Kazakstan Oil and Gas Report Q4 2010

Date: October 22, 2010
Pages: 107
US$ 1,295.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF), Download

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Includes 3 FREE quarterly updates

The latest Kazakhstan Oil & Gas Report from BMI forecasts that the country will account for 4.13% of Central and Eastern European (CEE) regional oil demand by 2014, while providing 14.20% of supply. CEE regional oil use of 5.42mn barrels per day (b/d) in 2001 will rise to an estimated 6.02mn b/d in 2010. It should increase to around 6.68mn b/d by 2014. Regional oil production was 8.89mn b/d in 2001 and in 2010 will average a forecast 13.67mn b/d. It is set to rise to 14.44mn b/d by 2014. 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 had risen to an estimated 7.65mn b/d in 2010 and is forecast to reach 7.76mn b/d by 2014. 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 consumed an estimated 638.6bn cubic metres (bcm), with demand of 728.8bcm targeted for 2014, representing 14.1% growth. Production of an estimated 788.4bcm in 2010 should reach 936.4bcm in 2014, which implies net exports rising from an estimated 149.8bcm in 2010 to 207.5bcm by the end of the period. Kazakhstan’s share of gas consumption in 2010 is an estimated 3.29%, while its share of production is put at 5.07%. By 2014, its share of demand is forecast to be 3.93%, with the country accounting for 6.84% of supply.

For 2010 as a whole, we continue to assume an average OPEC basket price of US$83.00/bbl, +36.4% year-on-year (y-o-y). Risk is now clearly on the downside, thanks to the slow progress made during June. However, a full year outturn in excess of US$80 remains a strong possibility and we see no need to review our assumptions at this point. The 2010 US WTI price is now put at US$87.63/bbl. BMI is assuming an OPEC basket price of US$85.00/bbl in 2011, with WTI averaging US$89.74. Our central assumption for 2012 and beyond is an OPEC price averaging US$90.00/bbl, delivering WTI at just over US$95.00.

For 2010, the BMI assumption for premium unleaded gasoline is an average global price of US$95.45/bbl. The overall y-o-y rise in 2010 gasoline prices is put at 36%. Gasoil in 2010 is expected to average US$93.23/bbl. The full-year outturn represents a 35% increase from the 2009 level. For 2010, the annual jet price level is forecast to be US$95.90/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$83.53/bbl, up 41% from the previous year’s level. BMI assumes that Kazakhstan’s real GDP will rise by 7% in 2010 and we are forecasting an average annual increase of 7% in 2010-2014. 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 276,000b/d by 2014. 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 2.05mn b/d by 2014. This implies that oil exports should rise from an estimated 1.42mn b/d in 2010 to 1.77mn b/d by the end of the forecast period.

Between 2010 and 2019, we are forecasting an increase in Kazakh oil and gas liquids production of 39.5%, with volumes reaching a peak of 2.40mn b/d in 2017/18, before falling to 2.35mn b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2019 is set to increase by 32.7%, with growth slowing to an assumed 5.0% per annum towards the end of the period and the country using 352,000b/d by 2019. Gas production should rise from estimated 2010 level of 40bcm to 77bcm by 2019. Gas demand rising 74.2% provides export potential increasing to 40bcm. Details of BMI’s 10-year forecasts can be found in the appendix to this report.

Kazakhstan now holds second place, just behind 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 eighth place above 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.
Executive Summary
SWOT Analysis
Kazakhstan Political SWOT
Kazakhstan Economic SWOT
Kazakhstan Business Environment SWOT
Kazakhstan Energy Market Overview
Global Oil Market Review
Drifting With The Tide
Quarterly Trends
Deepwater Turbulence
Global Oil Market Outlook
Waiting For The Wind To Change
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
Downstream Scores
    Table: Regional Downstream Business Environment Rating
Kazakhstan Downstream Rating – Overview
Kazakhstan Downstream Rating – Rewards
Kazakhstan Downstream Rating – Risks
Risk Summary
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
Macroeconomic Outlook
    Table: Kazakhstan - Economic Activity
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)
Eni Kazakhstan
BG Kazakhstan
ExxonMobil Kazakhstan
Shell Kazakhstan
Lukoil Kazakhstan
China National Petroleum Corporation (CNPC) – Summary
Korea National Oil Corporation (KNOC) – Summary
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
100 Methodology And Risks To Forecasts
100 Glossary Of Terms
BMI Methodology
How We Generate Our Industry Forecasts
102 Energy Industry
102 Cross checks
103 Oil And Gas Ratings Methodology
103     Table: Structure Of BMI’s Oil & Gas Business Environment Ratings
104 Indicators
105     Table: BMI’s Upstream Oil & Gas Business Environment Ratings – Methodology
105     Table: BMI’s Downstream Oil & Gas Business Environment Ratings – Methodology
106 Sources
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