This latest Nigeria Oil & Gas Report from BMI forecasts that the country will account for 11.92% of African regional oil demand by 2014, while providing 22.45% of supply. African regional oil use of 2.98mn barrels per day (b/d) in 2001 rose to an estimated 3.60mn b/d in 2009. It should average 3.67mn b/d in 2010 and then rise to around 4.14mn b/d by 2014. Regional oil production was 7.84mn b/d in 2001, and in 2009 averaged an estimated 9.69mn b/d. It is set to rise to 11.79mn b/d by 2014. Oil exports are growing steadily, because demand growth is lagging behind the pace of supply expansion. In 2001, the region was exporting an average 4.86mn b/d. This total had risen to an estimated 6.08mn b/d in 2009 and is forecast to reach 7.66mn b/d by 2014. Angola has the greatest production growth potential, with Nigerian exports set to soar if it can resolve recent quasi-political issues.
In terms of natural gas, the region in 2009 consumed an estimated 122.9bn cubic metres (bcm), with demand of 175.9bcm forecast for 2014. Production of an estimated 242.6bcm in 2009 should reach 391.9bcm in 2014, which implies net exports rising from 120bcm in 2009 to 216bcm in 2014. In 2009 Nigeria consumed an estimated 14.65% of the region's gas, with its market share forecast at 19.90% by 2014. It contributed 16.49% to estimated 2009 regional gas production and, by 2014, will account for 22.45% of supply.
We are sticking with our forecast that the OPEC basket of crudes will average US$83.00/bbl in 2010. Wide variations in crude differentials so far in 2010 make forecasting tricky for Brent, West Texas Intermediate (WTI) and Urals, but we believe the three benchmarks will average around US$85.11, US$88.22 and US$83.62/bbl respectively, with Dubai coming in at US$83.14. By 2011, there should be further growth in oil consumption and more room for OPEC to regain market share and reduce surplus capacity through higher production quotas. We are assuming a further increase in the OPEC basket price to an average US$85.00/bbl. For 2012 and beyond, we continue to use a central case forecast of US$90.00/bbl for the OPEC basket.
For 2010, BMI assumes an average global price of US$96.83/bbl for premium unleaded gasoline. The year-on-year (y-o-y) rise in 2010 gasoline prices is put at 38%. Gasoil is expected to average US$92.45/bbl in 2010, with the full-year outturn representing a 37% increase from the 2009 level. For jet fuel in 2010, the annual level is forecast to be US$95.58/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$82.46/bbl, up 39% from the previous year's level.
Nigerian real GDP is assumed by BMI to have risen by 6.9% in 2009, followed by forecast growth of 7.5% in 2010. We are assuming average annual growth of 7.4% in 2010-2014. We expect oil demand to rise from an estimated 376,000b/d in 2009 to 493,000b/d in 2014, representing 5-6% average annual growth. State-owned Nigerian National Petroleum Corporation (NNPC) accounts for more than 50% of oil production and over 40% of gas supply, but has a large number of international oil company (IOC) partners contributing to a forecast rise in oil and liquids production from an estimated 2.01mn b/d in 2009 to 2.70mn b/d by 2014 - subject to fresh rebel attacks on infrastructure and OPEC quota policy. Gas production should reach 88bcm by 2014, up from an estimated 40bcm in 2009. Consumption is expected to rise dramatically from around 18bcm to 35bcm by the end of the forecast period, allowing exports of no more than 53bcm. This threatens the country's liquefied natural gas (LNG) export business unless fresh supplies can be located and developed.
Between 2010 and 2019 we forecast an increase in Nigerian oil and gas liquids production of 55.3%, with volumes rising steadily to 3.40mn b/d by the end of the 10-year forecast period. Oil consumption is set to increase by 82.9%, with growth slowing to an assumed 7.5% per annum towards the end of the period and the country using 708,000b/d by 2019. Gas production is expected to rise to 126bcm by the end of the period. With demand rising by 205.3% between 2010 and 2019, export potential should increase to 65bcm, largely in the form of LNG. Details of BMI's 10-year forecasts can be found in the appendix to this report.
Nigeria shares fifth place with Angola in BMI's composite Business Environment (BE) ratings table, which combines Upstream and Downstream scores. The country now holds fourth place in BMI's updated Upstream Business Environment Ratings, just ahead of Angola. It may struggle to keep ahead of Angola over the medium term, as its West African rival has greater potential for advancement. Nigeria's score benefits from its substantial oil and gas reserves, its oil and gas production growth outlook, and high reserves-to-
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