The latest Philippines Oil & Gas Report from BMI forecasts that the country will account for 1.24% of Asia Pacific regional oil demand by 2012, while providing 0.81% of supply. Asia Pacific regional oil use of 21.4mn barrels per day (b/d) in 2001 reached an estimated 25.56mn b/d in 2007. It should rise to around 29.38mn b/d by 2012. In terms of natural gas, the region consumed an estimated 436bcm in 2007, with demand of 591bcm targeted for 2012, representing growth of 35.57% between 2007 and 2012. Production of an estimated 354bn cubic metres (bcm) in 2007 should reach 455bcm in 2012, but implies net imports rising from an estimated 82bcm per annum to 136bcm.

The Philippines’ share of gas consumption in 2007 was an estimated 0.69%, while its share of production was 0.85%. By 2012, its share of gas consumption is forecast to be 0.85%, with the country accounting for 1.07% of supply. In Q108, we estimate that the OPEC basket price averaged US$92.64 per barrel (/bbl) – up around 9% from the Q407 level. The OPEC basket price had exceeded US$102 by the middle of March, slipping back towards US$96/bbl later in the month. The estimated Q108 average prices for the main marker blends are now US$96.54 for Brent, US$97.31 for WTI and US$93.44/bbl for Russian Urals (Mediterranean delivery).

Our projections for 2008 as a whole are revised upwards from BMI’s last quarterly report. We are now assuming an OPEC basket price average of US$81/bbl for 2008, compared with the US$74 estimate provided by our last quarterly report. Based on recent price differentials, this implies Brent at US$84.71/bbl, WTI averaging US$85.63/bbl and Urals at US$81.88/bbl. The Philippines’ real GDP growth is now forecast by BMI at 6.3% for 2008, down from an estimated 7.3% in 2007. We are assuming 5.8% growth in 2009, followed by 5.5% in 2010-2012.

There is international oil company (IOC) and national involvement in domestic upstream activities, leading to substantial gas output growth and some modest liquids expansion. We are assuming oil and gas liquids production of no more than 70,000b/d by 2012, with the country pumping an estimated 60,000b/d in 2008. Consumption is forecast to increase by up to 3% per annum to 2012, implying end-period demand of 363,000b/d. The import requirement would therefore be about 293,000b/d by 2012. Gas supply and demand is forecast to rise from an estimated 3.0bcm in 2007 to 5.0bcm by 2012. Between 2007 and 2018, we are forecasting a reduction in Philippines oil production of 6.6%, with crude volumes peaking at 70,000b/d in 2013 before falling steadily to 54,000b/d in 2018. Oil consumption between 2007 and 2018 is set to increase by 42.5%, with growth slowing to an estimated 3.5% per annum towards the end of the period and the country using 446,000b/d by 2018. Gas production is expected to rise from around 3bcm in 2007 to a possible 7bcm by 2017-2018 (+133%).

With identical demand growth of 107%, this requires no imports and provides no exports. Details of the new BMI 10-year forecasts can be found in the Appendix of this report, which provides global, regional and country-specific projections. The Philippines ranks equal fourth with Pakistan in BMI’s newly revised Upstream Business Environment rating, reflecting a reasonable resource position and a better-than-average output growth outlook. The country sits just ahead of China. The country ranks equal 10th with Vietnam in our updated Downstream Business Environment rating, reflecting its ninth-ranked refinery capacity expansion plans, sixth- and second-placed oil and gas demand growth outlook and relatively low level of retail site intensity (ranked fifth). It is alongside Vietnam in the league table, but may be overtaken by the South East Asian country as its energy market develops.