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Brazil Oil and Gas Report Q2 2010
Market |
All Sectors |
Report Type |
Market Research |
Country |
Brazil |
Published |
18 March 2010 |
Number of Pages |
123 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
File Format |
- |
The latest Brazil Oil & Gas Report forecasts that the country will account for 32.95% of Latin American regional oil demand by 2014, while providing 28.74% of supply. Latin America regional oil use of 6.93mn barrels per day (b/d) in 2001 reached an estimated 7.78mn b/d in 2009. It should average 7.92mn b/d in 2010 and then rise to around 8.631mn b/d by 2014. Regional oil production was 10.30mn b/d in 2001, and in 2009 averaged an estimated 9.69mn b/d. It is set to rise to 10.79mn 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 of 3.37mn b/d. This total had fallen to an estimated 1.91mn b/d in 2009 and is forecast to recover to 2.15mn b/d in 2014. The principal exporters will be Mexico, Venezuela, Ecuador and Brazil.
In terms of natural gas, the region in 2009 consumed an estimated 200.6bn cubic metres (bcm), with demand of 263.9bcm targeted for 2014, representing 31.6% growth. Production of an estimated 216.8bcm in 2009 should reach 293.0bcm in 2014, and implies 29.1bcm of net exports the end of the period. Brazil's share of gas consumption in 2009 was an estimated 13.00%, while its share of production was 6.69%. By 2014, its share of gas consumption is forecast to be 13.63%, with the country accounting for 7.51% of supply.
For 2009 as a whole, we have assumed an average OPEC basket price of US$60.70 per barrel (bbl), a 35.5% decline year-on-year (y-o-y). For 2010, we expect to see a significant oil price recovery to US$83.00/bbl for the OPEC basket price, gaining further ground to US$85.00 in 2011 and to US$90.00/bbl in 2012 and beyond.
In 2010, we are now forecasting premium unleaded gasoline prices to average US$97.00, up from US$70.22/bbl in 2009. We are assuming an average global jet fuel price for 2010 of US$97.58/bbl, compared with US$70.63 in 2009. For gasoil, the 2010 price estimate is for an average of US$97.40/bbl, compared with US$70.50 in 2009. The FY10 naphtha price average, estimated at US$81.58/bbl, compares with US$59.07 in FY09.
Brazilian real GDP in 2009 is assumed to have fallen by 0.6%, compared with growth of 5.1% in 2008. We are assuming average annual growth of 4.2% in 2010-2014. Partly privatised deepwater specialist Petrobras will continue to team up with international oil companies (IOCs) in supporting output growth efforts, while dominating domestic production. We are assuming oil and gas liquids production of at least 3.10mn b/d by 2014, with the country expected to pump 2.35mn b/d in 2010. Beyond the expected weakness of 2009, consumption is forecast to increase by around 3.0% per annum to 2014, implying demand of 2.84mn b/d by the end of the forecast period. The net export capability would therefore be 796,000b/d by 2014. Gas production is forecast to increase from an estimated 14.4bcm in 2009 to 22.0bcm over the period to 2014, with consumption climbing from 26.1bcm to 36.0bcm. Between 2009 and 2019, we are forecasting an increase in Brazilian oil production of 113.6%, with crude volumes rising steadily to an estimated 4.40mn b/d by the end of the 10-year forecast period. Oil consumption between 2009 and 2019 is set to increase by 30.9%, with growth slowing to an assumed 2.5% per annum towards the end of the period and the country using 3.19mn b/d by 2019. Net export potential rises from 0.14mn b/d to 1.75mn b/d during the period. Gas production is expected to rise gradually, from an estimated 14.5bcm in 2009 to 35.0bcm by 2019. With demand growth of 76.4%, this provides a net import requirement falling from 11.6bcm in 2009 to 11.0bcm by 2019. Details of our 10-year forecasts can be found in the appendix to this report.
Brazil this quarter retains its outright first place in our updated Upstream Business Environment Rating, ahead of Venezuela, thanks to the size of the oil resource base, output growth prospects, attractive licensing regime and competitive environment. While some weak points exist in terms of the country's risk ratings and reserves-to-production ratios (RPRs) are middling, its position at the head of the regional league table continues to look unassailable. The country also holds the top slot of our updated Downstream Business Environment Rating, well clear of Colombia. This reflects its region-beating oil demand, substantial refining capacity and competitive environment. Colombia is now four points behind, and we see no obvious threat of it catching Brazil over the medium term.
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