to be US$89.50/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$77.65/bbl, up almost 31% from the previous year’s level.
Greek real GDP is assumed by BMI to have declined by 4.0% in 2010. We are forecasting a 0.2% average annual GDP contraction in 2010-2015. While there is still some limited scope for medium- to long-term growth in domestic oil production, there is considerable uncertainty over the scale and the timing of new field development. Meanwhile, the country’s oil consumption is expected to reach 453,000b/d in 2015. By 2015, our estimates suggest gas consumption of at least 5.2bcm, all of which will be imported.
Between 2010 and 2020, we are forecasting an increase in Greek oil and gas liquids consumption of 16.9%, with volumes rising steadily from an estimated 418,000b/d in 2010 to 488,000b/d at the end of the 10-year forecast period. Overall crude oil and gas liquids production is set to rise to a potential peak of 7,000b/d in 2012-2014, before easing to 5,000b/d by 2020. Gas demand should rise from the estimated 2010 level of 3.6bcm to 6.6bcm by 2020, relying on pipeline and LNG imports. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
According to BMI’s country risk team, Greece’s long-term political risk score is 77.5, compared with the Developed Markets average of 86.8 and the global average of 63.0. Our long-term economic rating for the country is 57.5, below the Developed Markets average of 66.6 and above the global average of 52.8. Greece has a partly privatised energy sector operating under EU guidelines. There is a small upstream oil and gas segment, featuring domestic companies and foreign exploration companies. Downstream oil is dominated by partly state-owned Hellenic Petroleum (HP). International oil companies (IOCs) have largely sold their operations. The gas and power sectors are still heavily state-influenced.
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