The latest Venezuela Oil & Gas Report forecasts that the country will account for 8.27% of Latin America regional oil demand by 2013, while providing 26.90% of supply. Latin America regional oil use of 6.66mn 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 194bcm, 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 the end of the period. Venezuela contributed an estimated 15.99% to 2008 regional gas consumption, while producing 14.87%. By 2013, it is expected to consume 20.49% of the region's gas, while contributing 20.07% to supply. In terms of the OPEC basket of crudes, the average price in Q408 was an estimated US$52.53/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. Venezuela's real GDP is forecast to contract by 5.6% in 2009, following growth of an estimated growth 4.8% in 2008. We are now assuming a 1.7% contraction in 2010, with growth of 3.4% in 2011, followed by 2.8% in 2012 and 2.6% in 2013. State-owned Petróleos de Venezuela (PdVSA) works in co-operation with numerous international oil company (IOC) partners in conventional and heavy oil projects. While recent re-nationalisation moves, changes in taxation and alterations to the licensing system have reduced foreign involvement, several key players appear committed to the country. We are assuming oil and gas liquids production of 2.90mn b/d by 2013, with the country expected to pump 2.60mn b/d in 2009. Consumption is forecast to increase by around 3% per annum to 2013, implying demand of 709,000b/d by this point. The export capability would thus be about 2.19mn b/d by 2013. Gas production is forecast to rise from an estimated 31bcm in 2008 to 59bcm over the period, allowing 4.4bcm of exports by 2013. Between 2007 and 2018, we are forecasting an increase in Venezuelan oil production of 24.4%, with liquids volumes rising steadily from 2.61mn b/d to 3.25mn b/d. Oil consumption between 2007 and 2018 is set to increase by 37.9%, with growth slowing to an assumed 3.0% per annum towards the end of the period and the country using 822,000b/d by 2018. Gas production is expected to rise steadily, from around 31bcm in 2008 to 78bcm in 2018. With demand growth of 145%, this implies export potential rising to more than 8bcm by 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. Venezuela now ranks second behind Brazil in BMI's updated Upstream Business Environment rating, having lost ground in spite of its vast hydrocarbons resource base. It is unlikely to take the outright regional lead unless the overall risk situation improves dramatically. Peru is now just one behind. As well as high scores for reserves, production growth potential and reserves-to-
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