The latest Mexico Oil & Gas Report from BMI forecasts that the country will account for 24.44% of Latin America regional oil demand by 2013, while providing 24.11% of supply. Latin America regional oil use of 6.66mn barrels per day (b/d) in 2001 reached an estimated 7.72mn b/d in 2008. It should average 7.86mn b/d in 2009 and then rise to around 8.58mn b/d by 2013. Regional oil production was just under 10.40mn b/d in 2001, and in 2008 averaged an estimated 9.99mn b/d. It is set to rise to 10.78mn b/d by 2013. Oil exports are slipping, because demand growth is exceeding the pace of supply expansion. In 2001, the region was exporting an average 3.73mn b/d. This total had fallen to an estimated 2.27mn b/d in 2008 and is forecast to be 2.21mn b/d in 2013. In terms of natural gas, the Latin America region in 2008 consumed an estimated 194bn cubic metres (bcm), with demand of 266bcm targeted for 2013, representing 45% growth. Estimated production of 208bcm in 2008 should reach 294bcm in 2013, and implies 28bcm of net exports at the end of the period. Mexico in 2008 consumed an estimated 28.88% of the region's gas, with its market share for 2013 forecast at 28.53%. In 2008 it produced some 23.51% of the region's gas, and is expected to be contributing 19.73% by 2013. In terms of the OPEC basket of crudes, the average price in the fourth quarter of 2008 (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% year-onyear (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. Mexican real GDP growth is forecast by BMI to contract by 1.3% in 2009, following an estimated fall of 0.1% in 2008. We are assuming 1.9% growth in 2010, 4.4% in 2011, followed by 5% in 2012 and 5.3% in 2013. Unless the government introduces a radical shift in energy policy, we expect state-owned Petróleos Mexicanos (Pemex) to retain full responsibility for oil production, without international oil company (IOC) involvement. We are assuming oil and gas liquids production of no more than 2.60mn b/d by 2013. Consumption is forecast to increase by no more than 1.5% per annum to 2013, implying demand of 2.10mn b/d by the end of the forecast period. The export capability would therefore be approximately 503,000b/d by 2013. Gas production is forecast to increase from an estimated 49bcm in 2008 to 58bcm over the period, with 18bcm of net imports required by 2013. Between 2007 and 2018, we are forecasting a decrease in Mexican oil production of 29%, with crude volumes falling steadily to 2.47mn b/d in 2018. Oil consumption between 2007 and 2018 is set to increase by 9%, with growth slowing to an assumed 1% per annum towards the end of the period and the country using 2.20mn b/d by 2018. Gas production is expected to rise gradually, from around 49bcm in 2008 to 70bcm in 2018. With demand growth of 81%, this implies a need for imports to rise from 7bcm to 28bcm between 2008 and 2018. Details of BMI's 10-year forecasts can be found in the appendix to this report, which provides global, regional and country-specific projections. Mexico ranks ninth in BMI's updated Upstream Business Environment rating, in spite of its vast hydrocarbons resource base. It is barely ahead of Chile and lags well behind Bolivia, so is unlikely to move further up the league table over the short term. While the absolute resource base may be large, the output growth outlook is modest, reserves-to-
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