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United Arab Emirates Oil and Gas Report Q1 2010
Market |
Energy and Utilities |
Report Type |
Market Research |
Country |
United Arab Emirates |
Published |
22 December 2009 |
Number of Pages |
83 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
The latest United Arab Emirates (UAE) Oil & Gas Report forecasts that the country will account for 4.35% of Middle Eastern (ME) regional oil demand by 2014, while providing 11.35% of supply. Regional oil use of 8.24mn barrels per day (b/d) in 2001 rose to an estimated 11.38mn b/d in 2009. It should average 11.66mn b/d in 2010 and then rise to around 12.68mn b/d by 2014. Regional oil production was 22.87mn b/d in 2001 and averaged an estimated 24.79mn b/d in 2009. It is set to rise to 28.65mn 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 14.63mn b/d. This total had fallen to an estimated 13.41mn b/d in 2009, but is forecast to reach 15.96mn b/d by 2014. Iraq has the greatest production growth potential, followed by Qatar.
In terms of natural gas, the region in 2009 consumed an estimated 406.5bn cubic metres (bcm), with demand of 545.1bcm targeted for 2014, representing 34.1% growth. Estimated production of 420.6bcm in 2009 should reach 652.8bcm in 2014 (+55.2%), which implies net exports rising to 108bcm by the end of the period. The UAE in 2009 consumed an estimated 14.27% of the region’s gas, with its market share forecast at 14.63% by 2014. It contributed an estimated 12.60% to 2009 regional gas production and, by 2014, will account for 13.02% of supply.
For 2009 as a whole, we have assumed an average OPEC basket price of US$59.00 per barrel (bbl), a 37.3% decline year-on-year (y-o-y). This represents an upgrade from the US$55.00/bbl forecast we were using in the previous quarter. 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.
For 2009, the report has assumed a global average gasoline price of US$67.46/bbl, with the fuel having peaked in June at almost US$80.00/bbl. The overall y-o-y fall in 2009 gasoline prices is put at 33.7%. The gasoil forecast is for an average price of US$70.59/bbl, assuming a monthly high above US$94/bbl in December 2009. The full-year outturn represents a 41.8% y-o-y fall. The annual jet price level for 2009 is estimated at US$68.45/bbl. This compares with US$124.95/bbl in 2008. The 2009 average naphtha price is put at US$52.66/bbl, down 39.7% from the previous year’s level. UAE real GDP is estimated to have fallen by 2.8% in 2009, compared with 7.4% growth in 2008. We are assuming average annual growth of 5.0% in 2010-2014. We expect oil demand to rise from an estimated 472,000b/d in 2009 to 552,000b/d in 2014, lagging our underlying economic assumptions. State-owned Abu Dhabi National Oil Company (ADNOC) is the biggest national oil company, working in partnership with major international oil companies (IOCs) to deliver an estimated 2.75mn b/d of 2009 oil and liquids production, rising to 3.25mn b/d by the end of the forecast period – subject to OPEC quota policy. Gas production should reach at least 85bcm by 2014, up from an estimated 53bcm in 2009. Consumption is expected to rise from an estimated 58bcm to 80bcm by the end of the forecast period, allowing net exports of around 5bcm.
Between 2009 and 2019, we are forecasting an increase in UAE oil production of 38.2%, with volumes rising steadily to 3.80mn b/d by the end of the 10-year forecast period. Oil consumption between 2009 and 2019 is set to increase by 39.0%, with growth slowing to an assumed 3.0% per annum towards the end of the period and the country using 656,000b/d by 2019. Gas production is expected to rise from an estimated 53bcm to 120bcm by the end of the period. With 2009-2019 demand growth of 89.3%, this provides net gas export potential rising to 10bcm over the period. Details of the 10-year forecasts can be found in the appendix to this report.
UAE now shares first place with Qatar in the updated Upstream Business Environment rating, thanks largely to its significant oil and gas resource base and investor-friendly climate. It stands 13 points clear of Iraq, so appears secure at least over the medium term. It is unlikely, however, to be able to break away from Qatar. UAE’s score reflects the country’s gas reserves, high RPR, plus non-state competition, established licensing framework and generally encouraging country risk factors. The country is well up the league table in the Downstream Business Environment rating, with several high scores and further progress up the rankings possible over the longer term. It is ranked second behind only Turkey, thanks largely to high scores for oil and gas demand, refining capacity expansion and nominal GDP.
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