Abstract
The latest Peru Oil & Gas Report from BMI forecasts that the country will
account for 1.99% of Latin
America regional oil demand by 2013, while
providing 1.23% of supply. Latin America regional oil use
of 6.66mn
barrels per day (b/d) in 2001 reached an estimated 7.61mn b/d in 2008. It
should average
7.57mn b/d in 2009 and then rise to around 8.23mn b/d by
2013. Regional oil production was just under
10.40mn b/d in 2001, and in
2008 averaged an estimated 9.89mn b/d. It is set to rise to 10.58mn 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 2.28mn b/d in
2008 and is forecast
to be 2.35mn b/d in 2013. The principal exporters will be Mexico,
Venezuela,
Ecuador and Brazil.
As regards natural gas, the region in
2008 consumed an estimated 191.3bcm, with demand of 254.3bn
cubic metres
(bcm) targeted for 2013, representing 32.9% growth. Estimated production of
207.4bcm in
2008 should reach 289.9bcm in 2013, and implies 35.7bcm of net
exports by the end of the period. Peru is
not yet a significant regional
gas producer or consumer but by 2013 its share of regional demand should
be 1.73%, while it will account for 4.83% of supply.
In terms of the OPEC
basket of crudes, the average price in Q109 was an estimated US$45.78 per
barrel
(bbl), down 13% from the US$52.51/bbl recorded during the previous
three months. During the second
quarter, there has been little change to
our view of oil market developments. BMI is forecasting an
average OPEC
basket price of US$51.30/bbl, with the March gains being retained in April,
before further
recovery to a possible US$57.00 is seen by June. For 2009,
we are still assuming an average OPEC basket
price of US$52.00/bbl (-45%
year-on-year). The BMI full year forecast implies Brent crude at US$53.73,
WTI averaging US$54.90/bbl and Urals at US$52.66 for 2009.
For the whole
of 2009, the BMI assumption for gasoline is an average US$56.89/bbl, with the
price
peaking at a forecast monthly average of US$64.75 in December 2009.
The overall y-o-y fall in 2009
gasoline prices is put at 44.1%. For gasoil
in 2009, the BMI forecast is for an average price of
US$69.35/bbl,
assuming a monthly high of US$94.48/bbl in December. The full-year outturn
represents a
42.8% fall from the 2008 level. The monthly average jet fuel
price is forecast to range from US$53.75 in
February to US$96.76/bbl in
December, proving an annual level of US$71.78/bbl. This compares with
US$124.95/bbl in 2008.
Peruvian real GDP growth is forecast by BMI at 3.2%
for 2009, down from 9.8% in 2008. We are
assuming 3.8% growth in 2010,
4.5% in 2011, 3.4% in 2012 followed by 4.2% in 2013. We are assuming
oil
and gas liquids production of 130,000b/d by 2012/2013, with the country
expected to pump 99,000b/d
in 2009. Consumption, beyond the expected 2009
weakness, is forecast to increase by 2-3% per annum to
2013, implying
demand of 163,000b/d by the end of the forecast period. The import requirement
would
therefore be approximately 33,000b/d by 2013. Gas production is
forecast to increase from an estimated
3.5bcm in 2008 to 14.0bcm over the
period, with net exports of up to 9.6bcm by 2013.
Between 2008 and 2018,
we are forecasting a decrease in Peruvian oil production of 6.9%, with crude
and
gas liquids volumes peaking at 130,000b/d in 2012/2013, before falling
steadily to 101,000b/d at the end
of the 10-year forecast period. Oil
consumption between 2008 and 2018 is set to increase by 20.8%, with
growth
slowing to an assumed 2.0% per annum towards the end of the period and the
country using
180,000b/d by 2018. Gas production is expected to rise
steadily, from around 3.5bcm in 2008 to 20.0bcm
in 2018. With demand
growth of 172.6%, this implies export potential rising from 0.9bcm in 2008
to
12.9bcm in 2018. Details of BMI’s 10-year forecasts can be found
in the appendix to this report.
Peru now ranks second in BMI’s
updated Upstream Business Environment rating, in spite of its modest
hydrocarbons resource base. It is now just one point ahead of third-placed
Venezuela, and is vulnerable to
being overtaken over the next several
quarters thanks to the greater upstream potential of the regional
leaders.
While Peru’s absolute resource base may be small, the output growth
outlook is excellent,
reserves-to-production ratios (RPR) are above the
regional average, and licensing terms are particularly
attractive. The
country has a lower position in BMI’s Downstream Business Environment
rating, ranked
fifth ahead of Chile as a result of state ownership and
regulation, modest oil demand growth prospects, a
lack of refining
capacity expansion and the limitations of population and nominal GDP. Peru is
two
points behind Argentina, so has limited potential to move higher in
the regional ranking.
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