Kazakhstan Oil and Gas Report Q1 2011
The latest Kazakhstan Oil & Gas Report from BMI forecasts that the country will account for 4.21% of Central and Eastern European (CEE) regional oil demand by 2015, while providing 15.47% of supply. CEE regional oil use of 5.42mn barrels per day (b/d) in 2001 will have risen to an estimated 6.05mn b/d in 2010. It should increase to around 6.89mn b/d by 2015. Regional oil production was 8.89mn b/d in 2001 and in 2010 will have averaged an estimated 13.82mn b/d. It is set to rise to 15.08mn 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 3.47mn b/d. This total will have risen to an estimated 7.76mn b/d in 2010 and is forecast to reach 8.19mn b/d by 2015. Azerbaijan and Kazakhstan have the greatest production growth potential, although Russia will remain the key exporter.
In terms of natural gas, the region in 2010 will have consumed an estimated 636.3bn cubic metres (bcm), with demand of 747.7bcm targeted for 2015, representing 17.5% growth. Production of an estimated 787.9bcm in 2010 should reach 954.2bcm in 2015, which implies net exports rising from an estimated 151.6bcm in 2010 to 206.5bcm by the end of the period. Kazakhstan’s share of gas consumption in 2010 is an estimated 3.30%, while its share of production is put at 5.07%. By 2015, its share of demand is forecast to be 4.02%, with the country accounting for 6.92% of supply.
For 2010 as a whole, we assume an average OPEC basket price of US$77.00/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 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.
BMI assumes that Kazakhstan’s real GDP will have risen by 6.0% in 2010 and we are forecasting an average annual increase of 7.2% in 2010-2015. Consumption growth should keep pace with the growing economy, but is unlikely to have much negative impact on export potential. We are forecasting that domestic oil demand will reach 289,000b/d by 2015. State-owned KazMunaiGaz (KMG) accounts for more than 10% of oil production and participates in joint venture (JV) projects with international oil companies (IOCs), which should deliver rapid volume growth after the Karachaganak field builds up to full output in excess of 200,000b/d. Expansion of the Tengiz field and activation of the offshore Kashagan project should push Kazakh production towards 2.30mn b/d by 2015. This implies that oil exports should rise from an estimated 1.46mn b/d in 2010 to 2.01mn b/d by the end of the forecast period.
Between 2010 and 2020, we are forecasting an increase in Kazakh oil and gas liquids production of 36.5%, with volumes reaching a peak of 2.40mn b/d in 2017/2018, before falling to 2.30mn b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2020 is set to increase by 39.3%, with growth slowing to an assumed 5% per annum towards the end of the period and the country using 369,000b/d by 2020. Gas production should rise from estimated 2010 level of 40bcm to 80bcm by 2020. Gas demand rising 82.9% provides export potential increasing to 42bcm. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Kazakhstan now holds first place, above Azerbaijan, in BMI’s composite Business Environment (BE) ratings table, which combines upstream and downstream scores. It still occupies first place in BMI’s updated upstream Business Environment rating, now two points ahead of neighbour Azerbaijan. Its oil and gas production growth outlook, asset immaturity, high reserves to production ratios (RPR) and competitive landscape work in the country’s favour, but are undermined by a relatively unappealing risk environment. Kazakhstan is around the mid-point of the league table in BMI’s updated downstream Business Environment rating, holding seventh place above Azerbaijan and Hungary. There are few particularly high scores, so progress further up the rankings seems unlikely. The low level of retail-site intensity represents a strong suit, along with region-leading oil demand growth prospects."
In terms of natural gas, the region in 2010 will have consumed an estimated 636.3bn cubic metres (bcm), with demand of 747.7bcm targeted for 2015, representing 17.5% growth. Production of an estimated 787.9bcm in 2010 should reach 954.2bcm in 2015, which implies net exports rising from an estimated 151.6bcm in 2010 to 206.5bcm by the end of the period. Kazakhstan’s share of gas consumption in 2010 is an estimated 3.30%, while its share of production is put at 5.07%. By 2015, its share of demand is forecast to be 4.02%, with the country accounting for 6.92% of supply.
For 2010 as a whole, we assume an average OPEC basket price of US$77.00/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 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.
BMI assumes that Kazakhstan’s real GDP will have risen by 6.0% in 2010 and we are forecasting an average annual increase of 7.2% in 2010-2015. Consumption growth should keep pace with the growing economy, but is unlikely to have much negative impact on export potential. We are forecasting that domestic oil demand will reach 289,000b/d by 2015. State-owned KazMunaiGaz (KMG) accounts for more than 10% of oil production and participates in joint venture (JV) projects with international oil companies (IOCs), which should deliver rapid volume growth after the Karachaganak field builds up to full output in excess of 200,000b/d. Expansion of the Tengiz field and activation of the offshore Kashagan project should push Kazakh production towards 2.30mn b/d by 2015. This implies that oil exports should rise from an estimated 1.46mn b/d in 2010 to 2.01mn b/d by the end of the forecast period.
Between 2010 and 2020, we are forecasting an increase in Kazakh oil and gas liquids production of 36.5%, with volumes reaching a peak of 2.40mn b/d in 2017/2018, before falling to 2.30mn b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2020 is set to increase by 39.3%, with growth slowing to an assumed 5% per annum towards the end of the period and the country using 369,000b/d by 2020. Gas production should rise from estimated 2010 level of 40bcm to 80bcm by 2020. Gas demand rising 82.9% provides export potential increasing to 42bcm. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Kazakhstan now holds first place, above Azerbaijan, in BMI’s composite Business Environment (BE) ratings table, which combines upstream and downstream scores. It still occupies first place in BMI’s updated upstream Business Environment rating, now two points ahead of neighbour Azerbaijan. Its oil and gas production growth outlook, asset immaturity, high reserves to production ratios (RPR) and competitive landscape work in the country’s favour, but are undermined by a relatively unappealing risk environment. Kazakhstan is around the mid-point of the league table in BMI’s updated downstream Business Environment rating, holding seventh place above Azerbaijan and Hungary. There are few particularly high scores, so progress further up the rankings seems unlikely. The low level of retail-site intensity represents a strong suit, along with region-leading oil demand growth prospects."
Contents
Executive SummarySWOT Analysis
Kazakhstan Political SWOT
Kazakhstan Economic SWOT
Kazakhstan Business Environment SWOT
Kazakhstan 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: Central/Eastern Europe Oil Consumption (000b/d)
Table: Central/Eastern Europe Oil Production (000b/d)
Oil: Downstream
Table: Central/Eastern Europe Oil Refining Capacity (000b/d)
Gas Supply And Demand
Table: Central/Eastern Europe Gas Consumption (bcm)
Table: Central/Eastern Europe Gas Production (bcm)
Liquefied Natural Gas
Table: Central/Eastern Europe LNG Exports/(Imports) (bcm)
Business Environment Ratings
Central/Eastern Europe Region
Composite Scores
Table: Regional Composite Business Environment Rating
Upstream Scores
Table: Regional Upstream Business Environment Rating
Kazakhstan Upstream Rating – Overview
Kazakhstan Upstream Rating – Rewards
Kazakhstan Upstream Rating – Risks
Kazakhstan Oil & Gas Report Q1 2011
© Business Monitor International Ltd Page
Downstream Scores
Table: Regional Downstream Business Environment Rating
Kazakhstan Downstream Rating – Overview
Kazakhstan Downstream Rating – Rewards
Kazakhstan Downstream Rating – Risks
Risk Summary
Political
Economic Outlook
Business Environment
Industry Forecast Scenario
Oil And Gas Reserves
Oil Supply And Demand
Gas Supply And Demand
Refining And Oil Products Trade
Revenues/Import Costs
Table: Kazakhstan Oil And Gas – Historical Data And Forecasts
Other Energy
Table: Kazakhstan 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
Table: Major Refineries In Kazakhstan
Oil Terminals/Ports
Oil Pipelines
Gas Storage Facilities
Gas Pipelines
Competitive Landscape
Executive Summary
Table: Key Players – Kazakhstan Oil And Gas Sector
Overview/State Role
Licensing And Regulation
Government Policy
International Energy Relations
Table: Key Upstream Players
Table: Key Downstream Players
Company Monitor
KazMunaiGaz (KMG)
Chevron
Eni Kazakhstan
BG Kazakhstan
ExxonMobil Kazakhstan
Shell Kazakhstan
Lukoil Kazakhstan
PetroKazakhstan
CNPC
Korea National Oil Corporation (KNOC) – Summary
Kazakhstan Oil & Gas Report Q1 2011
© Business Monitor International Ltd Page
ConocoPhillips – Summary
BP – Summary
Total – Summary
Rosneft – Summary
Tethys Petroleum – Summary
Roxi Petroleum – Summary
MangistauMunaiGaz – Summary
Zhaikmunai – Summary
Oil And Natural Gas Corporation (ONGC) – Summary
Max Petroleum – Summary
Petrom – Summary
Others – Summary
Oil And Gas Outlook: Long-Term Forecasts
Regional Oil Demand
Table: CEE Oil Consumption (000b/d)
Regional Oil Supply
Table: CEE Oil Production (000b/d)
Regional Refining Capacity
Table: CEE Oil Refining Capacity (000b/d)
Regional Gas Demand
Table: CEE Gas Consumption (bcm)
Regional Gas Supply
Table: CEE Gas Production (bcm)
Kazakhstan Country Overview
Methodology And Risks To Forecasts
Glossary Of Terms
BMI Methodology
How We Generate Our Industry Forecasts
Energy Industry
Cross checks
Oil And Gas Ratings Methodology
Table: Structure Of BMI’s Oil & Gas Business Environment Ratings
Indicators
Table: BMI’s Upstream Oil & Gas Business Environment Ratings – Methodology
Table: BMI’s Downstream Oil & Gas Business Environment Ratings – Methodology
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