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Poland Oil and Gas Report Q3 2010
Market |
Energy and Utilities |
Report Type |
Market Research |
Country |
Poland |
Published |
21 July 2010 |
Number of Pages |
108 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
File Format |
- |
The latest Poland Oil & Gas Report forecasts that the country will account for 8.49% of Central and Eastern European (CEE) regional oil demand by 2014, while providing less than 0.1% of supply. CEE regional oil use of 5.42mn barrels per day (b/d) in 2001 rose to an estimated 5.81mn b/d in 2009. It should average 6.03mn b/d in 2010 and then rise to around 6.69mn b/d by 2014. Regional oil production was 8.88mn b/d in 2001, and in 2009 averaged an estimated 13.35mn b/d. It is set to rise to 14.57mn b/d by 2014. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average of 3.46mn b/d. This total had risen to an estimated 7.54mn b/d in 2009 and is forecast to reach 7.88mn b/d by 2014. Azerbaijan and Kazakhstan have the greatest production growth potential, although Russia will remain the key exporter.
In terms of natural gas, the region in 2009 consumed an estimated 668.5bn cubic metres (bcm), with demand of 780.0bcm targeted for 2014, representing 13.7% growth. Production of an estimated 830.3bcm in 2009 should reach 1,025.7bcm in 2014, which implies net exports rising from an estimated 162bcm in 2009 to 246bcm by the end of the period. Poland's share of 2009 gas consumption was an estimated 2.09%, while it makes an insignificant contribution to regional supply. By 2014, its share of demand is forecast to be 2.24%.
We are sticking with our forecast that the OPEC basket of crudes will average US$83.00/bbl in 2010. Wide variations in crude differentials so far in 2010 make forecasting tricky for Brent, West Texas Intermediate (WTI) and Urals, but we believe the three benchmarks will average around US$85.11, US$88.22 and US$83.62/bbl respectively, with Dubai coming in at US$83.14. By 2011, there should be further growth in oil consumption and more room for OPEC to regain market share and reduce surplus capacity through higher production quotas. We are assuming a further increase in the OPEC basket price to an average US$85.00/bbl. For 2012 and beyond, we continue to use a central case forecast of US$90.00/bbl for the OPEC basket.
For 2010, the assumption for premium unleaded gasoline is an average global price of US$96.83/bbl. The year-on-year (y-o-y) rise in 2010 gasoline prices is put at 38%. Gasoil in 2010 is expected to average US$92.45/bbl, with the full-year outturn representing a 37% increase from the 2009 level. For jet fuel in 2010, the annual level is forecast to be US$95.58/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put at US$82.46/bbl, up 39% from the previous year's level.
Polish real GDP is assumed to have risen by 1.7% in 2009, followed by forecast 3.4% growth in 2010. We are assuming average annual growth of 3.9% in 2010-2014. A growing number of motor vehicles on the roads and renewed economic activity should push oil demand to 568,000b/d by 2014, representing annual growth beyond 2009 of around 1.5%. Given the bleak outlook for local supply, despite efforts by state explorer Polskie Górnictwo Naftowe i Gazownictwo (PGNiG) and some international oil company (IOC) partners, the end-period import volume can be expected to reach 558,000b/d. We are assuming that gas consumption will reach 17.5bcm by 2014, requiring imports of 13.0bcm.
Between 2010 and 2019, we are forecasting an increase in Polish oil consumption of 15.5%, with import volumes rising steadily from an estimated 512,000b/d to 604,000b/d by the end of the 10-year forecast period. Gas consumption is expected to rise from an estimated 13.5bcm to 20.3bcm by 2019, met by 16.8bcm of imports. Refining capacity is expected to increase by 50.9% between 2010 and 2019. Details of the 10-year forecasts can be found in the appendix to this report.
Poland shares third place with Russia in the composite Business Environment (BE) Ratings table, which combines upstream and downstream scores. It now shares third place with Bulgaria in the updated and enlarged upstream Business Environment Ratings, in spite of its humble hydrocarbons potential. Its licensing regime, privatisation progress and healthy country risk environment help offset a modest reserves position and limited output growth prospects. Russia is three points behind in the regional upstream ranking, and is likely to catch Poland over the longer term. Poland is near the top of the league table in the updated downstream Business Environment Ratings, ranked third behind only Russia and Turkey. It has some high scores that should protect it over the medium term from Ukraine below. The high level of oil demand is a strong suit, along with healthy gas demand growth prospects and a region-topping competitive landscape.
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