"Norway Oil & Gas Report Q4 2010" is now available at Fast Market Research

Nov. 7, 2010 - PRLog -- The latest Norway Oil & Gas Report from BMI forecasts that the country will account for just 1.68% of Developed European regional oil demand by 2014, while contributing 51.79% to supply. In Developed Europe, overall oil consumption is set to average an estimated 13.10mn barrels per day (b/d) in 2010, before recovering to around 13.29mn b/d by 2014. Developed Europe regional oil production was 6.96mn b/d in 2001, and is expected to average an estimated 4.45mn b/d in 2010. It is set to fall to just 3.69mn b/d by 2014. Oil imports are growing steadily because supply is contracting and demand is rising, albeit slowly. In 2010, net crude imports are forecast to be 8.65mn b/d. By 2014, they are expected to have reached 9.60mn b/d. Norway will remain the only major net exporter, with the UK a net importer.

As regards natural gas, the Developed Europe region is expected to consume an estimated 419.5bcm in 2010, with demand of 458.1bcm targeted for 2014, representing 9.2% growth. Production of an estimated 259.3bcm in 2010 is set to fall to 259.0bcm in 2014, which implies net imports rising from the estimated 2010 level of 156.6bcm to some 199.1bcm by the end of the period. Norway's share of gas consumption in 2010 will be an estimated 0.98%, while it will contribute around 42.46% to production. By 2014, its share of gas consumption is forecast to be 0.97%, with a 46.33% contribution to regional supply.

For 2010 as a whole, we continue to assume an average OPEC basket price of US$83.00/bbl (+36.4% yo- y). Risk is now clearly on the downside, thanks to the slow progress made during June-August. However, a full-year outturn in excess of US$80 remains a strong possibility and we see no need to review our assumptions at this point. BMI is assuming an OPEC basket price of US$85.00/bbl in 2011, with WTI averaging US$89.74. Our central assumption for 2012 and beyond is an OPEC price averaging US$90.00/bbl, delivering WTI at just over US$95.00.

For 2010, the BMI assumption for premium unleaded gasoline is an average global price of US$95.45/bbl. The overall y-o-y rise in 2010 gasoline prices is put at 36%. Gasoil in 2010 is expected to average US$93.23/bbl. The full-year outturn represents a 35% increase from the 2009 level. For 2010, the annual jet price level is forecast to be US$95.90/bbl, compared with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$83.53/bbl, up 41% from the previous year's level.

BMI expects Norwegian real GDP to rise by 0.9% in 2010. We are forecasting 2.1% average annual growth in 2010-2014. Recent (July 2010) Norwegian oil and liquids production has averaged 2.28mn b/d. We expect the country's 2010 oil and liquids production to be about 2.19mn b/d, down from 2.34mn b/d in 2009. By 2014, liquids volumes look set to slip to 1.91mn b/d. Oil demand could rise to 223,000b/d by 2014, implying that net exports will slip from an estimated 2.13mn b/d in 2009 to 1.69mn b/d by the end of the period. Estimated 2010 gas production of 110bcm should continue to rise towards at least 120bcm by 2012-2014. Rising domestic gas consumption, from an estimated 4.1bcm to 4.4bcm over the period 2009-2014, suggests that net exports will rise to 115.6bcm by the end of the forecast period.

Between 2010 and 2019, we forecast a decline in Norwegian oil production of 19.91%, with output slipping steadily from an estimated 2.19mn b/d in 2010 to 1.75mn b/d at the end of the 10-year forecast period. Given a mere 3.32% increase in oil consumption over the period, exports slide from 1.97mn b/d to 1.53mn b/d by 2019. Gas production should rise from the estimated 2010 level of 110bcm to a peak of 120bcm in 2012-2014, before falling to 100bcm by 2019. Most exports will continue to be in the form of pipeline gas, with some liquefied natural gas (LNG). Details of BMI's 10-year forecasts can be found in the appendix to this report.

According to BMI's country risk team, Norway's long-term political risk score is 99.0 out of 100, compared with the Developed Markets average of 86.7 and the global average of 63.0. Our long-term economic rating for the country is 73.0, above the Developed Markets average of 66.8 and above the global average of 53.2. There is a partly privatised energy sector, with government majority ownership of the national oil company Statoil, formed in 2007 through a merger of 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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