Australia Oil and Gas Report Q3 2008 - www.companiesandmarkets.com adds new report.

2008-09-12 23:35:03 - Australia Oil and Gas Report Q3 2008 - a new market research report on www.companiesandmarkets.com

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The latest Australia Oil & Gas Report from BMI forecasts that the country will account for 3.33% of Asia Pacific regional oil demand by 2012, while providing 7.32% of supply. Asia Pacific regional oil use of 21.4mn barrels per day (b/d) in 2001 reached an estimated 25.56mn b/d in 2007. It should rise to around 29.38mn b/d by 2012. In terms of natural gas, the region in 2007 consumed an estimated 436bcm, with demand of 591bcm targeted for 2012, representing growth of 35.57% between 2007 and 2012.

Production of an estimated 354bcm in 2007 should reach 455bcm in 2012, but implies net imports rising from an estimated 82bcm per annum to 136bcm. Australia’s share of gas consumption in 2007 was an estimated 5.65%, while its share of production was 12.14%. By 2012, its share of gas consumption is forecast to be 4.86%, with the country accounting for 12.52% of supply. In Q108, we estimate that the OPEC basket price averaged US$92.64 per barrel (bbl) – up around 9% from the Q407 level. The OPEC basket price had exceeded US$102 by the middle of March, slipping back towards US$96/bbl later in the month.

The estimated Q108 average prices for the main marker blends are now US$96.54 for Brent, US$97.31 for WTI and US$93.44/bbl for Russian Urals (Mediterranean delivery). Our projections for 2008 as a whole are revised upwards from BMI’s last quarterly report. We are now assuming an OPEC basket price average of US$81 per barrel for 2008, compared with the US$74 estimate provided by our last quarterly report. Based on recent price differentials, this implies Brent at US$84.71, WTI averaging US$85.63/bbl, and Urals at US$81.88/bbl. Australian real GDP growth is now forecast by BMI at 3.5% for 2008, down from an estimated 3.9% in 2007. We are assuming 3.8% growth in 2009/10, 3.5% in 2011 and 3.4% in 2012. There is no state oil industry, but a group of domestic and leading international companies is investing heavily in gas production and exports to help slow the rate of decline in Australia’s oil output.

We are assuming oil and gas liquids production of no more than 630,000b/d by 2012, and the country is expected to pump 620,000b/d in 2008. Consumption is forecast to increase by around 1.5% per annum to 2012, implying demand of 978,000b/d by the end of the forecast period. The import requirement would therefore be approximately 348,000b/d by 2012. Between 2007 and 2018, we are forecasting an increase in Australian oil production of just 9.3%, with crude volumes peaking in 2009/2010 at 640,000b/d, before falling steadily to 590,000b/d by the end of the 10-year forecast period. Oil consumption between 2007 and 2018 is set to increase by 13.2%, with growth slowing to an assumed 0.5% per annum towards the end of the period and the country using 1.03mn b/d by 2018. Gas production is expected to rise rapidly, from around 41bcm in 2007 to a possible 92bcm by 2018 (+124%). With demand growth of 47%, this provides export potential rising from 16bcm to 56bcm, all in the form of liquefied natural gas (LNG).

Details of the new BMI 10-year forecasts can be found in the Appendix of this report, which provides global, regional and country-specific projections. Australia leads BMI’s newly revised Upstream Business Environment rating, with its balance of strong gas production/export potential, world class regulatory structure and solid risk environment proving to be a winning combination. However, the gap between it and second-placed Vietnam flatters Australia as it is due largely to the poorer risk environment in Vietnam. The country is further down the league table in BMI’s revised Downstream Business Environment rating, reflecting its status as a mature, deregulated and competitive energy market with limited growth potential. It shares fifth place out of the 14 states, alongside Indonesia and South Korea and seems certain to slip lower down the rankings as Country Risk improves elsewhere in the region.

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