Pakistan Oil and Gas Report Q2 2011
The latest Pakistan Oil & Gas Report from BMI forecasts that the country will account for 1.51% of Asia Pacific regional oil demand by 2015, while providing 0.73% of its supply. Regional oil use of 21.42mn barrels per day (b/d) in 2001 is expected to have reached an estimated 27.28mn b/d in 2010 and is forecast to rise to around 30.80mn b/d by 2015.
Regional oil production was around 8.35mn b/d in 2001, and is expected to have averaged 8.82mn b/d in 2010. It is set to increase slightly to 8.85mn b/d by 2015. Oil imports are growing rapidly, because demand growth is outstripping the pace of supply expansion. In 2001, the region was importing an average 13.07mn b/d. This total is expected to have risen to 18.46mn b/d in 2010 and is forecast to reach 21.96mn b/d by 2015. The principal importers will be China, Japan, India and South Korea. By 2015 the only net exporter will be Malaysia.
In terms of natural gas, the region is expected to have consumed 493bn cubic metres (bcm) in 2010, and demand of 647bcm is targeted for 2015. Production of an estimated 412bcm in 2010 should reach 548bcm in 2015, implying net imports rising from around 81bcm to 99bcm. This is thanks to many Asian gas producers being major exporters. Pakistan’s share of gas consumption in 2010 was an estimated 7.72%, while its share of production is put at 9.23%. By 2015, its share of gas consumption is forecast to be 6.92%, with the country accounting for 7.66% of supply.
Preliminary data suggest that the 2010 full year outturn was US$77.38 per barrel (bbl) for OPEC crude, which is expected to have delivered North Sea Brent and West Texas Intermediate (WTI) averages of around US$79.40/bbl. The BMI price target of US$77 was reached thanks to the early onset of particularly cold weather, which drove up demand for and the price of heating oil during the closing weeks of the year. The oil market is now in a bullish mood, despite the economic uncertainty facing the world in 2011.
Global GDP growth should exceed 3% in 2011, but is unlikely to match the level seen in 2010. Slower economic expansion in China and Japan is set to undermine a potentially unchanged rate of growth in the US and Eurozone. Oil prices seldom reflect underlying macroeconomic trends, but the case for surging energy demand and spiralling fuel costs is far from convincing. Ample oil inventories and increasing OPEC supply are likely to keep the price of crude in check – and we are sticking with our forecast of an average US$80/bbl for the OPEC basket.
BMI estimates that Pakistan’s real GDP growth rose by 4.4% in 2010, with an average annual increase of 3.1% forecast for 2010-2015. Several state-controlled oil and gas companies are in the throes of privatisation, and already work with international oil companies (IOCs) in the upstream segment. We foresee oil and gas liquids production of no more than 65,000b/d by 2015, with the country able to pump an estimated 80,000b/d in 2010/11. Consumption beyond 2010 is forecast to increase by around 2% per annum to 2015, implying demand of 464,000b/d by the end of the forecast period. The import requirement would therefore be approximately 399,000b/d by 2015. Gas demand is set to rise from an estimated 38bcm in 2010 to almost 45bcm by 2015, requiring imports of up to 3bcm.
Between 2010 and 2020, we forecast a decrease in Pakistani oil production of 37.0%, with crude volumes falling steadily to 46,000b/d in 2020. Oil consumption between 2010 and 2020 is set to increase by 21.7%, with growth slowing to an assumed 1.5% per annum during the period and the country using 509,000b/d by 2020. Gas production is expected to rise from an estimated 38bcm in 2010 to a possible 48bcm by 2020. With demand growth of 43.3%, this will require imports rising to above 6bcm by the end of the forecast period. Details of BMI’s 10-year forecasts, which provide regional and country-specific projections, can be found later in this report.
Pakistan is now ranked equal eighth with Japan and Indonesia in BMI’s composite Business Environment Ratings (BERs) table. It ranks seventh, above Indonesia and China, in the updated upstream ratings, reflecting a reasonable resource position, better-than-average growth outlook and falling state involvement. The country now sits three points behind the Philippines and is unlikely to make further progress over the medium term. Pakistan ranks equal ninth with Vietnam in BMI’s downstream ratings, reflecting its refinery capacity expansion plans, average oil and gas demand growth outlook and low level of retail site intensity.
Preliminary data suggest that the 2010 full year outturn was US$77.38 per barrel (bbl) for OPEC crude, which is expected to have delivered North Sea Brent and West Texas Intermediate (WTI) averages of around US$79.40/bbl. The BMI price target of US$77 was reached thanks to the early onset of particularly cold weather, which drove up demand for and the price of heating oil during the closing weeks of the year. The oil market is now in a bullish mood, despite the economic uncertainty facing the world in 2011.
Global GDP growth should exceed 3% in 2011, but is unlikely to match the level seen in 2010. Slower economic expansion in China and Japan is set to undermine a potentially unchanged rate of growth in the US and Eurozone. Oil prices seldom reflect underlying macroeconomic trends, but the case for surging energy demand and spiralling fuel costs is far from convincing. Ample oil inventories and increasing OPEC supply are likely to keep the price of crude in check – and we are sticking with our forecast of an average US$80/bbl for the OPEC basket.
BMI estimates that Pakistan’s real GDP growth rose by 4.4% in 2010, with an average annual increase of 3.1% forecast for 2010-2015. Several state-controlled oil and gas companies are in the throes of privatisation, and already work with international oil companies (IOCs) in the upstream segment. We foresee oil and gas liquids production of no more than 65,000b/d by 2015, with the country able to pump an estimated 80,000b/d in 2010/11. Consumption beyond 2010 is forecast to increase by around 2% per annum to 2015, implying demand of 464,000b/d by the end of the forecast period. The import requirement would therefore be approximately 399,000b/d by 2015. Gas demand is set to rise from an estimated 38bcm in 2010 to almost 45bcm by 2015, requiring imports of up to 3bcm.
Between 2010 and 2020, we forecast a decrease in Pakistani oil production of 37.0%, with crude volumes falling steadily to 46,000b/d in 2020. Oil consumption between 2010 and 2020 is set to increase by 21.7%, with growth slowing to an assumed 1.5% per annum during the period and the country using 509,000b/d by 2020. Gas production is expected to rise from an estimated 38bcm in 2010 to a possible 48bcm by 2020. With demand growth of 43.3%, this will require imports rising to above 6bcm by the end of the forecast period. Details of BMI’s 10-year forecasts, which provide regional and country-specific projections, can be found later in this report.
Pakistan is now ranked equal eighth with Japan and Indonesia in BMI’s composite Business Environment Ratings (BERs) table. It ranks seventh, above Indonesia and China, in the updated upstream ratings, reflecting a reasonable resource position, better-than-average growth outlook and falling state involvement. The country now sits three points behind the Philippines and is unlikely to make further progress over the medium term. Pakistan ranks equal ninth with Vietnam in BMI’s downstream ratings, reflecting its refinery capacity expansion plans, average oil and gas demand growth outlook and low level of retail site intensity.
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