Abstract
BMI forecasts that Iran will account for 15.00% of Middle East (ME) regional
oil demand by 2013, while
providing 15.68% 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 386bn cubic metres (bcm), with
demand of 511bcm
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. Iran in 2008 consumed
an estimated 30.83% of the region’s gas, with its market share
forecast
at 29.06% by 2013. It contributed an estimated 31.97% to 2008
regional gas production and, by 2013,
will account for 34.68% 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.
Iranian real
GDP growth is estimated by BMI at 2.4% for 2009, following an estimated 4.7%
in 2008.
We are assuming 3.7% growth in 2010, 4.8% in 2011, followed by
3.8% in 2012 and 3.4% in 2013. We
expect oil demand to rise from an
estimated 1.68mn b/d in 2008 to 1.77mn b/d in 2013, failing to match
the
underlying rate of economic expansion. State-owned National Iranian Oil
Company (NIOC) is
responsible for all upstream oil and gas activities,
although there is some small-scale participation by
international oil
companies (IOCs) on a sub-contractor basis. The lack of large-scale IOC
investment
contributes to modest output growth, with crude production
forecast to increase from an estimated
4.30mn b/d in 2008 to 4.45mn b/d in
2013, subject to OPEC quotas and the possible impact of any
sanctions
resulting from the nuclear energy debate. Gas production should reach 190bcm
by 2013, up
from an estimated 130bcm in 2008. Consumption is expected to
rise from 119bcm to 148bcm by the end
of the forecast period, providing
exports of 42bcm.
Between 2008 and 2018, we are forecasting an increase in
Iranian oil production of 8.1%, with crude
volumes rising towards 4.65mn
b/d by the end of the 10-year forecast period, although there will be an
OPEC-induced dip in 2009. Oil consumption between 2008 and 2018 is set to
increase by 16.8%, with
growth slowing to an assumed 2.0% per annum
towards the end of the period and the country using
1.96mn b/d by 2018.
Gas production is expected to climb to 280bcm by the end of the period. With
2008-
2018 demand growth of 51.7%, this provides export potential rising
to almost 100bcm by 2018. Details of
BMI’s 10-year forecasts can be
found in the appendix to this report.
Iran now holds fifth place behind
Turkey in BMI’s updated Upstream Business Environment rating. It is
three points clear of Oman and is likely to keep the smaller Gulf state at bay
for the foreseeable future.
The country’s score benefits from the
region’s biggest gas reserves base and a very healthy oil reserves
position. Reserves-to-production ratios (RPRs) are high, but strict government
control of the upstream
industry prevents Iran’s achieving a better
overall score. The country is below the middle of the league
table for
BMI’s updated Downstream Business Environment rating, with some high
scores but progress
further up the rankings unlikely. It is now ranked
equal seventh with Bahrain, thanks to high scores for
refining capacity,
oil demand, gas consumption, retail site intensity and population. The growth
outlooks
for oil/gas consumption and refining capacity represent
relatively weak suits. Kuwait is immediately
behind it in the regional
rankings, and there is some long-term risk of it challenging for Iran’s
seventh
place.
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