Russia Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Russia’s oil and gas industry.
This latest Russia Oil & Gas Report from BMI forecasts that the country will account for 47.48% of Central and Eastern European (CEE) regional oil demand by 2015, while providing 70.34% of supply. CEE regional oil use of 5.42mn barrels per day (b/d) in 2001 will have risen to an estimated 6.05mn b/d in 2010. It should increase to around 6.89mn b/d by 2015. Regional oil production was 8.89mn b/d in 2001 and in 2010 will have averaged an estimated 13.82mn b/d. It is set to rise to 15.08mn b/d by 2015.
Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average of 3.47mn b/d. This total will have risen to an estimated 7.76mn b/d in 2010 and is forecast to reach 8.19mn b/d by 2015. Azerbaijan and Kazakhstan have the greatest production growth potential, although Russia will remain the key exporter.
In terms of natural gas, the region in 2010 will have consumed an estimated 636.3bn cubic metres (bcm), with demand of 747.7bcm targeted for 2015, representing 17.5% growth. Production of an estimated 787.9bcm in 2010 should reach 954.2bcm in 2015, which implies net exports rising from an estimated 151.6bcm in 2010 to 206.5bcm by the end of the period. Russias share of gas consumption in 2010 is an estimated 62.16%, while its share of production is put at 71.07%. By 2015, its share of demand is forecast to be 58.41%, with the country accounting for 68.12% of supply.
For 2010 as a whole, we assume an average OPEC basket price of US$77.00/bbl (+26.5% y-o-y). The 2010 US WTI price is now put at US$79.16/bbl. BMI is assuming an OPEC basket price of US$80.00/bbl in 2011, with WTI averaging US$82.25, Brent at US$82.46/bbl, Urals delivering around US$81.21 and the Dubai average being US$80.74/bbl. Our central assumption for 2012 is an OPEC price averaging US$85.00/bbl, delivering WTI at approximately US$87.40 and Brent at US$87.60/bbl. From 2013 onwards, we are using an average OPEC price of US$90.00/bbl.
For the whole of 2010, the BMI assumption for the global gasoline price is an average of US$87.49/bbl, representing a y-o-y rise of 24.7%. The global gasoil forecast is for an average price of US$88.00/bbl, probably peaking in December 2010 at more than US$95/bbl. The full-year outturn represents a 27.6% increase from the 2009 level. For 2010, the annual jet price level is forecast to be US$89.500/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$77.65/bbl, up almost 31% from the previous years level.
Russian real GDP is assumed by BMI to have risen by 4.1% in 2010. We are forecasting average annual growth of 4.3% in 2010-2015. State-controlled Gazprom has a virtual monopoly over gas transportation and exports. With it being the main provider, we see gas output rising from an estimated 560bcm in 2010 to 650bcm by 2015. Russian domestic companies control most of Russias oil production. Rosneft is the main state-controlled oil producer. The companies will have delivered 2010 output of crude oil and condensates averaging an estimated 10.36mn b/d. Oil production seems likely to rise only slowly over the next few years. Our 2015 production forecast is for 10.60mn b/d.
Between 2010 and 2020, we are forecasting an increase in Russian oil production of 4.59%, with output rising slowly from an estimated 10.36mn b/d in 2010 to a peak of 11.00mn b/d in 2016/17, before easing to 10.84mn b/d by 2020. Oil consumption during the period is forecast to rise by 28.01%, permitting exports peaking at 7.65mn b/d in 2016. Gas consumption is expected to be up from an estimated 396bcm to 482bcm by 2020, providing export potential peaking at 213bcm in 2015. Details of BMIs 10-year forecasts can be found in the appendix to this report.
Russia now shares fourth place with Turkey in BMIs composite Business Environment (BE) ratings table, which combines upstream and downstream scores. It now holds fifth place below Turkey in BMIs updated upstream Business Environment ratings, aided by unrivalled hydrocarbons resources. Its oil and gas reserves account for much of the upstream score, but licensing, privatisation and country risk factors are less impressive. Medium-term scope exists for Russia to overtake Turkey and Poland above it, but it is likely to remain behind Azerbaijan and Kazakhstan. Russia is at the top of the league table in BMIs updated downstream Business Environment ratings, having overtaken Turkey and Poland. There are a few particularly high scores, but there is some risk from both Turkey and Poland over the longer term. There are excellent scores for refining capacity, oil and gas demand, population and nominal GDP.
