PRLog (Press Release)– Apr 21, 2011– This latest Kuwait Oil & Gas Report from BMI forecasts that the country will account for 5.46% of Middle East (ME) regional oil demand by 2015, while providing 10.22% of supply. Middle East regional oil use rose to an estimated 7.40mn barrels per day (b/d) in 2010. It should average 7.70mn b/d in 2011 and then climb to around 8.70mn b/d by 2015. Regional oil production was 22.83mn b/d in 2001 and averaged an estimated 24.90mn b/d in 2010. After a forecast 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 17.85mn b/d. This total 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 rc helicopter and car market place estimated 467bcm in 2010 should reach 612bcm in 2015 (+31.0%), which implies net exports rising to 130bcm by the end of the period. Kuwait consumed an estimated 3.55% of the region's gas in 2010, with its market share forecast at 3.75% by 2015. It contributed an estimated 2.83% to 2010 regional gas production and by 2015 will a acura ccount for 2.91% 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. < chevrolet /p>
BMI assumes that Kuwait's real GDP rose by 2.0% in 2010, with average annual growth of 3.6% expected in 2010-2015. We expect oil demand to rise from an estimated 423,000b/d in 2010 to 475,000b/d in 2015, lagging the underlying rate of economic expansion. State oil company Kuwait Petroleum Corporation (KPC) is responsible for all domestic oil and gas operations. Despite the absence of near-term international oil company (IOC) investment, crude production is forecast to increase from an estimated 2.49mn b/d in 2010 to 2.79mn b/d in 2015, subject to OPEC quotas. Gas production should reach 17.8bcm by 2015, up from an estimated 13.2bcm in 2010. Consumption is expected to rise from an estimated 13.9bcm in 2010 to 18.1bcm by the end of the forecast period, requiring modest net imports.
Between 2010 and 2020, we are forecasting an increase in Kuwaiti oil production of 38.6%, with crude volumes rising steadily to 3.45mn b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2020 is set to increase by 25.4%, with growth slowing to an average 3.0% per annum towards the end of the period and the country using 530,000b/d by 2020. Gas production is expected to climb to 20.8bcm by the end of the period. With 2010-2020 demand growth of 66.4%, this provides an import requirement ris buick ing to 2.3bcm by 2020. Details of the BMI 10-year forecasts can be found in the appendix to this report.
Kuwait takes last place in BMI's composite Business Environment Ratings (BERs) table, which combines upstream and downstream scores. The Gulf state holds eighth place, above only Saudi Arabia, in BMI's updated upstream ratings, which is a surprising outcome in view of its vast oil and gas wealth. It is three points behind Oman and may ultimately be able to mount a challenge. Kuwait's score suffers from strict government control of the upstream industry, undermining the healthy resource position. Kuwait is in the lower half of the league table in BMI's downstream ratings, with a few high scores and near-term progress up the rankings a possibility. It is now ranked eighth ahead only of Iraq, thanks to country risk factors that fail to counter the highly regulated and largely state-controlled industry.
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