Abstract
The latest Czech Republic Oil & Gas Report from BMI forecasts that the country
will account for 3.83%
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
5.39mn 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 636.7bcm, with demand of
737.8bn
cubic metres (bcm) 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. 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
1.50% by the end of the
forecast period.
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.
Czech
real GDP is forecast by BMI to fall by 2.1% in 2009, down from 3.2% growth in
2008. We are
assuming 1.1% growth in 2010, 3.3% in 2011, followed by 4.0%
in 2012 and 3.7% in 2013. Assuming an
average rise in consumption of 1.5%
per annum, below the CEE norm, oil demand will reach 224,000b/d
in 2013
– implying imports of at least 221,000b/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 4.0% from an estimated
9.2bcm in 2008
to around 11.1bcm by 2013.
Between 2008 and 2018, we
are forecasting an increase in Czech oil consumption of 15.7%, with import
volumes rising steadily from an estimated 209,000b/d to 242,000b/d by the end
of the 10-year forecast
period. Gas consumption is expected to rise from
an estimated 9.2bcm to 13.3bcm by 2018, met by
imports. Details of
BMI’s 10-year forecasts can be found in the appendix to this report.
The Czech Republic now occupies 10th place 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
near-term
progress further up the rankings. It takes seventh place ahead
of Hungary. 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. Azerbaijan is
likely to move further out of
reach above it.
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