Abstract
The latest Czech Republic Oil & Gas Report from BMI forecasts that the country
will account for 3.85%
of Central and Eastern European (CEE) regional oil
demand by 2013, while making no material
contribution to supply. CEE
regional oil use of 4.65mn barrels per day (b/d) in 2001 rose to an
estimated
5.36mn b/d in 2008. It should average 5.42mn b/d in 2008 and
then rise to around 5.99mn b/d by 2013.
Regional oil production was 8.83mn
b/d in 2001, and in 2008 averaged an estimated 13.00mn b/d. It is set
to
rise to 14.44mn b/d by 2013. Oil exports are growing steadily, because demand
growth is lagging the
pace of supply expansion. In 2001, the region was
exporting an average 4.18mn b/d. This total had risen
to an estimated
7.64mn b/d in 2008 and is forecast to reach 8.45mn b/d by 2013.
In terms
of natural gas, the region in 2008 consumed an estimated 637bn cubic metres
(bcm), with
demand of 749bcm targeted for 2013, representing 17.5% growth.
Production of an estimated 783bcm in
2008 should reach 913bcm in 2013,
which implies net exports rising from around 145bcm in 2008 to
164bcm by
the end of the period. The Czech Republic’s share of gas consumption in
2008 was an
estimated 1.44%, with no meaningful contribution to regional
supply. Its share of demand is forecast to be
1.54% by the end of the
forecast period.
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/bbl (-
45%
y-o-y), with Q109 expected to deliver US$40.00. 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$58.00/bbl
for the OPEC price, gaining further ground to US$65.00 in 2011 and
US$70.00/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$90.00/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.
Czech real GDP is forecast by
BMI to fall by 2.1% in 2009, down from an estimated 4.6% growth in
2008.
We are assuming 1.2% growth in 2010, 3.5% in 2011, followed by 3.9% in 2012
and 3.6% in 2013.
Assuming an average rise in consumption of 2% per annum,
below the CEE norm, oil demand will reach
231,000b/d in 2013 –
implying imports of at least 228,000b/d. In spite of a privatised oil
industry, there is
very limited international oil company (IOC)
involvement in the upstream segment to boost domestic
supply of oil or
gas. BMI is assuming gas demand will rise by an annual 5% from an estimated
9.2bcm in
2008 to around 11.6bcm by 2013.
Between 2007 and 2018, we
are forecasting an increase in Czech oil consumption of 18.4%, with import
volumes rising steadily from an estimated 209,000b/d to 248,000b/d by the end
of the 10-year forecast
period. Gas consumption is expected to rise from
an estimated 9.2bcm to 14.4bcm by 2018, met by
imports. Details of
BMI’s 10-year forecasts can be found in the appendix to this report,
which provides
global, regional and country-specific projections.
The
Czech Republic occupies equal ninth place with Bulgaria in BMI’s updated
Upstream Business
Environment rating, just ahead of Hungary. Its minimal
oil and gas reserves and poor production outlook
work against the country,
but are offset somewhat by privatisation progress, the
competitive/regulatory
environment and reasonable country risk factors.
The country is just in the lower half of the league table
in BMI’s
Downstream Business Environment rating, with a few high scores but no reason
to expect nearterm
progress further up the rankings. It takes a share of
seventh place with Slovakia and Kazakhstan.
Refining capacity is among the
region’s lowest, with low scores for likely capacity expansion and for
oil
and gas demand growth. Population and GDP per capita also work against
the country. Kazakhstan is
likely to move out of reach above it.
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