The latest Poland Oil & Gas Report forecasts that the country will account for 9.94% of Central and Eastern European (CEE) regional oil demand by 2013, while providing less than 0.2% of supply. CEE regional oil use of 4.65mn barrels per day (b/d) in 2001 rose to 5.41mn b/d in 2008. It should average 5.15mn b/d in 2009 and then rise to around 5.63mn b/d by 2013. Regional oil production was 8.83mn b/d in 2001, and in 2008 averaged 12.91mn b/d. It is set to rise to 14.37mn 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 4.18mn b/d. This total had risen to 7.51mn b/d in 2008 and is forecast to reach 8.74mn b/d by 2013.

In terms of natural gas, the region in 2008 consumed 592.7bn cubic metres (bcm), with demand of 663.4bcm targeted for 2013, representing 12.3% growth. Production of 754.6bcm in 2008 should reach 906.1cm in 2013, which implies net exports rising from 161.9bcm in 2008 to 242.7bcm by the end of the period. Poland’s share of 2008 gas consumption was 2.34%, while it provides an insignificant contribution to regional supply. By 2013, its share of demand is forecast to be 2.41%.

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.

Polish real GDP is now forecast to contract by 1.0% in 2009, compared with growth of 4.9% in 2008. We are assuming 0.9% growth in 2010, 3.2% in 2011, followed by 4.0% in 2012 and 4.3% in 2013.

A small but growing motor vehicle population and renewed economic activity should push oil demand to 560,000b/d by 2013, representing annual growth beyond 2009 of around 1.5%. Given a bleak outlook for local supply, despite efforts by state explorer Polskie Górnictwo Naftowe i Gazownictwo (PGNiG) and some international oil company (IOC) partners, the end-period import volume can be expected to reach 547,000b/d. We are assuming gas consumption reaching 16.0bcm by 2013, requiring imports of 11.5bcm.

Between 2008 and 2018, we are forecasting an increase in Polish oil consumption of 17.1%, with import volumes rising steadily from an estimated 529,000b/d to 593,000b/d by the end of the 10-year forecast period. Gas consumption is expected to up from 13.5bcm to 18.5bcm by 2018, met by 14.8bcm of imports. Refining capacity is expected to increase 51.0% between 2008 and 2018. Details of BMI’s 10- year forecasts can be found in the appendix to this report.

Poland still occupies a surprising third place in the updated Upstream Business Environment rating (albeit well behind regional leaders Kazakhstan and Azerbaijan), in spite of its humble hydrocarbons potential. Its licensing regime, privatisation progress and healthy country risk environment help offset a modest reserves position and limited output growth prospects. Russia is four points behind in the regional upstream ranking, so Poland’s position may not be secure over the longer term. The country is at the top of the league table in the updated Downstream Business Environment rating, ahead of both Ukraine and Russia. It has some high scores that should protect it over the medium term from its rivals. The high level of oil demand represents a strong suit, along with healthy gas demand growth prospects and a region-topping competitive landscape.