companiesandmarkets.com

Return to Report | Print

Kazakhstan Oil and Gas Report Q3 2008

http://www.companiesandmarkets.com/Summary-Market-Report/kazakhstan-oil-and-gas-report-q3-2008-51467.asp

Report Summary

The latest Kazakhstan Oil & Gas Report from BMI forecasts that the country will account for 5.31% of Central and Eastern European (CEE) regional oil demand by 2012, while providing 16.25% of supply. CEE regional oil demand rose to an estimated 5.46mn barrels per day (b/d) in 2007 and should average 5.61mn b/d in 2008, before reaching 6.25mn b/d by 2012. Production of an estimated 12.74mn b/d in 2007 is forecast to reach 15.38mn b/d by 2012. CEE gas consumption in 2007 was an estimated 632bn cubic metres (bcm), with demand of 772bcm targeted for 2012. Production in 2007 of an estimated 802bcm should reach 961bcm by the end of the period. Kazakhstan’s estimated share of gas consumption in 2007 was 3.76%, while its share of production was 4.14%. By 2012 its share of demand is forecast to be 4.53%, with the country accounting for 8.22% of supply.

In Q108 we estimate that the OPEC basket price averaged US$92.64 per barrel, 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 per barrel 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, WTI averaging US$85.63/bbl and Urals at US$81.88/bbl.

Kazakhstan’s real GDP growth is estimated by BMI at 6.7% for 2008, down from an estimated 8.5% in 2007. We are assuming 7.9% growth in 2009, followed by 8.6% in 2010, 9.8% in 2011 and 9.4% in 2012. Consumption growth should accelerate with the improving economy, but it is unlikely to have much negative impact on export potential. We are forecasting domestic oil demand reaching 332,000b/d by 2012. State-owned KazMunaiGaz accounts for 12% of oil production and participates in joint venture (JV) projects with international oil companies (IOCs), which should deliver rapid volume growth after the Karachaganak field builds up to full output in excess of 200,000b/d. Expansion of the Tengiz field and activation of the offshore Kashagan project should push Kazakh production towards 2.5mn b/d by 2012. This implies that oil exports should rise from an estimated 1.20mn b/d in 2007 to at least 2.17mn b/d by the end of the forecast period.

Between 2007 and 2018 we are forecasting an increase in Kazakh oil and gas liquids production of 59.7%, with volumes reaching a plateau of 2.6mn b/d in 2013-2014, before falling to 2.3mn b/d by the end of the 10-year forecast period. Oil consumption between 2007 and 2018 is set to increase by 88.0%, with growth slowing to an assumed 5.0% per annum towards the end of the period and the country using 444,000b/d by 2018. Gas production should rise from the estimated 2007 level of 29bcm to 95bcm by 2018, providing export potential increasing to 48bcm. 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. Kazakhstan occupies second place in BMI’s newly revised Upstream Business Environment rating, behind only neighbour Azerbaijan. Its oil and gas production growth outlook, asset immaturity, high reserves to production ratios (RPR) and competitive landscape work in the country’s favour, but are undermined by a relatively unappealing risk environment. Long-term scope exists for Kazakhstan to close the gap on Azerbaijan. The country is in the upper half of the league table in BMI’s updated Downstream Business Environment rating, although there are few particularly high scores and progress further up the rankings from fifth place seems unlikely. The low level of retail site intensity represents a strong suit, along with region-leading oil demand growth prospects. The Czech Republic is just one point below it in the regional rankings, but there is little chance of it challenging for Kazakhstan’s fifth place over the medium term.

Table of Contents

Executive Summary ....7
SWOT Analysis .....9
Kazakhstan Political SWOT....... 9
Kazakhstan Economic SWOT... 10
Kazakhstan Energy Market Overview ................11
Global Oil Market Overview ..16
Table: Global Oil Consumption (000b/d) ...... 17
Table: Global Oil Production (000b/d).......... 18
Oil Price Outlook ..19
Waiting For A Correction .. 19
Table: Crude Price Assumptions 2007/2008.. 20
Revised Forecasts .............. 20
Table: Oil Price Forecasts....... 21
Regional Energy Market Overview 22
Oil Supply And Demand ..... 22
Table: Central/Eastern Europe Oil Consumption (000b/d) . 23
Table: Central/Eastern Europe Oil Production (000b/d)..... 24
Oil: Downstream ............... 25
Table: Central/Eastern Europe Oil Refining Capacity (000b/d) ............ 25
Gas Supply And Demand ... 26
Table: Central/Eastern Europe Gas Consumption (bcm) .... 26
Table: Central/Eastern Europe Gas Production (bcm)........ 27
Liquefied Natural Gas ........ 28
Table: Central/Eastern Europe LNG Exports/(Imports) ( 28
Business Environment Ranking .29
Central/Eastern Europe Region .... 29
Composite Scores .......... 29
Table: Regional Upstream Business Environment Rating.... 30
Table: Regional Downstream Business Environment Ratin 31
Upstream Scores ........... 31
Downstream Scores ...... 32
Kazakhstan Upstream Rating – Overview...... 32
Kazakhstan Upstream Rating – Potential Returns ............... 32
Kazakhstan Upstream Rating – Risks to Potential Returns.. 32
Kazakhstan Downstream Rating – Overview. 33
Kazakhstan Downstream Rating – Potential Returns........... 33
Kazakhstan Downstream Rating – Risks to Potential Returns ............... 33
Risk Summary .....34
Political ....... 34
Economic ..... 34
Business Environment ........ 34
Industry Forecast Scenario ..35
Oil and Gas Reserves ......... 35
Oil Supply and Demand ..... 35
Gas Supply and Demand .... 36
Refining and Oil Products Trade .. 37
Revenues/Import Costs ....... 37
Table: Kazakhstan Oil & Gas – Historic Data & Forecasts 38
Other Energy .... 39
Table: Kazakhstan Other Energy – Historic Data & Fore 40
Key Risks to BMI’s Forecast Scenario................ 40
Long-term Oil & Gas Outlook ...... 40
Macroeconomic Outlook ...............42
Table: Economic Activity......... 43
Regional Case Study ...44
Gazprom In The CIS And Europe . 44
Competitive Landscape ...51
Executive Summary ............ 51
Key Players – Kazakhstan Oil & Gas sector. 52
Overview/State Role ........... 52
Table: Key Upstream Players .. 55
Table: Key Downstream Players .. 55
Company Monitor ......56
KazMunaiGaz (KMG) ........ 56
Chevron ....... 60
Eni Kazakhstan . 63
BG Kazakhstan . 66
ExxonMobil Kazakhstan .... 69
Shell Kazakhstan ................ 71
Lukoil Kazakhstan .............. 73
PetroKazakhstan ................ 75
KNOC – Summary ........ 78
ConocoPhillips – Summary...... 78
BP – Summary .............. 78
Total – Summary ........... 78
Rosneft – Summary ....... 79
Tethys Petroleum – Summary .. 79
Roxi Petroleum – Summary...... 79
Others – Summary ........ 80
Glossary of Terms .....82
Oil & Gas Ratings: Revised Methodology ..83
Introduction . 83
Ratings Overview ............... 83
Table: BMI Oil & Gas Business Environment Ratings: Structure ......... 84
Indicators ..... 84
Table: BMI Oil & Gas Business Environment Upstream Ratings: Methodology ... 85
Table: BMI Oil & Gas Business Environment Downstream Ratings: Methodology ............... 86
Oil & Gas Outlook: Long-term forecasts ........88
Global Oil Demand ............ 88
Global Oil Demand (000b/d) ... 88
Global Oil Production (000b/d) .... 89
Global Oil Supply .............. 89
Global Gas Demand .......... 90
Global Gas Demand (bcm) ...... 90
Global Gas Supply ............. 90
Global Gas Production (bcm).. 91
Regional Oil Demand ........ 92
CEE Oil Consumption (000b/d) .... 92
Regional Oil Supply ........... 92
CEE Oil Production (000b/d) .. 93
Regional Refining Capacity .......... 93
CEE Oil Refining Capacity (000b/d) ............. 94
Regional Gas Demand ....... 94
CEE Gas Consumption (bcm) .. 95
Regional Gas Supply .......... 95
CEE Gas Production (bcm) ..... 96
Kazakhstan Country Overview...... 96
Kazakhstan Oil & Gas – Long-term Forecasts ... 97
Kazakhstan Other Energy – Long-term Forecasts ............... 98
Methodology & Risks To Forecasts ... 98
BMI Forecast Modelling ...99
How we generate our industry forecasts ............. 99
Energy Industry ............... 100
Cross checks ... 100
Sources ...... 100