April 28, 2011 -
PRLog -- The latest Venezuela Oil & Gas Report forecasts that the country will account for 7.49% of Latin American oil demand by 2015, while providing 26.58% of supply. Latin American regional use averaged an estimated 7.88mn barrels per day (b/d) in 2010. It should rise to 8.07mn b/d in 2011 and reach 8.69mn b/d by 2015. Regional oil production in 2010 averaged an estimated 10.03mn b/d. It is set to rise to 11.66mn b/d by 2015. Oil exports have been slipping, because demand growth has exceeded the pace of supply expansion. In 2001, the region was exporting an average of 3.46mn b/d. This total will have fallen to an estimated 2.15mn b/d in 2010 and is forecast to rebound to 2.97mn b/d in 2015. The principal exporters will be Mexico, Venezuela, Colombia and Brazil. In terms of natural gas, the region consumed an estimated 209bn cubic metres (bcm) in 2010, with demand of 264bcm targeted for 2015. Production of an estimated 221bcm in 2010 should reach 273bcm in 2015, and implies more than 8bcm of net exports at the end of the period. Venezuela contributed an estimated 14.59% to 2010 regional gas consumption, while producing around 13.12%. By 2015, it is expected to consume 13.23% of the region's gas, while contributing 14.66% to 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. BMI calculates Venezuelan real GDP fell 2.0% in 2010, with an average annual increase of 1.7% expected in 2010-2015. State-owned PetrÛleos de Venezuela (PdVSA) works in cooperation with numerous international oil company (IOC) partners in conventional and heavy oil projects. Although recent renationalisation moves, changes in taxation and alterations to the licensing system have reduced foreign involvement, several key players appear committed to the country's heavy oil schemes. We are assuming oil and gas liquids production of 3.10mn b/d by 2015, with the country expected to pump 2.54mn b/d in 2011. Consumption beyond the economic weakness of 2009/10 is forecast to increase by up to 2% per annum to 2015, implying demand of 651,000b/d by this point. The export capability would therefore be about 2.45mn b/d by 2015. Gas production is forecast to rise from an estimated 29bcm in 2010 to 40bcm over the period, providing 5bcm of export potential in 2015. Between 2010 and 2020, we forecast an increase in Venezuelan oil production of 59.1%, with liquids volumes averaging 2.52mn b/d in 2010 before rising steadily to 4.00mn b/d by 2018-2020. Oil consumption between 2010 and 2020 is set to increase by 11.2%, with growth slowing to an assumed 1.0% per annum towards the end of the period and the country using 684,000b/d by 2020. Gas production is expected to rise steadily, from an estimated 29bcm in 2010 to 54.0bcm in 2020. With demand growth of 30%, this implies export potential rising to 14.4bcm by 2020. Details of BMI's 10-year forecasts can be found in the appendix to this report. Venezuela now shares fifth place with Trinidad & Tobago (T&T)
in BMI's composite Business Environment Ratings (BERs_, which combines upstream and downstream scores. It lags Brazil and Peru in third place in BMI's updated upstream ratings, having held much of its ground thanks to its vast hydrocarbons resource base. Although now four points behind Brazil and Peru, its position is far from secure unless the overall risk situation improves dramatically. As well as high scores for reserves, production growth potential and reserves-to-
production ratios (RPR), Venezuela benefits from the number of international companies active within its upstream industry. Venezuela now takes ninth place, ahead only of Bolivia, in BMI's downstream ratings, reflecting its refining capacity, retail site intensity and growth in GDP per capita. Bolivia is not thought to be capable of challenging Venezuela over the next few quarters.
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