PRLog (Press Release)– Apr 20, 2011– The latest Algeria Oil & Gas Report from BMI forecasts that the country will account for 9.31% of African regional oil demand by 2015, while providing 16.86% of supply. African regional oil use of 3.06mn barrels per day (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 in 2010 averaged an estimated 9.98mn b/d. 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 of 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 it can resolve recent quasi-political issues.
In terms of natural gas, the region in 2010 consumed an estimated 123.7bn cubic metres (bcm), with demand of 176.2bcm forecast for 2015. Production of an estimated corsa 217.7bcm in 2010 should reach 321.2bcm in 2015, which implies net exports rising from an estimated 94bcm to 145bcm in 2015. In 2010, Algeria's share of regional gas supply was an estimated 37.67%, slipping to 36.74% by 2015. The country's share of demand in 2010 was an estimated 22.08%, with 19.77% predicted by 2015.
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 follo bmw wed 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 audi region take. We have also retained our existing supply and demand forecasts until the scheduled quarterly revision at the start of April.
Algeria's real GDP is assumed by BMI to have risen by 3.3% in 2010, with forecast average annual growth in 2010-2015 put at 4.1%. We expect estimated oil demand of 343,000b/d in 2010 to rise by up to 4% per annum to 417,000b/d in 2015. State oil company Sonatrach dominates the industry, operating in partnership with various international oil companies (IOCs), and accounts for 60% of the country's oil output. Thanks largely to IOC investment, combined oil and gas liquids output is forecast to increase from an estimated 1.83mn b/d in 2010 to 2.01mn b/d in 2015, with exports heading towards 1.59mn b/d. The country's OPEC membership and assigned production quota could frustrate volume growth ambitions. Gas production of an estimated 82bcm in 2010 should reach 118bcm by 2015. Consumption of an estimated 27bcm in 2010 is expected to rise to 35bcm by the end of the forecast period, providing potential exports of 83bcm.
Between 2010 and 2020 we are forecasting an increase in Algerian oil and gas liquids production of 31.5%, with volumes rising steadily from an estimated 1.83mn b/d in 2010 to 2.40mn b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2020 is set to increase by 48.0%, with growth slowing to an assumed 4% per annum towards the end of the period and the country using 507,000b/d by 2020. Gas production is expected to rise to 140bcm by the end of the period. With demand rising by 65.9% between 2010 and 2020, export potential should rise from an estimated 54.7bcm to 94.7bcm, in the form of liquefied natural gas (LNG) and by pipeline. Details of BMI's 10-year forecasts can be found in the appendix to this report.
Algeria now shares third place with Libya and Egypt in BMI's composite Business Environment (BE) ratings table, which combines upstream and downstream scores. It now shares fifth place in the updated upstream Business Environment ratings, alongside South Africa. The country's score benefits from healthy oil and gas reserves, a large number of non-state companies active in the upstream sector and decent licensing terms. Algeria is near the top of the league table in BMI's updated downstream Business Environment ratings, with some high scores but progress further up the rankings unlikely. It is now ranked third, behind only South Africa and Egypt, thanks to high scores for gas consumption, nominal GDP, likely refining capacity expansion and oil demand growth.
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