Abstract
The latest Kazakhstan Oil & Gas Report from BMI forecasts that the country
will account for 4.64% of
Central and Eastern European (CEE) regional oil
demand by 2013, while providing 16.33% 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.
Kazakhstan’s share of gas consumption in 2008 was an estimated
3.83%, while its share of production is put at 5.20%. By 2013, its share of
demand is forecast to be
4.64%, with the country accounting for 8.28% 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.
Kazakhstan’s real GDP is forecast by BMI to contract by 1.9% in 2009,
compared with growth of 3.0%
in 2008. We are assuming 2.4% growth in 2010,
5.5% in 2011, followed by 6.6% in 2012 and 6.7% in
2013. Consumption
growth, beyond the likely weakness of 2009, should keep pace with the
growing
economy, but is unlikely to have much negative impact on export
potential. We are forecasting domestic
oil demand reaching 272,000b/d by
2013. State-owned KazMunaiGaz (KMG) accounts for more than
10% of oil
production and participates in joint venture (JV) projects with international
oil companies
(IOCs), which should deliver rapid volume growth after the
Karachaganak field builds up to full output in
excess of 200,000b/d.
Expansion of the Tengiz field and activation of the offshore Kashagan
project
should push Kazakh production towards 2.35mn b/d by 2013. This
implies that oil exports should rise
from an estimated 1.27mn b/d in 2008
to 2.08mn b/d by the end of the forecast period.
Between 2008 and 2018, we
are forecasting an increase in Kazakh oil and gas liquids production of
48.4%, with volumes reaching a peak of 2.6mn b/d in 2014, before falling to
2.3mn b/d by the end of the
10-year forecast period. Oil consumption
between 2008 and 2018 is set to increase by 52.1%, with growth
slowing to
an assumed 5.0% per annum towards the end of the period and the country using
347,000b/d
by 2018. Gas production should rise from the estimated 2008
level of 35bcm to 95bcm by 2018. Gas
demand rising 76.9% provides export
potential increasing to 50.8bcm. Details of BMI’s 10-year forecasts
can be found in the appendix to this report.
Kazakhstan still occupies
first place in BMI’s updated Upstream Business Environment rating,
having
remained just ahead of neighbour Azerbaijan. Its oil and gas
production growth outlook, asset immaturity,
high reserves to production
ratios (RPR) and competitive landscape work in the country’s favour, but
are
undermined by a relatively unappealing risk environment. The country
is just above the mid-point of the
league table in BMI’s updated
Downstream Business Environment rating, although there are few
particularly high scores and progress further up the rankings from fifth place
seems unlikely. The low
level of retail site intensity represents a strong
suit, along with region-leading oil demand growth
prospects. Azerbaijan is
just a point behind it in the regional rankings, but there is little chance of
its
moving ahead over the medium term.
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