Gabon Oil and Gas Report Q4 2009

The new Gabon Oil & Gas Report from BMI forecasts that the country will account for 0.41% of African regional oil demand by 2013, while providing 2.08% of supply. African regional oil use of 2.98mn barrels per day (b/d) in 2001 rose to 3.60mn b/d in 2008. It should average 3.58mn b/d in 2009 and then rise to around 3.96mn b/d by 2013. Regional oil production was 7.84mn b/d in 2001, and in 2008 averaged 10.20mn b/d. It is set to rise to 11.98mn 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 4.86mn b/d.

This total had risen to 6.60mn b/d in 2008 and is forecast to reach 8.02mn b/d by 2013. Angola has the greatest production growth potential, with Nigerian exports set to soar if it can resolve recent quasipolitical issues. In terms of natural gas, the region in 2008 consumed 115bn cubic metres (bcm), with demand of 181bcm targeted for 2013. Production of 211bcm in 2008 should reach 354bcm in 2013, which implies net exports rising from 96bcm in 2008 to 173bcm by the end of the period. Gabon is neither a significant regional producer nor consumer of gas.

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, BMI 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 BMI 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 by BMI at US$49.06/bbl, down 43.9% from the previous year's level.

Gabonese real GDP growth is now forecast by BMI at 0.2% for 2009, down from 4.2% in 2008. We are assuming 2.9% growth in 2010 and 3.8% in 2011, followed by 3.5% in 2012 and 3.0% in 2013. We expect oil demand to rise from an estimated 13,200b/d in 2008 to 16,200b/d in 2013. State oil company Soci?(C)t?(C) Nationale Petroli??re Gabonaise (SNPG) operates in partnership with various international oil companies (IOCs). Combined oil and gas liquids output is forecast to decrease from 235,000b/d in 2008 to 250,000b/d in 2013. Gas production should reach 1bcm by 2013, up from an estimated 0.1bcm in 2008. Consumption is expected to follow the production trend, with no need for imports but no surplus gas to export.

Between 2008 and 2018, we are forecasting a decrease in Gabon oil and gas liquids production of 3.95%, with volumes peaking at 265,000b/d in 2010, before falling steadily to 226,000b/d by the end of the 10- year forecast period. Oil consumption between 2008 and 2018 is set to increase by 56.00%, with growth slowing to an assumed 5.0% per annum towards the end of the period and the country using 21,000b/d by 2018. Gas production is expected to rise to 1bcm by the end of the period. With demand rising by 900% between 2008 and 2018, there should be a balanced market, with no need for imports or scope for exports. Details of BMI's 10-year forecasts can be found in the appendix to this report.

Gabon now occupies equal second place in BMI's updated Upstream Business Environment rating, alongside Nigeria and Republic of Congo (RoC). In spite of being just three points behind Libya, it is no position to move higher over the medium term. The county's score benefits from healthy gas output growth prospects, a particularly high gas reserves-to-production ratio (RPR) and attractive licensing terms. The country's risk environment is fragile, but this is hardly uncommon in the African region.

Angola should be able to overtake Gabon during the next few quarters. The country is near the bottom of the league table in BMI's updated Downstream Business Environment rating, with no high scores and progress further up the rankings unlikely unless the energy market grows rapidly or new refineries are built. It is ranked ninth ahead only of Equatorial Guinea thanks to low scores for refining capacity, oil and gas demand, likely refining capacity expansion, nominal GDP and population.