Browse the complete Report on: Argentina Oil and Gas Report Q4 2010
The latest Argentina Oil & Gas Report from BMI forecasts that the country will account for 6.09% of Latin America regional oil demand by 2014, while providing 6.31% of supply. Latin American regional oil use will average an estimated 7.76mn barrels per day (b/d) in 2010. It should rise to 7.91mn b/d in 2011 and reach 8.41mn b/d by 2014. Regional oil production in 2010 should average an estimated 10.05mn b/d. It is set to rise to 10.63mn b/d by 2014. Oil exports have been slipping, because demand growth has exceeded the pace of supply expansion. In 2001, the region was exporting an average 3.37mn b/d. This total will fall to an estimated 2.29mn b/d in 2010 and is forecast to slip further to 2.22mn b/d in 2014. The principal exporters will be Mexico, Venezuela, Ecuador and Brazil.
In terms of natural gas, the region in 2010 will consume an estimated 209bn cubic metres (bcm), with demand of 252bcm targeted for 2014. Production of an estimated 221bcm in 2010 should reach 247bcm in 2014, and implies 5bcm of net imports at the end of the period. Argentina’s share of gas consumption in 2010 is an estimated 21.05%, while its share of production was 19.45%. By 2014, its share of gas consumption is forecast to be 19.65%, with the country accounting for 17.69% of supply.
For 2010 as a whole, we continue to assume an average OPEC basket price of US$83.00/bbl, +36.4% year-on-year (y-o-y). Risk is now clearly on the downside, thanks to the slow progress made during June. However, a full year outturn in excess of US$80 remains a strong possibility and we see no need to review our assumptions at this point. The 2010 US WTI price is now put at US$87.63/bbl. BMI is assuming an OPEC basket price of US$85.00/bbl in 2011, with WTI averaging US$89.74. Our central assumption for 2012 and beyond is an OPEC price averaging US$90.00/bbl, delivering WTI at just over US$95.00.
For 2010, the BMI assumption for premium unleaded gasoline is an average global price of US$95.45/bbl. The overall y-o-y rise in 2010 gasoline prices is put at 36%. Gasoil in 2010 is expected to average US$93.23/bbl. The full-year outturn represents a 35% increase from the 2009 level. For 2010, the annual jet price level is forecast to be US$95.90/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$83.53/bbl, up 41% from the previous year’s level. Argentina’s real GDP is forecast by BMI to rise by 1.5% in 2010, followed by average annual growth of 2.0% in 2010-2014. State entity Enarsa acts as partner to international oil companies (IOCs) in supporting output growth efforts, operating alongside regional heavyweight Repsol YPF and others. We are assuming oil production peaking at no more than 685,000b/d in 2013, with the country expected to pump 665,000b/d in 2010. Beyond the 2009/2010 dip, consumption is forecast to increase by around 1.5% per annum to 2014, implying demand of 512,000b/d by the end of the forecast period. The crude oil export capability would therefore be around 159,000b/d by 2014. Gas production is forecast to increase from an estimated 43bcm in 2010 to a high of 46bcm during the period, resulting in the need for 5.8bcm of net imports by 2014.
Between 2010 and 2019, we are forecasting a decrease in Argentine oil production of 8.75%, with crude volumes peaking in 2013 at 685,000b/d, before falling steadily to 607,000b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2019 is set to increase by 13.21%, with growth slowing to an assumed 1% per annum towards the end of the period and the country using 541,000 b/d by 2019. Gas production is expected to rise gradually, from an estimated 43.0bcm in 2010 to a peak of 46.0bcm in 2012/2013, before slipping back to 33.8bcm by 2019. With demand growth of 24.13%, this provides a need for net imports to rise to 20.8bcm by 2019. Details of BMI’s 10-year forecasts can be found at the end of this report.
Argentina now takes fourth place, behind Peru, in BMI’s composite Business Environment (BE) rating, which combines upstream and downstream scores. The country holds fifth place in our updated upstream Business Environment ratings, ahead of Trinidad & Tobago (T&T). Its gas resources, largely privatised oil sector, licensing regime and competitive landscape work in the country’s favour, but are undermined by an absence of growth potential, asset maturity and unappealing risk environment. Limited scope exists for Argentina to pull further away from Trinidad, but it should be safe from Ecuador some eight points below. Argentina is well up the league table in BMI’s downstream Business Environment ratings, reflecting its privatised refining and marketing segment, substantial capacity and competitive environment, offset by only moderate growth potential and a relatively high level of retail site intensity. It now holds third place, behind Colombia, in the regional rankings.
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