The latest Norway Oil & Gas Report from BMI forecasts that the country will account for just 1.59% of developed European regional oil demand by 2013, while contributing 50.59% to supply. In Developed Europe, overall oil consumption reached an estimated 13.75mn barrels per day (b/d) in 2008. It is set to rise to around 14.04mn b/d by 2013. Developed Europe regional oil production was 6.97mn b/d in 2001, and in 2008 averaged an estimated 5.00mn b/d. It is set to fall to just 3.80mn b/d by 2013. Oil imports are growing steadily, because supply is contracting and demand is rising, albeit slowly. In 2008, net crude imports were an estimated 8.75mn b/d. By 2013, they are expected to have reached 10.24mn b/d. In terms of natural gas, the Developed Europe region in 2008 consumed an estimated 440bn cubic metres (bcm), with demand of 490bcm targeted for 2013, representing 11.2% growth. Production of an estimated 269bcm in 2007 should rise to 279bcm in 2013, which implies net imports rising from the estimated 2008 level of 171bcm to some 211bcm by the end of the period. Norway's share of gas consumption in 2008 was an estimated 1.01%, while it contributed 35.31% to production. By 2013, its share of gas consumption is forecast to be 1.0%, with a 42.96% contribution to regional supply. 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% year-on-year (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. Norwegian real GDP is now forecast by BMI to fall by 2.3% in 2009, down from growth of an estimated 1.4% in 2008. We are assuming average annual growth of 1.0% between 2009 and 2013. Recent (January 2009) Norwegian oil and liquids production has averaged 2.45mn b/d. We expect the country's 2008 oil and liquids production to be approximately 2.42mn b/d. By 2013, liquids volumes look set to have slipped to 1.92mn b/d. Oil demand could rise to just 223,000b/d by 2013, implying net exports slipping from an estimated 2.22mn b/d in 2008 to 1.70mn b/d by the end of the period. The estimated 2008 gas production of 95bcm should continue to rise towards at least 120bcm in 2012/13. Domestic gas consumption rising from 4.4bcm to 4.9bcm over the period 2008-2013 suggests that net exports will rise to 115.1bcm by the end of the forecast period. Between 2007 and 2018, we are forecasting a decrease in Norwegian oil production of 28.8%, with output slipping steadily from an estimated 2.44mn b/d in 2008 to 1.82mn b/d at the end of the 10-year forecast period. Given oil consumption forecast to decrease by 0.5%, exports slide from an estimated 2.22mn b/d to 1.60mn b/d during the forecast period. Gas production should rise from the estimated 2008 level of 95bcm to a peak of 120bcm in 2012-2014, before falling to 100bcm by 2018. Most exports will continue to be in the form of pipeline gas, with some LNG. Details of BMI's 10-year forecasts can be found in the appendix to this report, which provides global, regional and country-specific projections. BMI's long-term political risk rating for Norway is 99.0, well above the Developed Markets average of 85.8; and the highest among our universe of developed countries. Our long-term economic rating is 74.2, which compares with a Developed Markets average of 68.9, making Norway the highest-scoring country in developed Europe. There is a partly privatised energy sector, with government majority ownership of key company StatoilHydro, formed in 2007 from Statoil and the oil and gas interests of Norsk Hydro. Norway has a major, but mature and highly competitive upstream oil and gas segment, featuring most key national and international companies. The downstream oil segment is small, open to competition and deregulated.
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