Malaysia Oil and Gas Report

The latest Malaysia Oil & Gas Report from BMI forecasts that the country will account for 1.95% of Asia Pacific regional oil demand by 2013, while providing 8.52% of supply. Asia Pacific regional oil use of 21.40mn barrels per day (b/d) in 2001 reached 25.67mn b/d in 2008. It should average 24.83mn b/d in 2009, then rise to around 28.51mn b/d by 2013. Regional oil production was just under 8.41mn b/d in 2001, and averaged 8.45mn b/d in 2008. It is set to increase to 8.75mn b/d by 2013. In 2001 the region was importing an average 12.99mn b/d. This total had risen to an estimated 17.22mn b/d in 2008, and is forecast to reach 19.76mn b/d by 2013.

In terms of natural gas, in 2008 the region consumed 459bn cubic metres (bcm) and demand of 562bcm is targeted for 2013. Production of 356bcm in 2008 should reach 488bcm in 2013, but implies net imports easing from an estimated 102bcm per annum in 2008 to 74bcm in 2013. This is in spite of many Asian gas producers being major exporters. Malaysia's share of gas consumption in 2008 was 6.69%, while its share of production was 17.54%. By 2013 its share of gas consumption is forecast to be 6.02%, with the country accounting for 17.41% of supply.

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.

Malaysian real GDP is now forecast by BMI to fall by 3.4% in 2009, compared with the 2008 growth rate of 4.6%. We are assuming 2.6% growth in 2010, 4.5% in 2011, 4.7% in 2012, followed by 4.5% in 2013.

State-owned Petronas operates in partnership with various international oil companies (IOCs) under a production sharing system that we believe will result in oil production of 745,000b/d by 2013.

Consumption is forecast to rise by up to 2% per annum to 2013, implying demand of 557,000b/d.

Malaysia's gas exports are set to rise from 31.8bcm in 2008 to 51.2bcm in 2013, with production climbing from 62.5bcm to 85.0bcm over the period.

Between 2008 and 2018, we are forecasting a reduction in Malaysia oil production of 4.5%, with crude volumes falling steadily to 720,000b/d in 2018. Oil consumption between 2008 and 2018 is set to increase by 27.5%, with growth slowing to an assumed 1.5% per annum towards the end of the period and the country using 606,000b/d by 2018. Gas production is expected to rise from 62.5bcm in 2008 to a possible 105bcm by 2018. With demand growth of 24.7%, this provides an export capability reaching 66.7bcm in 2018, largely in the form of LNG. Details of BMI's 10-year forecasts can be found later in this report, which provides regional and country-specific projections.

Malaysia ranks fifth in BMI's updated Upstream Business Environment rating, reflecting a strong resource position and a moderate gas output growth outlook, being offset by extensive state involvement.

The country sits just ahead of the Philippines - and in a relatively strong position to defend its position.

The country now ranks equal 10th alongside Thailand and Pakistan in BMI's Downstream Business Environment rating, reflecting its limited refinery capacity expansion plans, sluggish oil and gas demand growth outlook and relatively high level of retail site intensity.