Abstract
The latest Colombia Oil & Gas Report from BMI forecasts that the country will
account for 3.37% of
Latin America regional oil demand by 2013, while
providing 6.26% of supply. Latin America regional oil
use of 6.66mn
barrels per day (b/d) in 2001 reached an estimated 7.72mn b/d in 2008. It
should average
7.86mn b/d in 2009 and then rise to around 8.58mn b/d by
2013. Regional oil production was just under
10.40mn b/d in 2001, and in
2008 averaged an estimated 9.99mn b/d. It is set to rise to 10.78mn b/d by
2013. Oil exports are slipping, because demand growth is exceeding the pace of
supply expansion. In
2001, the region was exporting an average 3.73mn b/d.
This total had fallen to an estimated 2.27mn b/d in
2008 and is forecast
to be 2.21mn b/d in 2013.
In terms of natural gas, the Latin America
region in 2008 consumed an estimated 194bn cubic metres
(bcm), with demand
of 266bcm targeted for 2013, representing 45% growth. Estimated production
of
208bcm in 2008 should reach 294bcm in 2013, and implies 28bcm of net
exports the end of the period.
Colombia' s share of gas consumption in 2008
was an estimated 4.07%, while its share of production was
4.08%. By 2013,
its share of gas consumption is forecast to be 3.75%, with the country
accounting for
3.74% of supply.
In terms of the OPEC basket of crudes,
the average price in Q408 was an estimated US$52.53 per barrel
(bbl), down
sharply from the US$113.49 recorded during the previous three months. The full
year 2008
average is put by BMI at US$94.08/bbl, representing a 36%
year-on-year (y-o-y) increase. North Sea
Brent, WTI and Russian Urals are
believed to have averaged US$97.06, US$99.33 and US$94.56/bbl
respectively
during 2008. For 2009, we are now assuming an average OPEC basket price of
US$52.0/bbl
(-45% y-o-y), with Q109 expected to deliver US$40.0. The new
full year forecast implies Brent crude at
US$55.65, WTI averaging
US$56.63/bbl and Urals at US$52.48 for 2009. For 2010, we expect to see a
recovery to US$58.0/bbl for the OPEC price, gaining further ground to US$65.0
in 2011 and US$70.0/bbl
in 2012. We are now using a long-term price
assumption of US$70.00 for 2013-2018, down from our
previous assumption of
US$90.0/bbl.
In 2009, we see monthly average global wholesale gasoline
prices ranging from US$38.90 in January to a
high of US$64.90 reached in
August and in December, providing a full year average of US$56.20 –
just
over 55% of the 2008 outturn. The 2009 BMI gasoil forecast is for an
average price of US$67/bbl,
assuming a monthly low of US$46.40 in January
and a high of US$77.30/bbl in December. The full-year
outturn represents a
45% downturn from the 2008 level. For 2009, the monthly average jet fuel price
is
forecast to range from US$47.90 in January to US$79.80/bbl in August,
proving an annual level of
US$69.20/bbl.
Colombian real GDP growth is
now forecast by BMI at 2.1% for 2009, down from an estimated 3.4% in
2008.
We are assuming 3.9% growth in 2010, 4.7% in 2011, followed by 4.2% in 2012
and 4.4% in 2013.
The government is working hard to encourage
international oil company (IOC) investment and boost
near-term domestic
oil production, aided by state-owned Ecopetrol. We are assuming oil and gas
liquids
production of no more than 675,000b/d by 2013, with the country
expected to pump 610,000b/d in 2009.
Consumption is forecast to increase
by 3-4% per annum to 2013, implying demand of 289,000b/d by the
end of the
forecast period. The country’s export capability will therefore rise to
around 386,000b/d by
2013. Gas consumption is forecast to increase from an
estimated 7.9bcm in 2008 to 10.0bcm over the
period, met by rising
domestic production, which will also provide modest exports to Venezuela.
Between 2007 and 2018, we are forecasting a decrease in Colombian oil
production of 5.53%, with crude
volumes peaking at 675,000b/d in 2013 and
then falling steadily to 530,000b/d by the end of the forecast
period. Oil
consumption between 2007 and 2018 is set to increase by 47.12%, with growth
slowing to an
assumed 3.0% per annum towards the end of the period and the
country using 335,000 b/d by 2018. Gas
production is expected to rise
gradually, from around 8.5bcm in 2007 to 15.0bcm in 2018. With demand
growth of 65%, this implies export potential reaching 2.3bcm by 2018. Details
of BMI’s 10-year
forecasts can be found in the appendix to this
report, which provides global, regional and country-specific
projections.
Colombia still ranks fourth in BMI’s updated Upstream
Business Environment rating, ahead of Trinidad
and behind Peru. While the
absolute resource base is modest, the competitive environment is
attractive
and licensing terms have improved to become some of the best in
the region. Country risk is moderate
and Colombia is well placed to retain
its strong position in the league table. The country still ranks second
in
BMI’s updated Downstream Business Environment rating, reflecting its oil
demand growth outlook,
refining capacity expansion plans, moderate Country
Risk and low retail site intensity. Argentina and
Trinidad share third
place, but arguably lack the potential to challenge Colombia.
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