Libya Oil and Gas Report Q2 2010

The latest Libya Oil & Gas Report from BMI forecasts that the country will account for 7.74% of African regional oil demand by 2014, while providing 16.07% of supply. African regional oil use of 2.93mn barrels per day (b/d) in 2001 rose to an estimated 3.57mn b/d in 2009. It should average 3.63mn b/d in 2010 and then rise to around 4.08mn b/d by 2014. Regional oil production was 7.77mn b/d in 2001, and in 2009 averaged an estimated 9.64mn b/d. It is set to rise to 11.83mn b/d by 2014. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average 4.83mn b/d. This total had risen to an estimated 6.07mn b/d in 2009 and is forecast to reach 7.75mn b/d by 2014.
In terms of natural gas, the region in 2009 consumed an estimated 123bn cubic metres (bcm), with demand of 194bcm targeted for 2014. Production of an estimated 248bcm in 2009 should reach 385bcm in 2014, which implies net exports rising from 125bcm in 2009 to 191bcm by the end of the period. In 2009, Libya consumed an estimated 5.44% of the region’s gas, with its market share forecast at 4.08% by 2014. It contributed 7.27% to estimated 2009 regional gas production and by 2014 will account for 9.09% of supply.
For 2009 as a whole, we have assumed an average OPEC basket price of US$60.70 per barrel (bbl), a 35.5% decline year-on-year (y-o-y). For 2010, we expect to see a significant oil price recovery to US$83.00/bbl for the OPEC basket price, gaining further ground to US$85.00 in 2011 and to US$90.00/bbl in 2012 and beyond.
In 2010, BMI is now forecasting premium unleaded gasoline prices at an average US$97.00, up from US$70.22/bbl in 2009. We are assuming an average global jet fuel price for 2010 of US$97.58/bbl, compared with US$70.63 in 2009. For gasoil, the 2010 price estimate is for an average of US$97.40/bbl, compared with US$70.50 in 2009. The FY10 naphtha price average, estimated at US$81.58/bbl compares with US$59.07 in FY09.
Libyan real GDP is assumed by BMI to have fallen by 2.0% in 2009, compared with 6.1% growth in 2008. We are assuming average annual growth of 6.0% in 2010-2014. We expect oil demand to rise from an estimated 268,000b/d in 2009 to 320,000b/d in 2014. State-owned National Oil Corporation (NOC) accounts for some 40% of oil production and all gas production, but it has a growing number of international oil company (IOC) partners contributing to a forecast rise in oil production from an estimated 1.69mn b/d in 2009 to 1.90mn b/d by 2014. The state itself has far more ambitious volume goals that may be frustrated by OPEC quota policy. Gas production should reach 35.0bcm by 2014, up from an estimated 18.0bcm in 2009. Consumption is expected to rise from around 6.7bcm to 7.9bcm by the end of the forecast period, allowing exports of 27.1bcm.
Between 2009 and 2019, we are forecasting an increase in Libyan oil and gas liquids production of 47.9%, with volumes rising steadily to 2.50mn b/d by the end of the 10-year forecast period. Oil consumption between 2009 and 2019 is set to increase by 42.4%, with growth slowing to an assumed 4.0% per annum towards the end of the period and the country using 390,000b/d by 2019. Gas production is expected to rise to 55bcm by the end of the period. With demand rising by 43.8% between 2009 and 2019, there should be export potential increasing to around 45bcm, via pipeline and in the form of LNG. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Libya continues to occupy first place, above Gabon, in BMI’s updated and enlarged Upstream Business Environment rating, with a comfortable margin over its nearest rival of three points. The country’s score benefits from its proven oil reserves and a region-topping oil reserves-to-production ratio (RPR). The competitive landscape features numerous non-state companies, while licensing terms are generally good. However, country risk factors undermine some of the hydrocarbons-specific strength. The country is in the middle of the league table in BMI’s Downstream Business Environment rating, with a few high scores but near-term progress up the rankings unlikely. It is ranked sixth thanks to poor country risk factors, a largely state-controlled industry and moderate oil and gas demand growth prospects.

Executive Summary

Libya Energy Market Overview

Global Oil Market Outlook Q110

Not So Bleak Midwinter

Oil Price Forecasts

Global Oil Market Review Q409

Quarterly Trends

Nigeria And Iraq Pose Problems

Oil Supply, Demand And Price Outlook Q110

Table: Global Oil Consumption (000b/d)

Short-Term Demand Outlook

Table: Global Oil Production (000b/d)

Short-Term Supply Outlook

Longer-Term Supply And Demand

Oil Price Assumptions

Table: Crude Price Assumptions 2010

Table: Oil Price Forecasts

Regional Market Overview

Oil Supply And Demand

Table: Africa Oil Consumption (000b/d)

Table: Africa Oil Production (000b/d)

Oil: Downstream

Table: Africa Oil Refining Capacity (000b/d)

Gas Supply And Demand

Table: Africa Gas Consumption (bcm)

Table: Africa Gas Production (bcm)

Liquefied Natural Gas

Table: Africa LNG Exports/(Imports) (bcm)

Business Environment Ranking

Africa Region

Composite Scores

Table: Regional Upstream Business Environment Rating

Table: Regional Downstream Business Environment Rating

Upstream Scores

Downstream Scores

Libya Upstream Rating - Overview

Libya Upstream Rating - Potential Returns

Libya Upstream Rating - Risks to Potential Returns

Libya Downstream Rating - Overview

Libya Downstream Rating - Potential Returns

Libya Downstream Rating - Risks to Potential Returns

Risk Summary

Political

Economic

Business Environment

Industry Forecast Scenario

Oil And Gas Reserves

Oil Supply And Demand

Gas Supply and Demand

LNG

Refining and Oil Products Trade

Revenues/Import Costs

Table: Libya Oil & Gas - Historical Data & Forecasts

Other Energy

Table: Libya Other Energy - Historical Data & Forecasts

Key Risks To BMI’s Forecast Scenario

Long-Term Oil & Gas Outlook

Oil And Gas Infrastructure

Oil Refineries

Table: Libyan Refineries

Oil Terminals/ Ports

Oil Pipelines

LNG Terminals

Table: LNG Terminals in Libya

Gas Pipelines

Macroeconomic Outlook

Table: Libya - Macroeconomic Forecasts

Competitive Landscape

Executive Summary

Table: Key Players - Libyan Oil & Gas Sector

Overview/State Role

Licensing and Regulation

Government Policy

Licensing Rounds

International Energy Relations

Table: Key Upstream Players

Table: Key Downstream Player

Company Monitor

National Oil Corporation (NOC)

Eni North Africa

Total Libya

OMV of Libya

Repsol YPF Libya

BP - Summary

ExxonMobil - Summary

Tatneft - Summary

Occidental Petroleum - Summary

ConocoPhillips - Summary

Marathon Oil - Summary

BG Group - Summary

Hess - Summary

Woodside Petroleum - Summary

Chevron - Summary

Statoil - Summary

Royal Dutch Shell - Summary

Suncor - Summary

PGNiG - Summary

Gazprom - Summary

RWE - Summary

Verenex Energy - Summary

Others - Summary

Glossary of Terms

Oil & Gas Ratings: Revised Methodology

Introduction

Ratings Overview

Table: BMI Oil & Gas Business Environment Ratings: Structure

Indicators

Table: BMI Oil & Gas Business Environment Upstream Ratings: Methodology

Table: BMI Oil & Gas Business Environment Downstream Ratings: Methodology

Oil & Gas Outlook: Long-Term Forecasts

Regional Oil Demand

Table: Africa Oil Consumption (000b/d)

Regional Oil Supply

Table: Africa Oil Production (000b/d)

Regional Refining Capacity

Table: Africa Oil Refining Capacity (000b/d)

Regional Gas Demand

Table: Africa Gas Consumption (bcm)

Regional Gas Supply

Table: Africa Gas Production (bcm)

Libya Country Overview

Methodology & Risks To Forecasts

BMI Forecast Modelling

How we generate our industry forecasts

Energy Industry

Cross checks

Sources