Study Just Published: Colombia Oil & Gas Report Q1 2010

PRLog (Press Release) - Jan 20, 2010 -
The latest  Colombia Oil & Gas Report from  BMI forecasts that the country will account for 3.23% of Latin America regional oil demand by 2013, while providing 6.38% of supply. Latin America regional oil use of 6.66mn barrels per day (b/d) in 2001 reached an estimated 7.61mn b/d in 2008. It should average 7.57mn b/d in 2009 and then rise to around 8.23mn b/d by 2013. Regional oil production was just under 10.40mn b/d in 2001, and in 2008 averaged an estimated 9.89mn b/d. It is set to rise to 10.58mn 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 2.28mn b/d in 2008 and is forecast to be 2.35mn b/d in 2013. The principal exporters will be Mexico, Venezuela, Ecuador and Brazil. As regards natural gas, the region in 2008 consumed an estimated 191.3bn cubic metres (bcm), with demand of 254.3bcm targeted for 2013, representing 32.9% growth. Estimated production of 207.4bcm in 2008 should reach 289.9bcm in 2013, and implies 35.7bcm of net exports the end of the period. Colombia's share of gas consumption in 2008 was an estimated 4.08%, while its share of production was 4.10%. By 2013, its share of gas consumption is forecast to be 3.81%, with the country accounting for 3.79% 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. Colombian real GDP is now forecast by  BMI to decline by 1.4% in 2009, down from growth of 2.5% in government is working hard to encourage international oil company (IOC) investment and boost nearterm domestic oil production, aided by state-owned  Ecopetrol. We are assuming oil and gas liquids production of no more than 675,000b/d by 2013, with the country expected to pump 600,000b/d in 2009. Consumption beyond 2009 is forecast to increase by 3-4% per annum to 2013, implying demand of 266,000b/d by the end of the forecast period. The country's export capability will therefore rise to around 409,000b/d by 2013. Gas consumption is forecast to increase from an estimated 7.8bcm in 2008 to 9.7bcm over the period, met by rising domestic production, which will also provide modest exports to Venezuela. Between 2008 and 2018, we are forecasting a decrease in Colombian oil production of 8.62%, with crude volumes peaking at 675,000b/d in 2013 and then falling steadily to 530,000b/d by the end of the forecast period. Oil consumption between 2008 and 2018 is set to increase by 32.70%, with growth slowing to an assumed 3.0% per annum towards the end of the period and the country using 309,000 b/d by 2018. Gas production is expected to rise gradually, from around 8.5bcm in 2008 to 15.0bcm in 2018. With demand growth of 60.3%, this implies export potential reaching 2.5bcm by 2018. Details of  BMI's 10-year forecasts can be found in the appendix to this report. Colombia still ranks fourth in  BMI's updated Upstream Business Environment rating, well ahead of Trinidad and behind Venezuela. While the absolute resource base is modest, the competitive environment is attractive and licensing terms have improved to become some of the best in the region. Country risk is moderate and Colombia is well placed to retain its strong position in the league table. The country still ranks second in  BMI's updated Downstream Business Environment rating, reflecting its oil demand growth outlook, refining capacity expansion plans, moderate Country Risk and low retail site intensity. Trinidad holds third place, but arguably lacks the potential to challenge Colombia.

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