Abstract
The latest Russia Oil & Gas Report from BMI forecasts that the country will
account for 51.03% of
Central and Eastern European (CEE) regional oil
demand by 2013, while providing 69.15% of supply.
CEE regional oil use of
4.65mn barrels per day (b/d) in 2001 rose to an estimated 5.39mn b/d in 2008.
It
should average 5.33mn b/d in 2009 and then rise to around 5.85mn b/d by
2013. Regional oil production
was 8.83mn b/d in 2001, and in 2008 averaged
an estimated 12.93mn b/d. It is set to rise to 14.39mn 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
7.54mn b/d in 2008 and is forecast to
reach 8.54mn b/d by 2013.
As regards natural gas, the region in 2008
consumed an estimated 636.7bn cubic metres (bcm), with
demand of 737.8bcm
targeted for 2013, representing 13.0% growth. Production of an estimated
778.7bcm
in 2008 should reach 906.1cm in 2013, which implies net exports
rising from 141.9bcm in 2008 to
168.3bcm by the end of the period.
Russia’s share of gas consumption in 2008 was an estimated 69.67%,
while its share of production is put at 77.96%. By 2013, its share of demand
is forecast to be 66.75%,
with the country accounting for 73.94% 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.
Russian real GDP is forecast by BMI to fall by 7.1% in 2009, compared with
growth of 5.6% in 2008.
We are assuming 1.0% growth in 2010, 3.5% in 2011
and 4.6% in 2012, followed by 4.8% in 2013. Statecontrolled
Gazprom has a
virtual monopoly over gas transportation and exports. With it being the
main
provider, we see gas output rising from an estimated 615bcm in 2008
to 670bcm by 2013. Russian
domestic companies control most of
Russia’s oil production, with the exception being Anglo-Russian
joint venture (JV) TNK-BP. Rosneft is the main state-controlled oil producer.
The companies are
expected to deliver 2009 output of crude oil and
condensates averaging 9.68mn b/d. Oil production seems
likely to stagnate
over the short term, then grow only slowly over the remainder of the decade.
Our 2013
production forecast is for 9.95mn b/d.
Between 2008 and 2018,
we are forecasting an increase in Russian oil production of 13.1%, with
output
falling initially from an estimated 9.92mn b/d in 2008 to 9.65mn
b/d in 2010, before rising gradually to
10.95mn b/d by 2018. Oil
consumption during the period is forecast to rise by 23.7%, permitting
exports
peaking at 7.79mn b/d in 2016. Gas consumption is expected to be
up from an estimated 448bcm to
544bcm by 2018, providing export potential
peaking at 211bcm at the end of the forecast period. Details
of
BMI’s 10-year forecasts can be found in the appendix to this report.
Russia occupies fourth place in BMI’s updated Upstream Business
Environment rating, aided by
unrivalled hydrocarbons resources. Its oil
and gas reserves account for much of the upstream score, but
licensing,
privatisation and country risk factors are less impressive. Medium-term scope
exists for Russia
to challenge Poland above it, while Slovenia poses no
threat below. The country is near the top of the
league table in
BMI’s updated Downstream Business Environment rating, having fallen
behind Romania
into third place. There are a few particularly high scores,
but a move to challenge Romania is possible
over the medium term. There
are excellent scores for refining capacity, oil and gas demand, population
and nominal GDP. Ukraine is just one point below Russia in the regional
rankings, but there is little
chance of its mounting a challenge.
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