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

2008-09-12 23:53:05 - Japan Oil and Gas Report Q3 2008 - a new market research report on www.companiesandmarkets.com

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The latest Japan Oil & Gas Report from BMI forecasts that the country will account for 17.33% of Asia Pacific regional oil demand by 2012, while not contributing significantly to regional 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 consumed an estimated 436bn cubic metres (bcm) in 2007, with demand of 591bcm targeted for 2012, representing growth of 35.57%.

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. Japan’s share of gas consumption in 2007 was an estimated 20.18%, while it provides no meaningful share of production. 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/bbl 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/bbl, WTI averaging US$85.63/bbl, and Urals at US$81.88/bbl. Japanese real GDP growth is forecast by BMI at 2.0% for 2008, up from an estimated 1.9% in 2007. We foresee 2.2% growth in 2009, followed by 2.1% in 2010-2012. There is little domestic upstream activity, with local state and private firms concentrating on international exploration efforts.

The outlook for domestic oil and gas production therefore remains poor. Oil consumption is forecast to stagnate or even fall slightly over the period to 2012, implying demand of 5.09mn b/d by the end of the forecast period. The country should also be consuming 102bcm of gas by the end of the period, all of which will be imported in the form of liquefied natural gas (LNG). Between 2007 and 2018, we are forecasting a reduction in Japanese oil consumption of almost 0.82%, with demand stagnating towards the end of the period and the country using 5.08mn b/d by 2018. Gas consumption is expected to rise from around 88bcm in 2007 to a possible 115bcm by 2018 (+31%). All of Japan’s gas will continue to be imported in the form of 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. Japan ranks 10th in BMI’s newly revised Upstream Business Environment rating, thanks to a virtual absence of hydrocarbon resources.

The score reflects the limited involvement of the government in upstream oil activities and an exceptionally healthy country risk profile, which counter the lack of reserves and output growth potential. The country ranks third in BMI’s updated Downstream Business Environment rating, reflecting its high levels of oil and gas consumption, increasing gas demand and the established modern refining capability. However, it is held back by a high level of retail site intensity and a poor oil demand growth outlook. It is sandwiched between India and Singapore.

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