The latest Malaysia Oil & Gas Report forecasts that the country will account for 1.92% of Asia Pacific regional oil demand by 2014, while providing 8.74% of supply. Asia Pacific regional oil use of 21.40mn barrels per day (b/d) in 2001 reached an estimated 25.44mn b/d in 2009. It should average 25.93mn b/d in 2010, then rise to around 28.99mn b/d by 2014. Regional oil production was just under 8.41mn b/d in 2001 and averaged an estimated 8.50mn b/d in 2009. It is set to increase to 8.59mn b/d by 2014. In 2001, the region was importing an average 12.99mn b/d of oil. This total had risen to an estimated 16.94mn b/d in 2009 and is forecast to reach 20.41mn b/d by 2014. The principal importers will be China, Japan, India and South Korea. By 2014, the only net exporter will be Malaysia In terms of natural gas, the region consumed an estimated 459bn cubic metres (bcm) in 2009 and demand of 582bcm is targeted for 2014. Production of an estimated 378bcm in 2009 should reach 509bcm in 2014, but implies net imports easing from an estimated 81bcm in 2009 to 73bcm in 2013. This is in spite of many Asian gas producers being major exporters. China’s estimated share of gas consumption in 2009 was 18.46%, while its share of production was 21.35%. By 2014, its share of gas consumption is forecast to be 20.80%, with the country accounting for 20.24% 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, gaining further ground to US$85.00/bbl in 2011 and US$90.00/bbl in 2012 and beyond.

For 2009, the report has assumed a global average gasoline price of US$67.73/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 33.4%.

The the gasoil forecast is for an average price of US$73.92/bbl, assuming a monthly high above US$105/bbl in December 2009. The full-year outturn represents a 39.1% y-o-y fall. The annual jet price level for 2009 is estimated at US$69.54/bbl. This compares with US$124.95/bbl in 2008. The 2009 average naphtha price is put at US$52.85/bbl, down 39.5% from the previous year’s level.

Malaysian real GDP is estimated to have fallen by 3.4% in 2009 compared with the 2008 growth rate of 4.6%. We are assuming an average annual growth rate of 4.2% in 2010-2014. State-owned Petronas operates in partnership with various international oil companies (IOCs) under a production sharing system that we believe will result in oil production of 750,000b/d by 2014. Consumption is forecast to rise by up to 2% per annum to 2014, implying demand of 557,000b/d. Malaysia’s gas exports are set to rise from an estimated 36bcm in 2009 to 56bcm in 2014, with production climbing from 65bcm to 90bcm over the period.

Between 2009 and 2019, we are forecasting a reduction in Malaysian oil production of 3.62%, with crude volumes falling steadily to 713,000b/d in 2019. Oil consumption between 2009 and 2019 is set to increase by 23.09%, with growth slowing to an assumed 1.5% per annum towards the end of the period and the country using 603,000b/d by 2019. Gas production is expected to rise from an estimated 65bcm in 2009 to a possible 110bcm by 2019. With demand growth of 32.56%, this provides an export capability reaching 71.6bcm in 2019, largely in the form of liquefied natural gas (LNG). Details of the 10-year forecasts can be found later in this report, which provides regional and country-specific projections.

Malaysia now ranks fourth in the updated Upstream Business Environment rating, reflecting a strong resource position and a moderate gas output growth outlook, being offset by extensive state involvement.

The country sits well ahead of China and is in a relatively strong position to defend its position over the near term. The country now ranks 13th ahead only of Taiwan in BMI’s Downstream Business Environment rating, reflecting its limited refinery capacity expansion plans, sluggish oil and gas demand growth outlook and relatively high level of retail site intensity.