The latest Libya Oil & Gas Report forecasts that the country will account for 7.78% of African regional oil demand by 2013, while providing 16.61% of supply. African regional oil use of 2.98mn barrels per day (b/d) in 2001 rose to 3.60mn b/d in 2008. It should average 3.58mn b/d in 2009 and then rise to around 3.96mn b/d by 2013. Regional oil production was 7.84mn b/d in 2001, and in 2008 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 an average 4.86mn b/d. This total had risen to 6.60mn b/d in 2008 and is forecast to reach 8.02mn b/d by 2013.

Angola has the greatest production growth potential, with Nigerian exports set to soar if it can resolve recent quasi-political issues.

In terms of natural gas, the region in 2008 consumed 115bn cubic metres (bcm), with demand of 181bcm targeted for 2013. Production of 211bcm in 2008 should reach 354bcm in 2013, which implies net exports rising from 96bcm in 2008 to 173bcm by the end of the period. Libya in 2008 consumed 5.64% of the region’s gas, with its market share forecast at 4.20% by 2013. It contributed 7.53% to 2008 regional gas production and by 2013 will account for 8.75% of supply.

For 2009 as a whole, we are now assuming an average OPEC basket price of US$55.00 per barrel (bbl), a 41.5% decline year-on-year (y-o-y). This represents an upgrade from the US$52 forecast we have stuck with during the past three quarters. Our OPEC basket assumption delivers likely Brent, WTI, Urals and Dubai prices of US$56.30, US$57.50, US$55.60 and US$55.60/bbl respectively. For 2010, we expect to see a recovery to US$60.00/bbl for the OPEC price (up from our previous forecast of US$58), gaining further ground to US$65.00 in 2011 and to US$70.00/bbl in 2012. Our post-2010 forecasts are unchanged and we are continuing to use a long-term price assumption of US$70.00 for 2013-2018.

In 2009, the report is now assuming a global average gasoline price of US$62.12/bbl, with the fuel having peaked in June. The overall y-o-y fall in 2009 gasoline prices is put at 40.0%. The gasoil forecast is for an average price of US$68.62/bbl, assuming a monthly high of US$92.49/bbl in December. The full year outturn represents a 43.4% fall from the 2008 level. The annual jet price level for 2009 is forecast to be US$65.17/bbl. This compares with US$124.95/bbl in 2008. The 2009 average naphtha price is put at US$49.06/bbl, down 43.9% from the previous year’s level.

Libyan real GDP growth is now forecast at 0.6% for 2009, down from 5.7% in 2008. We are assuming 6.4% growth in 2010, 5.6% in 2011, followed by 6.4% in 2012, and 6.0% in 2013. We expect oil demand to rise from an estimated 268,000b/d in 2008 to 308,000b/d in 2013. State-owned National Oil Corporation (NOC) accounts for some 40% of oil production and all gas production, but it has a growing number of international oil company (IOC) partners contributing to a forecast rise in oil production from 1.85mn b/d in 2008 to 1.99mn b/d by 2013. The state itself has far more ambitious volume goals that may be frustrated by OPEC quota policy. Gas production should reach 31.0bcm by 2013, up from 15.9bcm in 2008. Consumption is expected to rise from around 6.5bcm to 7.6bcm by the end of the forecast period, allowing exports of 23.4bcm.

Between 2008 and 2018, we are forecasting an increase in Libyan oil and gas liquids production of 32.7%, with volumes rising steadily to 2.45mn b/d by the end of the 10-year forecast period. Oil consumption between 2008 and 2018 is set to increase by 39.7%, with growth slowing to an assumed 4.0% per annum towards the end of the period and the country using 375,000b/d by 2018. Gas production is expected to rise to 51bcm by the end of the period. With demand rising by 42.4% between 2008 and 2018, there should be export potential increasing to around 42bcm, via pipeline and in the form of LNG.

Details of the 10-year forecasts can be found in the appendix to this report.

Libya continues to occupy first place, above Gabon, Nigeria and Republic of Congo (RoC), in the updated Upstream Business Environment rating, with a comfortable margin of three points. The country’s score benefits from its proven oil reserves, and a region-topping oil reserves-to-production ratio (RPR).

The competitive landscape features numerous non-state companies, while licensing terms are generally good. However, country risk factors undermine some of the hydrocarbons-specific strength. The country is near the middle of the league table in the Downstream Business Environment rating, with a few high scores but near-term progress up the rankings unlikely. It is ranked equal sixth with Sudan thanks to poor country risk factors, a largely state-controlled industry and moderate oil and gas demand growth prospects.