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Angola Oil and Gas Report Q4 2009
Market |
Energy and Utilities |
Report Type |
Market Research |
Country |
Angola |
Published |
1 October 2009 |
Number of Pages |
77 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Angola’s new-found OPEC membership is posing problems in terms of production quotas
The latest Angola Oil & Gas Report forecasts that the country will account for 3.77% of African regional oil demand by 2013, while providing 19.20% 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. Angola in 2008 consumed 3.04% of the region’s gas, while producing just 1.66%. By 2013, we expect its share of consumption to be 4.45%, with a 4.24% contribution to regional gas production.
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 fullyear 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.
Angolan real GDP is now forecast to decline by 2.3% in 2009, following growth of 14.8% in 2008. We are assuming 5.4% growth in 2010, 6.2% in 2011, 4.1% in 2012, followed by 5.3% in 2013.
Healthy economic growth is exceeded by spectacular oil demand growth, albeit from a low base.
Consumption is set to rise from an estimated 81,000b/d in 2008 to 149,000b/d by 2013. State oil company Sonangol operates in partnership with various international oil companies (IOCs) and now accounts for less than 40% of the country’s oil output. Thanks largely to IOC investment, oil output is forecast to increase from 1.88mn b/d in 2008 to 2.30mn b/d in 2013, with exports heading towards 2.15mn b/d.
Project slippage, brought about by lower oil prices, has weakened the volume growth trend – with Angola’s new-found OPEC membership also posing problems in terms of production quotas. Gas production of an estimated 3.5bcm in 2008 could reach 15.0bcm by 2013. Consumption is expected to rise to 8.1bcm by the end of the forecast period, providing export potential of around 7.0bcm.
Between 2008 and 2018, we are forecasting an increase in Angolan oil and gas liquids production of 20.0%, with volumes peaking at 2.55mn b/d in 2015, before slipping steadily to 2.25mn b/d by the end of the 10-year forecast period. Oil consumption between 2008 and 2018 is set to increase by 322.7%, with growth slowing to an assumed 15.0% per annum towards the end of the period and the country using 341,000b/d by 2018. Gas production is expected to rise to 33.2bcm by the end of the period. With demand rising by 362.6% between 2008 and 2018, there should be export potential increasing to 17.0bcm, in the form of LNG. Details of the 10-year forecasts can be found in the appendix to this report.
Angola still occupies fifth place in the updated Upstream Business Environment rating, although it is just one point behind Nigeria, Gabon and the Republic of Congo (RoC) and therefore capable of a move higher. The country’s score benefits from an excellent oil and gas output growth outlook, respectable proven reserves, a large number of non state companies active in the upstream sector and decent licensing terms. There is little immediate threat from Algeria three points below it. The country is in the middle of the league table in the updated Downstream Business Environment rating, with a few high scores but progress further up the rankings unlikely over the near term. It is now ranked fifth, ahead of Sudan and Libya in spite of low scores for refining capacity, oil and gas consumption, and private company competition in the downstream segment.
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