The latest Turkey Oil & Gas Report from the forecasts that the country will account for 5.98% of Middle Eastern (ME) regional oil demand by 2013, while providing an insignificant contribution to 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 390.1bcm in 2008 should reach 611.6bcm in 2013 (+56.7%), which implies net exports rising to 99bcm by the end of the period.

Turkey’s share of gas consumption in 2008 was 9.19%, while it makes no meaningful contribution to production. By 2013, its share of demand is forecast to be 8.91%.

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 fullyear 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.

Turkish real GDP is now forecast to shrink by 6.2% in 2009, following growth of 1.1% in 2008.

We are now assuming 1.7% growth in 2010, 4.2% in 2011, 4.5% in 2012, followed by 5.0% in 2013. We expect oil demand to rise from 690,000b/d in 2008 to 728,000b/d in 2013. State upstream company TPAO and some international oil companies (IOCs) are attempting to raise domestic oil output, but our estimates assume 37,000b/d of 2009 oil and liquids production sinking to 27,000b/d by the end of the forecast period. Gas production will remain insignificant, but consumption is expected to rise from 36.0bcm to 45.7bcm by the end of the forecast period, requiring imports of 44.5bcm.

Between 2008 and 2018, we are forecasting an increase in Turkish oil consumption of 16.09%, with demand rising steadily from 690,000b/d to 801,000b/d by the end of the 10-year forecast period. Refining capacity between 2008 and 2018 is set to increase by 122.4%, reaching 1.36mn b/d by 2018. Gas consumption is expected to climb from 36bcm 51bcm, depending largely on imports. LNG imports are expected to more than double from 5.3bcm to 12.0bcm during the forecast period. Details of BMI’s 10- year forecasts can be found in the appendix to this report.

Turkey is ranked fourth in the updated Upstream Business Environment rating, in spite of the virtually non-existent oil and gas resource base. It stands just one point clear of Iran, and could be faced with a challenge over the medium term. Turkey’s score reflects the lower level of state asset ownership and the more advanced stage of privatisation than is the norm for the region, plus an established licensing framework and largely encouraging country risk factors. The country leads the league table in the updated Downstream Business Environment rating, with several high scores but some threat from the UAE to its position over the medium- to long-term. It is ranked four points ahead of the Emirates, thanks largely to high scores for oil demand, retail site intensity, non-state competition, deregulation, and nominal GDP.