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United Arab Emirates Oil and Gas Report Q4 2009
Market |
Energy and Utilities |
Report Type |
Market Research |
Country |
United Arab Emirates |
Published |
28 October 2009 |
Number of Pages |
79 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
United Arab Emirates oil production is forecast to increase to 3.7mn b/d by 2018
The latest United Arab Emirates (UAE) Oil & Gas Report from BMI forecasts that the country will account for 4.38% of Middle Eastern (ME) regional oil demand by 2013, while providing 11.07% of supply. Regional oil use of 8.24mn barrels per day (b/d) in 2001 rose to 11.25mn b/d in 2008. It should average 11.30mn b/d in 2009 and then rise to around 12.17mn b/d by 2013. Regional oil production was 22.87mn b/d in 2001, and in 2008 averaged 26.29mn b/d. It is set to rise to 28.01mn 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 14.63mn b/d. This total had risen to 15.04mn b/d in 2008 and is forecast to reach 15.84mn b/d by 2013. Iraq has the greatest production growth potential, followed by Qatar.
In terms of natural gas, the region in 2008 consumed 391.5bn cubic metres (bcm), with demand of 512.8bcm targeted for 2013, representing 31.0% growth. Production of 389.5bcm in 2008 should reach 610.4bcm in 2013 (+56.7%), which implies net exports rising to 98bcm by the end of the period. The UAE in 2008 consumed 14.84% of the region’s gas, with its market share forecast at 14.47% by 2013. It contributed 12.87% to 2008 regional gas production and, by 2013, will account for 13.08% 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.
The UAE’s real GDP is forecast to fall by 2.8% in 2009, following growth of 7.3% in 2008. We are assuming 3.6% growth in 2010, 3.9% in 2011, 4.5% in 2012, followed by 3.8% in 2013. We expect oil demand to rise from 467,000b/d in 2008 to 533,000b/d in 2013, 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 3.10mn b/d by the end of the forecast period – subject to OPEC quota policy. Gas production should reach at least 80bcm by 2013, up from 50bcm in 2008. Consumption is expected to rise from 58bcm to 74bcm by the end of the forecast period, allowing net exports of almost 6bcm.
Between 2008 and 2018, we are forecasting an increase in UAE oil production of 24.2%, with volumes rising steadily to 3.70mn b/d by the end of the 10-year forecast period. Oil consumption between 2008 and 2018 is set to increase by 35.7%, with growth slowing to an assumed 3.0% per annum towards the end of the period and the country using 635,000b/d by 2018. Gas production is expected to rise from 50bcm to 110bcm by the end of the period. With 2008-2018 demand growth of 78.34%, this provides net gas export potential rising to 6bcm over the period. Details of the 10-year forecasts can be found in the appendix to this report.
UAE is ranked a relatively close second place in the updated Upstream Business Environment rating, thanks largely to its significant oil and gas resource base and investor-friendly climate. It stands seven points clear of Iraq, so appears secure at least over the medium term. It is unlikely, however, to mount a near-term challenge on Qatar, four points above it. 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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