Abstract
The latest Bulgaria Oil & Gas Report from BMI forecasts that the country will
account for 2.19% of
Central and Eastern European (CEE) regional oil
demand by 2013, while making no meaningful
contribution to 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. Bulgaria’s share of consumption in
2008 was an estimated 0.57%,
while it has no significant share of
production. By 2013, its share of demand is forecast to be 0.72%.
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.
Bulgarian real GDP is now
forecast by BMI to fall by 3.1% in 2009, following 2008 growth of 5.8%. We
are assuming a further 1.5% contraction in 2010, followed by growth of 2.4% in
2011, 3.0% in 2012, and
3.4% in 2013. Oil demand beyond the weakness of
2009/10 is forecast to rise by up to 2.0% per annum,
which suggests that
consumption could reach 128,000b/d by 2013. Imports can be expected to grow
in
line, as exploration efforts in the largely privatised hydrocarbons
sector by small international oil
companies (IOCs) do not appear likely to
deliver increased domestic crude volumes. Gas consumption is
rising well
ahead of domestic supply. While gas output could reach 1.1bcm by the end of
2013, demand is
heading for 5.30bcm, requiring imports of 4.20bcm
Between 2008 and 2018, we are forecasting an increase in Bulgarian oil
consumption of 11.0%, with
import volumes rising steadily from an
estimated 122,000b/d in 2008 to 142,000b/d by the end of the 10-
year
forecast period. Gas production is expected to fall over the short term from
the estimated 2008 level
of 0.3bcm to just 0.1bcm in 2009, before
recovering to a peak of 1.5bcm by 2014. Import dependency
therefore
increases from the estimated 2008 level of 3.0bcm to 5.6bcm at the end of the
period. Details of
BMI’s 10-year forecasts can be found in the
appendix to this report.
Bulgaria now shares eighth place with Romania in
BMI’s updated Upstream Business Environment
rating. Its minimal oil
and gas reserves, poor production outlook, and limited competitive landscape
work
against the country, but are offset somewhat by reasonable country
risk factors. Long-term scope exists
for Bulgaria to overtake Romania. The
country is now at the bottom of the league table in BMI’s
Downstream
Business Environment rating, with few particularly high scores and no reason
to expect
near-term progress further up the rankings. Refining capacity is
among the region’s lowest, while gas
consumption is particularly
modest. The relatively high level of retail site intensity represents
another
weak suit, although gas demand growth prospects are among the best
in the CEE region.
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