New Market Research Report: Bahrain Oil & Gas Report Q2 2011

April 20, 2011 - PRLog -- We forecast that Bahrain will account for 0.56% of Middle East regional oil demand by 2015, while providing 0.33% of supply. Middle East regional oil use rose to an estimated 7.4mn b/d in 2010. It should average 7.7mn barrels per day (b/d) in 2011 and then climb to around 8.7mn b/d by 2015. Regional oil production was 22.83mn b/d in 2001 and averaged an estimated 24.9mn b/d in 2010. After an estimated 25.21mn b/d in 2011, it is set to rise to 27.24mn b/d by 2015. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average of 17.85mn b/d. This total will have eased to an estimated 17.50mn b/d in 2010 and is forecast to reach 18.54mn b/d by 2015. Iraq has the greatest export growth potential, followed by Qatar.

In terms of natural gas, the region consumed an estimated 392bn cubic metres (bcm) in 2010, with demand of 482bcm targeted for 2015, representing 23.0% growth. Production of an estimated 467bcm in 2010 should reach 612bcm in 2015 (+31.0%), which implies net exports rising to 130bcm by the end of the period. Bahrain's estimated share of gas consumption in 2010 will have been 3.37%, while its share of production is put at 2.83%. By 2015, its share of gas consumption is forecast to be 3.66%, with the country accounting for 2.73% of supply.

The 2010 full-year outturn was US$77.45/bbl for OPEC crude, which delivered an average for North Sea Brent of US$80.34/bbl and for West Texas Intermediate (WTI) of US$79.61/bbl. The BMI price target of US$77 was reached thanks to the early onset of particularly cold weather, which drove up demand for and the price of heating oil during the closing weeks of the year.

We set our 2011 supply, demand and price forecasts in early January, targeting global oil demand growth of 1.53% and supply growth of 1.91%. With OECD inventories at the top of their five-year average range, we set a price forecast of US$80/bbl average for the OPEC basket in 2011. The unprecedented wave of popular uprisings in the Middle East and North Africa (MENA) that followed the removal of Tunisian President Ben Ali on January 14 has obviously fundamentally altered our outlook, particularly since the unrest spread to Libya in mid-February.

Taking into account the risk premium that has been added to crude prices in response to actual and perceived threats to supply, we have now raised our benchmark OPEC basket price forecast from US$80 to US$90/bbl for 2011 and from US$85 to US$95/bbl for 2012. Based on our expectations for differentials, this gives a forecast for Brent at US$94/bbl in 2011 and US$99/bbl in 2012. We have kept our long-term price assumption of US$90/bbl (OPEC basket) in place for the time being while we wait to see what path events in the MENA region take. We have also retained our existing supply and demand forecasts until the scheduled quarterly revision at the start of April.

Bahrain's real GDP rose by an estimated 1.3% in 2010, with average annual growth of 4.7% forecast in 2010-2015. Consumption of oil is set to rise with the moderate growth of the economy, reaching a maximum of 49,000b/d by 2015. The state accounts for all domestic oil and gas production, as well as the refining and distribution segment. International oil company (IOC) involvement is somewhat limited. Thanks to modest resource potential and few large-scale IOC upstream ventures, crude and liquids output is now averaging about 58,000b/d, with potential to reach 90,000b/d by 2015. Gas output is set to increase from an estimated 13.2bcm in 2010 to 16.7bcm by 2015, with imports of 1.0bcm required by the end of the forecast period.

Between 2010 and 2020, we are forecasting an increase in Bahrain oil production of 81.8%, with crude volumes doubling to 100,000b/d before the end of the 10-year forecast period. Oil consumption between 2010 and 2020 is set to increase by 38.1%, with growth at an assumed 3% per annum towards the end of the period and the country using 58,000b/d by 2020. Gas production is expected to climb towards 18bcm by 2019/20. With 2010-2020 demand growth of 79.1%, this provides an import requirement of around 5.9bcm by 2020. Details of BMI's 10-year forecasts can be found in the appendix to this report.

Bahrain now shares sixth place with Oman in BMI's composite Business Environment (BE) ratings table, which combines upstream and downstream scores. The country this quarter retains fifth place in BMI's updated upstream Business Environment ratings, and is five points above Iran. It has held this position in spite of its very modest oil and gas reserves, but thanks to an improving production growth outlook. There are low reserves-to-production ratios (RPR) and modest non-state involvement in the upstream segment. The country's risk environment is very sound, but this may prove insufficient to help Bahrain move further up the league table. Bahrain now shares sixth place with Qatar in BMI's updated downstream Business Environment ratings, with few high scores and no further progress up the rankings likely. It scores 46 points, above Kuwait, thanks to modest refining capacity, oil and gas demand, population and the privatisation trend. The growth prospects for oil/gas consumption and refining capacity are reasonable, offsetting the pedestrian increase in GDP per capita.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.