The latest Norway Oil & Gas Report forecasts that the country will account for just 1.64% of Developed European regional oil demand by 2013, while contributing 51.00% to supply. In Developed Europe, overall oil consumption reached 13.62mn barrels per day (b/d) in 2008. It is set to ease to around 13.60mn b/d by 2013. Developed Europe regional oil production was 6.97mn b/d in 2001, and in 2008 averaged 4.90mn b/d. It is set to fall to just 3.77mn b/d by 2013. Oil imports are growing steadily because supply is contracting and demand is rising, albeit slowly. In 2008, net crude imports were 8.72mn b/d. By 2013, they are expected to have reached 9.84mn b/d. Norway will remain the only major net exporter, with the UK becoming a net importer.

As regards natural gas, the Developed Europe region consumed 445bn cubic metres (bcm) in 2008, with demand of 478bcm targeted for 2013, representing 7.3% growth. Production of 269bcm in 2008 should rise to 278bcm in 2013, which implies net imports rising from the 2008 level of 176bcm to 267bcm by the end of the forecast period. Norway’s share of gas consumption in 2008 was 0.99%, while it contributed 36.90% to production. By 2013, its share of gas consumption is forecast to be 1.03%, with a 43.19% contribution to regional 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.

Norwegian real GDP is now forecast to fall by 2.4% in 2009, compared with growth of 2.0% in 2008. We are assuming average annual growth of 0.7% between 2009 and 2013. Recent (July 2009) Norwegian oil and liquids production has averaged 2.17mn b/d. We expect the country’s 2009 oil and liquids production to be about 2.25mn b/d, down from 2.45mn b/d in 2008. By 2013, liquids volumes look set to have slipped to 1.92mn b/d. Oil demand could rise to 223,000b/d by 2013, implying net exports slipping from 2.24mn b/d in 2008 to 1.70mn b/d by the end of the period. The 2008 gas production of 99bcm should continue to rise towards at least 120bcm in 2012/13. Domestic gas consumption rising from 4.4bcm to 4.9bcm over the period 2008-2013 suggests that net exports will rise to 115bcm by the end of the forecast period.

Between 2008 and 2018, we forecast a decrease in Norwegian oil production of 25.6%, with output slipping steadily from 2.45mn b/d in 2008 to 1.82mn b/d at the end of the 10-year forecast period. Given just a 4.8% increase in oil consumption over the period, exports slide from 2.24mn b/d to 1.60mn b/d by 2018. Gas production should rise from the 2008 level of 99bcm to a peak of 120bcm in 2012-2014, before falling to 100bcm by 2018. Most exports will continue to be in the form of pipeline gas, with some liquefied natural gas (LNG). Details of the 10-year forecasts can be found in the appendix to this report.

According to the Country Risk team, Norway’s long-term political risk score is 99.0, compared with the Developed Markets average of 87.5 and the global average of 63.6. Our long-term economic rating for the country is 74.2, above the Developed Markets average of 70.0 and the global average of 53.7. There is a partly privatised energy sector, with government majority ownership of the key company StatoilHydro, formed in 2007 from Statoil and the oil and gas interests of Norsk Hydro. Norway has a major, but mature and highly competitive upstream oil and gas segment, featuring most key national and international companies. The downstream oil segment is small, open to competition and deregulated.