Abstract
In this report, we forecast that Bahrain will account for 0.40% of Middle East
regional oil demand by
2013, while providing just 0.20% of supply.
Regional oil use of 8.24mn barrels per day (b/d) in 2001 rose
to an
estimated 10.86mn b/d in 2008. It should average 11.09mn b/d in 2009 and then
rise to around
12.08mn b/d by 2013. Regional oil production was 22.87mn
b/d in 2001, and in 2008 averaged an
estimated 25.94mn b/d. It is set to
rise to 28.99mn 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
14.63mn b/d. This total had risen to an estimated
15.18mn b/d in 2008 and is forecast to reach 16.58mn
b/d by 2013. Iraq has
the greatest production growth potential, followed by Qatar.
As regards
natural gas, the region in 2008 consumed an estimated 386bcm, with demand of
511bn cubic
metres (bcm) targeted for 2013, representing 32.3% growth.
Production of an estimated 407bcm in 2008
should reach 625bcm in 2013
(+53.8%), which implies net exports rising to 115bcm by the end of the
period. Bahrain’s share of gas consumption in 2008 was an estimated
2.49%, while its share of
production is put at 2.61%. By 2013, its share
of gas consumption is forecast to be 3.08%, with the
country accounting
for 2.08% 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 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% y-o-y). 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.
Bahrain’s real GDP is now forecast by BMI to fall by 0.6% in 2009,
following growth of 5.2% in 2008.
We are assuming 1.6% growth in 2010,
1.9% in 2011, 2.1% in 2012, and 2.2% in 2013. Consumption of
oil is set to
rise slowly with the subdued growth of the economy, reaching a maximum of
48,000b/d by
2013. The state accounts for all domestic oil and gas
production, as well as the refining and distribution
segment.
International oil company (IOC) involvement is very limited. Thanks to a lack
of resources
potential and the absence of large-scale IOC upstream
ventures, crude and liquids output is now
averaging 48,000b/d; however, no
further significant near-term decline is expected. We are assuming
liquids
volumes will rise towards a peak of 60,000b/d by 2012. Gas output is set to
increase from an
estimated 10.6bcm in 2008 to 13.0bcm during the period,
providing an import requirement of 2.8bcm.
Between 2008 and 2018, we are
forecasting a decrease in Bahrain oil production of 16.7%, with crude
volumes peaking in 2012 at 60,000b/d, before falling to 40,000b/d by the end
of the 10-year forecast
period. Oil consumption between 2008 and 2018 is
set to increase by 34.4%, with growth at an assumed
3.0% per annum towards
the end of the period and the country using 55,000 b/d by 2018. Gas
production
is expected to climb towards 15bcm by 2014-16, then decline to
14bcm by the end of the period. With
2008-2018 demand growth of 109.4%,
this provides an import requirement rising to 6.1bcm by 2018.
Details of
BMI’s 10-year forecasts can be found in the appendix to this report.
Bahrain now shares seventh place with Israel in BMI’s updated Upstream
Business Environment rating,
above Kuwait and Saudi Arabia. It stands
third from last because of the very modest oil and gas reserves,
poor
production growth outlook, low reserves-to-production ratios (RPR) and modest
non-state
involvement in the upstream segment. The country’s risk
environment is very sound, but this may prove
insufficient to help Bahrain
challenge Oman above it in the league table. It may, however, be able to
keep
Kuwait at bay. The state is now ranked equal seventh alongside Iran
in BMI’s updated Downstream
Business Environment rating, with few
high scores and progress further up the rankings unlikely. It is
ranked
third from last thanks to low scores for refining capacity, oil and gas
demand, population and the
privatisation trend. The growth outlooks for
oil/gas consumption and refining capacity also represent
relatively weak
suits, along with the pedestrian increase in GDP per capita. Kuwait is
immediately behind
it in the regional rankings, and there is some risk of
it challenging Bahrain.
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