Abstract
The latest Slovakia Oil & Gas Report from BMI forecasts that the country will
account for 1.63% of
Central and Eastern European (CEE) regional oil
demand by 2013, while providing no significant
contribution to supply. CEE
regional oil use of 4.65mn barrels per day (b/d) in 2001 rose to an
estimated
5.36mn b/d in 2008. It should average 5.42mn b/d in 2008 and
then rise to around 5.99mn b/d by 2013.
Regional oil production was 8.83mn
b/d in 2001, and in 2008 averaged an estimated 13.00mn b/d. It is set
to
rise to 14.44mn 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
7.64mn b/d in 2008 and is forecast to reach 8.45mn b/d by 2013.
In terms
of natural gas, the region in 2008 consumed an estimated 637bn cubic metres
(bcm), with
demand of 749bcm targeted for 2013, representing 17.5% growth.
Production of an estimated 783bcm in
2008 should reach 913bcm in 2013,
which implies net exports rising from around 145bcm in 2008 to
164bcm by
the end of the period. Slovakia’s share of gas consumption in 2008 was
an estimated 0.94%,
while its share of production was negligible. By 2013,
its share of demand is forecast be 0.98%.
In terms of the OPEC basket of
crudes, the average price in Q408 was an estimated US$52.53 per barrel
(bbl), down sharply from the US$113.49 recorded during the previous three
months. The full year 2008
average is put by BMI at US$94.08/bbl,
representing a 36% y-o-y increase. North Sea Brent, WTI and
Russian Urals
are believed to have averaged US$97.06, US$99.33 and US$94.56/bbl respectively
during
2008. For 2009, we are now assuming an average OPEC basket price of
US$52/bbl (-45% y-o-y), with
Q109 expected to deliver US$40.00. The new
full year forecast implies Brent crude at US$55.65, WTI
averaging
US$56.63/bbl and Urals at US$52.48 for 2009. For 2010, we expect to see a
recovery to
US$58.00/bbl for the OPEC price, gaining further ground to
US$65.00 in 2011 and US$70.00/bbl in
2012. We are now using a long-term
price assumption of US$70.00 for 2013-2018, down from our
previous
assumption of US$90.00/bbl.
In 2009, we see monthly average global
wholesale gasoline prices ranging from US$38.90 in January to a
high of
US$64.90 reached in August and in December, providing a full year average of
US$56.20 – just
over 55% of the 2008 outturn. The 2009 BMI gasoil
forecast is for an average price of US$67/bbl,
assuming a monthly low of
US$46.40 in January and a high of US$77.30/bbl in December. The full-year
outturn represents a 45% downturn from the 2008 level. For 2009, the monthly
average jet fuel price is
forecast to range from US$47.90 in January to
US$79.80/bbl in August, proving an annual level of
US$69.20/bbl.
Slovak real GDP is forecast by BMI to fall by 0.9% in 2009, compared with
estimated growth of 7.6% in
2008. We are assuming 2.0% growth in 2010,
3.7% in 2011 and 4.0% in 2012, followed by 4.6% in 2013.
Oil consumption
is forecast to rise rapidly, averaging around 4% per annum and keeping pace
with
underlying GDP growth. There is scope for oil consumption to reach
98,000b/d by 2013. This volume
will be imported, largely from Russia.
Natural gas demand may also rise at a more rapid rate if the power
industry builds new gas-fired plants, although the residential gas market is
close to saturation. Our
forecast is for Slovakia to be consuming 7.4bcm
of gas by 2013, virtually all of which will be imported.
Between 2007 and
2018, we are forecasting an increase in Slovak oil consumption of 41.8%, with
import
volumes rising steadily from an estimated 81,000b/d to 113,000b/d
by the end of the 10-year forecast
period. Gas consumption is expected to
up from an estimated 6.0bcm to 9.4bcm by 2018, met largely by
imports.
Details of BMI’s 10-year forecasts can be found in the appendix to this
report, which provides
global, regional and country-specific
projections.
Slovakia occupies equal sixth place with Ukraine in
BMI’s updated Upstream Business Environment
rating. Licensing,
privatisation and country risk factors account for its mid-table score, rather
than
hydrocarbons wealth. Over the medium term, Slovakia it is at some
risk from Romania below. The
country is just in the lower half of the
league table in BMI’s Downstream Business Environment rating.
Only
in oil demand growth potential does the country score particularly well and
progress further up the
rankings from a share of seventh place (alongside
the Czech Republic and Kazakhstan) seems unlikely
over the medium term.
Country risk factors are generally favourable and there is an established
competitive landscape. Turkmenistan is just two points below it in the
regional rankings, and there is
some risk of the Caspian state challenging
for Slovakia’s position, while Kazakhstan is likely to break
away
and move above it.
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