The latest Egypt Oil & Gas Report from BMI forecasts that the country will account for 19.72% ofAfrican regional oil demand by 2013, while providing 5.93% of supply. African regional oil use of2.98mn barrels per day (b/d) in 2001 rose to 3.60mn b/d in 2008. It should average 3.58mn b/d in 2009and then rise to around 3.96mn b/d by 2013. Regional oil production was 7.84mn b/d in 2001, and in2008 averaged 10.20mn b/d. It is set to rise to 11.98mn b/d by 2013. Oil exports are growing steadily,because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting ana'verage 4.86mn b/d. This total had risen to 6.60mn b/d in 2008 and is forecast to reach 8.02mn b/d by2013. Angola has the greatest production growth potential, with Nigerian exports set to soar if it canresolve recent quasi-political issues.
In terms of natural gas, the region in 2008 consumed 115bn cubic metres (bcm), with demand of 181bcmtargeted for 2013. Production of 211bcm in 2008 should reach 354bcm in 2013, which implies net exportsrising from 96bcm in 2008 to 173bcm by the end of the period. Egypt in 2008 consumed 35.51% of theregion’s gas, with its market share set to be 27.41% by 2013. It contributed 27.90% to 2008 regional gasproduction and, by 2013, will account for 24.57% of supply.
For 2009 as a whole, we are now assuming an average OPEC basket price of US$55.00 per barrel (bbl), a41.5% decline year-on-year (y-o-y). This represents an upgrade from the US$52 forecast we have stuckwith during the past three quarters. Our OPEC basket assumption delivers likely Brent, WTI, Urals andDubai prices of US$56.30, US$57.50, US$55.60 and US$55.60/bbl respectively. For 2010, we expect tosee a recovery to US$60.00/bbl for the OPEC price (up from our previous forecast of US$58), gainingfurther ground to US$65.00 in 2011 and to US$70.00/bbl in 2012. Our post-2010 forecasts are unchangedand we are continuing to use a long-term price assumption of US$70.00 for 2013-2018.
In 2009, BMI is now assuming a global average gasoline price of US$62.12/bbl, with the fuel havingpeaked in June. The overall y-o-y fall in 2009 gasoline prices is put at 40.0%. The BMI gasoil forecast isfor an average price of US$68.62/bbl, assuming a monthly high of US$92.49/bbl in December. The fullyearoutturn represents a 43.4% fall from the 2008 level. The annual jet price level for 2009 is forecast tobe US$65.17/bbl. This compares with US$124.95/bbl in 2008. The 2009 average naphtha price is put byBMI at US$49.06/bbl, down 43.9% from the previous year’s level.
Egyptian real GDP growth is now forecast by BMI at 3.7% for 2009, down from 7.2% in 2008. We areassuming 2.5% growth in 2010, 3.3% in 2011 and 4.8% in 2012, followed by 5.4% in 2013. We expectoil demand to rise from 693,000b/d in 2008 to 780,000b/d in 2013, subject to national efforts to conserveoil and increase the use of gas. State oil company Egyptian General Petroleum Corporation (EGPC)operates in partnership with various international oil companies (IOCs), and alone accounts for just 20%of the country’s oil output. In spite of higher recent IOC investment, combined oil and gas liquids outputis forecast to decrease from 722,000b/d in 2008 to 710,000b/d in 2013. Gas production should reach87bcm by 2013, up from 59bcm in 2008. Consumption is expected to rise from 41bcm to 50bcm by theend of the forecast period, providing exports of 37bcm.
Between 2008 and 2018, we are forecasting a decrease in Egyptian oil and gas liquids production of13.4%, with volumes slipping steadily to 626,000b/d by the end of the 10-year forecast period. Oilconsumption between 2008 and 2018 is set to increase by 30.5%, with growth slowing to an assumed3.0% per annum towards the end of the period and the country using 904,000b/d by 2018. Gas productionis expected to rise to 110bcm by the end of the period. With demand rising by 47.8% between 2008 and2018, there should be export potential increasing to 49.6bcm, in the form of LNG. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Egypt occupies seventh place in BMI’s updated Upstream Business Environment rating, three pointsbehind Algeria. The country’s score benefits from healthy proven gas reserves, an established competitivelandscape, a reasonable gas reserves-to-production ratio (RPR) and attractive licensing terms. Thecountry’s risk environment is sound, but this alone may not be enough to push Egypt past Algeria duringthe next few quarters. However, South Africa is two points behind and lacks the upstream credentials tochallenge for Egypt’s seventh place. The country is in the upper half of the league table in BMI’sDownstream Business Environment rating, with some high scores but progress further up the rankingsunlikely. It is ranked second, thanks to high scores for refining capacity, oil and gas demand, retail siteintensity, population and GDP per capita growth. The growth outlook for oil/gas consumption andrefining capacity represent relatively weak suits. Algeria is behind it in the regional rankings, and there issome long-term risk of it challenging for Egypt’s second place