Israel Oil and Gas Report Q1 2011
The latest Israel Oil & Gas Report from BMI forecasts that the country will account for 3.14% of Middle East (ME) regional oil demand by 2015, while making no appreciable contribution to rising oil supply. Middle East regional oil use of 4.98mn barrels per day (b/d) in 2001 will rise to an estimated 7.40mn b/d in 2010. It should average 7.70mn b/d in 2011 and then rise to around 8.70mn b/d by 2015. Regional oil production was 22.83mn b/d in 2001 and will average an estimated 24.96mn b/d in 2010. After an estimated 25.22mn b/d in 2011, it is set to rise to 27.24mn b/d by 2015. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average of 17.85mn b/d. This total eases to an estimated 17.55mn b/d in 2010 and is forecast to reach 18.54mn b/d by 2015. Iraq has the greatest export growth potential, followed by Qatar.
In terms of natural gas, the region will consume an estimated 391bn cubic metres (bcm) in 2010, with demand of 483bcm targeted for 2015, representing 23.7% growth. Production of an estimated 467bcm in 2010 should reach 614bcm in 2015 (+31.4%), which implies net exports rising to 130bcm by the end of the period. Israel, in 2010, will consume an estimated 0.69% of the region’s gas, with its market share forecast at 1.45% by 2015. It will contribute 0.21% to estimated 2010 regional gas production and, by 2015, will account for 1.14% of supply.
For 2010 as a whole, we assume an average OPEC basket price of US$77.00/bbl (+26.5% y-o-y). The 2010 US WTI price is now put at US$9.16/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, a yo- y rise of 24.7%. The global gasoil forecast 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 forecast to be US$89.500/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.
Israel’s real GDP is assumed by BMI to rise by 3.4% in 2010, with forecast average annual growth of 2.9% in 2010-2015. We expect oil demand to rise from an estimated 254,000b/d in 2010 to 273,000b/d in 2015, although the state would like to minimise dependency on imports and exploit fully the country’s growing gas resources. A lack of serious upstream oil prospects and limited international oil company (IOC) participation mean Israel is likely to continue importing virtually all the oil needed to supply its domestic refineries. Israeli gas production has risen following the start-up of the Tethys Sea project, with up to 1bcm of current supply available. Gas imports could be as high as 2bcm per annum by 2011, before easing as domestic volumes rise.
Between 2010 and 2020, we are forecasting an increase in Israeli oil consumption of 16.1%, with demand rising steadily from an estimated 254,000b/d to 294,000b/d by the end of the 10-year forecast period. Refining capacity between 2010 and 2020 is set to increase by 59.1%, reaching 350,000b/d by 2020. Gas production is expected to climb from an estimated 1bcm to a potential 10bcm. With 2010-2020 demand growth of 270%, this provides an import requirement peaking to 2bcm in 2011, before being replaced by rising domestic supply. Details of the BMI 10-year forecasts can be found in the appendix to this report. Israel now shares first place with Qatar and the UAE in BMI’s composite Business Environment (BE) ratings, which combine upstream and downstream scores. The country holds fourth place in BMI’s updated upstream Business Environment ratings, in spite of the state’s limited upstream potential. Bahrain below has the medium-term potential to challenge for fourth place. Israel’s score benefits from the lack of state involvement in the upstream segment, the licensing terms and privatisation progress, plus a healthy country risk outlook. The overall score is dragged down by limited oil resources and growth prospects.
Israel currently tops the league table in BMI’s updated downstream Business Environment rating, with a few high scores but limited potential to retain regional leadership over the longer term. It is seven points ahead of Iran, thanks largely to excellent country risk factors that outweigh a modest showing in terms of oil/gas demand, oil demand growth and likely refining capacity expansion."
In terms of natural gas, the region will consume an estimated 391bn cubic metres (bcm) in 2010, with demand of 483bcm targeted for 2015, representing 23.7% growth. Production of an estimated 467bcm in 2010 should reach 614bcm in 2015 (+31.4%), which implies net exports rising to 130bcm by the end of the period. Israel, in 2010, will consume an estimated 0.69% of the region’s gas, with its market share forecast at 1.45% by 2015. It will contribute 0.21% to estimated 2010 regional gas production and, by 2015, will account for 1.14% of supply.
For 2010 as a whole, we assume an average OPEC basket price of US$77.00/bbl (+26.5% y-o-y). The 2010 US WTI price is now put at US$9.16/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, a yo- y rise of 24.7%. The global gasoil forecast 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 forecast to be US$89.500/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.
Israel’s real GDP is assumed by BMI to rise by 3.4% in 2010, with forecast average annual growth of 2.9% in 2010-2015. We expect oil demand to rise from an estimated 254,000b/d in 2010 to 273,000b/d in 2015, although the state would like to minimise dependency on imports and exploit fully the country’s growing gas resources. A lack of serious upstream oil prospects and limited international oil company (IOC) participation mean Israel is likely to continue importing virtually all the oil needed to supply its domestic refineries. Israeli gas production has risen following the start-up of the Tethys Sea project, with up to 1bcm of current supply available. Gas imports could be as high as 2bcm per annum by 2011, before easing as domestic volumes rise.
Between 2010 and 2020, we are forecasting an increase in Israeli oil consumption of 16.1%, with demand rising steadily from an estimated 254,000b/d to 294,000b/d by the end of the 10-year forecast period. Refining capacity between 2010 and 2020 is set to increase by 59.1%, reaching 350,000b/d by 2020. Gas production is expected to climb from an estimated 1bcm to a potential 10bcm. With 2010-2020 demand growth of 270%, this provides an import requirement peaking to 2bcm in 2011, before being replaced by rising domestic supply. Details of the BMI 10-year forecasts can be found in the appendix to this report. Israel now shares first place with Qatar and the UAE in BMI’s composite Business Environment (BE) ratings, which combine upstream and downstream scores. The country holds fourth place in BMI’s updated upstream Business Environment ratings, in spite of the state’s limited upstream potential. Bahrain below has the medium-term potential to challenge for fourth place. Israel’s score benefits from the lack of state involvement in the upstream segment, the licensing terms and privatisation progress, plus a healthy country risk outlook. The overall score is dragged down by limited oil resources and growth prospects.
Israel currently tops the league table in BMI’s updated downstream Business Environment rating, with a few high scores but limited potential to retain regional leadership over the longer term. It is seven points ahead of Iran, thanks largely to excellent country risk factors that outweigh a modest showing in terms of oil/gas demand, oil demand growth and likely refining capacity expansion."
Contents
Executive SummarySWOT Analysis
Israel Political SWOT
Israel Economic SWOT
Israel Business Environment SWOT
Israel Energy Market Overview
Global Oil Market Review
Regaining Momentum
Quarterly Trends
Global Oil Market Outlook
Sitting Comfortably
Oil Price Forecasts
Oil Supply, Demand And Price Outlook
Short-Term Demand Outlook
Table: Global Oil Consumption (000b/d)
Short-Term Supply Outlook
Table: Global Oil Production (000b/d)
Longer-Term Supply And Demand
Oil Price Assumptions
Table: Crude Price Assumptions 2010
Table: Oil Price Forecasts
Regional Energy Market Overview
Oil Supply And Demand
Table: Middle East Oil Consumption (000b/d)
Table: Middle East Oil Production (000b/d)
Oil: Downstream
Table: Middle East Oil Refining Capacity (000b/d)
Gas Supply And Demand
Table: Middle East Gas Consumption (bcm)
Table: Middle East Gas Production (bcm)
Liquefied Natural Gas
Table: Middle East LNG Exports/(Imports) (bcm)
Business Environment Ratings
Middle East Region
Composite Scores
Table: Regional Composite Business Environment Rating
Upstream Scores
Table: Regional Upstream Business Environment Rating
Israel Upstream Rating – Overview
Israel Upstream Rating – Rewards
Israel Upstream Rating – Risks
Downstream Scores
Table: Regional Downstream Business Environment Rating
Israel Downstream Rating – Overview
Israel Downstream Rating – Rewards
Israel Downstream Rating – Risks
Business Environment
Legal Framework
Infrastructure
Labour Force
Foreign Investment Policy
Tax Regime
Security Risk
Industry Forecast Scenario
Oil And Gas Reserves
Oil Supply And Demand
Gas Supply And Demand
LNG
Refining And Oil Products Trade
Revenues/Import Costs
Table: Israel Oil And Gas – Historical Data And Forecasts
Other Energy
Table: Israel Other Energy – Historical Data And Forecasts
Key Risks To BMI’s Forecast Scenario
Long-Term Oil And Gas Outlook
Oil And Gas Infrastructure
Oil Refineries
Oil Pipelines
Gas Storage Facilities
Gas Pipelines
Macroeconomic Outlook
Table: Israel - Economic Activity
Competitive Landscape
Executive Summary
Table: Key Players – Israeli Oil And Gas Sector
Overview/State Role
Government Policy
Licensing Rounds
International Energy Relations
Table: Key Downstream Players
Company Monitor
Noble Energy
Oil Refineries Ltd – Summary
Delek Group – Summary
Sonol – Summary
Paz – Summary
Zion Oil & Gas – Summary
Bontan Oil & Gas – Summary
Others – Summary
Former IOC Partners – Summary
Oil And Gas Outlook: Long-Term Forecasts
Regional Oil Demand
Table: Middle East Oil Consumption (000b/d)
Regional Oil Supply
Table: Middle East Oil Production (000b/d)
Regional Refining Capacity
Table: Middle East Oil Refining Capacity (000b/d)
Regional Gas Demand
Table: Middle East Gas Consumption (bcm)
Regional Gas Supply
Table: Middle East Gas Production (bcm)
Israel Country Overview
Methodology And Risks To Forecasts
Glossary Of Terms
Oil And Gas Ratings: Revised Methodology
Introduction
Ratings Overview
Table: BMI Oil And Gas Business Environment Ratings: Structure
Indicators
Table: BMI Oil And Gas Business Environment Upstream Ratings: Methodology
Table: BMI Oil And Gas Business Environment Downstream Ratings: Methodology
BMI Forecast Methodology
How We Generate Our Industry Forecasts
Energy Industry
Cross checks
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