Market Report, "Nigeria Oil & Gas Report Q2 2011", published

April 23, 2011 - PRLog -- This latest Nigeria Oil & Gas Report from BMI forecasts that the country will account for 8.82% of African regional oil demand by 2015, while providing 23.07% of supply. African regional oil use of 3.06mn b/d in 2001 rose to an estimated 3.88mn b/d in 2010. It should average 3.96mn b/d in 2011 and then rise to around 4.48mn b/d by 2015. Regional oil production was 7.93mn b/d in 2001 and averaged an estimated 9.98mn b/d in 2010. From an estimated 10.37mn b/d in 2011, it is set to rise to 11.92mn b/d by 2015. Oil exports are growing steadily, because demand growth is lagging behind the pace of supply expansion. In 2001, the region was exporting an average 4.87mn b/d. This total rose to an estimated 6.10mn b/d in 2010 and is forecast to reach 7.44mn b/d by 2015. Angola has the greatest production growth potential, with Nigerian exports set to climb if the country can resolve recent quasi-political issues.

The region consumed an estimated 123.7bcm of natural gas in 2010, with demand of 176.2bcm forecast for 2015. Production of an estimated 217.7bcm in 2010 should reach 321.2bcm in 2015, which implies net exports rising from an estimated 94bcm to 145bcm in 2015. Nigeria consumed an estimated 10.51% of the region's gas in 2010, with its market share forecast at 13.62% by 2015. It will have contributed 15.62% to estimated 2010 regional gas production and, by 2015, will account for 18.37% 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.

Nigeria's GDP rose 7.8% in 2010 and BMI forecasts average annual growth of 7.7% in 2010-2015. We expect oil demand to rise from an estimated 288,000b/d in 2010 to 395,000b/d in 2015, representing 6-7% 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 a large number of international oil company (IOC) partners contribute to a forecast rise in oil and liquids production from an estimated 2.32mn b/d in 2010 to 2.75mn b/d by 2015 - subject to fresh rebel attacks on infrastructure and OPEC quota policy. Gas production should reach 59bcm by 2015, up from an estimated 35bcm in 2010. Consumption is expected to rise dramatically to around 24bcm by the end of the forecast period, allowing exports of no more than 35bcm. This threatens the country's liquefied natural gas (LNG) export business unless fresh supplies can be located and developed.

Between 2010 and 2020 we forecast an increase in Nigerian oil and gas liquids production of 50.9%, with volumes rising steadily to 3.50mn b/d by the end of the 10-year forecast period. Oil consumption is set to increase by 96.6%, with growth slowing to an assumed 7.5% per annum towards the end of the period and the country using 567,000b/d by 2020. Gas production is expected to rise to 80bcm by the end of the period. With demand rising by 215% between 2010 and 2020, export potential should increase to 39bcm, largely in the form of LNG. Details of BMI's 10-year forecasts can be found in the appendix to this report.

Nigeria now holds second place in BMI's composite Business Environment Ratings (BERs) table, which combines upstream and downstream scores. The country now shares third place with Ghana in BMI's updated upstream ratings. Nigeria's score benefits from its substantial oil and gas reserves, its oil and gas production growth outlook, and high reserves-to-production ratios (RPR). The competitive landscape features numerous non-state companies, and licensing terms are generally acceptable, although potentially under review. However, negative country risk factors undermine the hydrocarbons-specific strength. Nigeria is in the upper half of the league table in BMI's downstream ratings, with a few high scores but near-term progress further up the rankings unlikely. It is ranked fourth, behind Algeria, thanks largely to poor country risk factors that undermine further a regulated and largely state-controlled industry.

For more information or to purchase this report, go to:
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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.