Chile Oil and Gas Report Q3 2009

The latest Chile Oil & Gas Report from BMI forecasts that the country will account for 4.60% of Latin American regional oil demand by 2013, while making no meaningful contribution to supply. Latin America regional oil use of 6.66mn barrels per day (b/d) in 2001 reached an estimated 7.61mn b/d in 2008. It should average 7.57mn b/d in 2009 and then rise to around 8.23mn b/d by 2013. Regional oil production was just under 10.40mn b/d in 2001, and in 2008 averaged an estimated 9.89mn b/d. It is set to rise to 10.58mn b/d by 2013. Oil exports are slipping, because demand growth is exceeding the pace of supply expansion. In 2001, the region was exporting an average 3.73mn b/d. This total had fallen to an estimated 2.28mn b/d in 2008 and is forecast to be 2.35mn b/d in 2013. The principal exporters will be Mexico, Venezuela, Ecuador and Brazil.

As regards natural gas, the region in 2008 consumed an estimated 191.3bn cubic metres (bcm), with demand of 254.3bcm targeted for 2013, representing 32.9% growth. Estimated production of 207.4bcm in 2008 should reach 289.9bcm in 2013, and implies 35.7bcm of net exports the end of the period. Chile's share of gas consumption in 2008 was an estimated 2.61%, while it has no significant share of production.

By 2013, its share of gas consumption is forecast to be 2.65%.

In terms of the OPEC basket of crudes, the average price in Q109 was an estimated US$45.78 per barrel (bbl), down 13% from the US$52.51/bbl recorded during the previous three months. During the second quarter, there has been little change to our view of oil market developments. BMI is forecasting an average OPEC basket price of US$51.30/bbl, with the March gains being retained in April, before further recovery to a possible US$57.00 is seen by June. For 2009, we are still assuming an average OPEC basket price of US$52.00/bbl (-45% year-on-year). The BMI full year forecast implies Brent crude at US$53.73, WTI averaging US$54.90/bbl and Urals at US$52.66 for 2009.

For the whole of 2009, the BMI assumption for gasoline is an average US$56.89/bbl, with the price peaking at a forecast monthly average of US$64.75 in December 2009. The overall y-o-y fall in 2009 gasoline prices is put at 44.1%. For gasoil in 2009, the BMI forecast is for an average price of US$69.35/bbl, assuming a monthly high of US$94.48/bbl in December. The full-year outturn represents a 42.8% fall from the 2008 level. The monthly average jet fuel price is forecast to range from US$53.75 in February to US$96.76/bbl in December, proving an annual level of US$71.78/bbl. This compares with US$124.95/bbl in 2008.

Chilean real GDP growth is now forecast by BMI at 0.1% for 2009, down from 3.2% in 2008. We are assuming 1.2% growth in 2010, 3.2% in 2011, 2.9% in 2012 and 3.5% in 2013. State oil and gas company Empresa Nacional del Petr??leo (ENAP) is responsible for all domestic oil and gas production, with volumes in decline. We are assuming oil and gas liquids production of no more than 4,000b/d by 2013, with the country expected to pump an average 8,000b/d in 2009. Consumption beyond 2009 is forecast to increase by up to 3% per annum to 2013, implying demand of 379,000b/d by the end of the forecast period. The import requirement would therefore be around 375,000b/d by 2013. Gas production is forecast to increase from an estimated 1.6bcm in 2008 to a peak of 1.8bcm in 2009/2010, falling back to 1.6bcm in 2013, with net imports of 5.2bcm required by 2013.

Between 2008 and 2018, we are forecasting an increase in Chilean oil consumption of 21.98%, with demand rising steadily from 343,000b/d to 418,000b/d. The annual growth rate is expected to slow to 2.0% towards the end of the period. Gas production is expected to peak at around 1.8bcm in 2009/2010, before declining steadily to 1.2bcm by 2018. With demand growth of 72.3% to 10bcm, this provides an import requirement rising from 3.4bcm to 7.4bcm during the 10-year period. Details of BMI's 10-year forecasts can be found in the appendix to this report.

Chile's outright last place in BMI's updated Upstream Business Environment rating is achieved in spite of high reserves-to-production ratios (RPR) and an investor-friendly country risk profile. There is little likelihood of a move much further up the rankings, but Chile may be able to catch Mexico during the next few quarters. Chile fares rather better in BMI's updated Downstream Business Environment rating, taking sixth place (behind Peru), reflecting its oil demand growth outlook, regulatory environment and attractive country risk rating. It is positioned ahead of Mexico in the league table, with the potential to move higher.

• Executive Summary
• SWOT Analysis
• Chile Political SWOT
• Chile Economic SWOT
• Chile Business Environment SWOT
• Chile Energy Market Overview
• Regional Energy Market Overview
• Oil Supply and Demand
• Oil: Downstream
• Gas Supply and Demand
• Liquefied Natural Gas
• Business Environment Ranking
• Latin America Region
• Composite Scores
• Upstream Scores
• Downstream Scores
• Chile Upstream Rating - Overview
• Chile Upstream Rating - Potential Returns
• Chile Upstream Rating - Risks to Potential Returns
• Chile Downstream Rating - Overview
• Chile Downstream Rating - Potential Returns
• Chile Downstream Rating - Risks to Potential Returns
• Business Environment
• Legal Framework
• Infrastructure
• Labour Force
• Foreign Investment Policy
• Tax Regime
• Security Risk
• Industry Forecast Scenario
• Oil and Gas Reserves
• Oil Supply and Demand
• Gas Supply and Demand
• Liquefied Natural Gas
• Refining and Oil Products Trade
• Revenues/Import Costs
• Other Energy
• Key Risks to BMI's Forecast Scenario
• Long-Term Oil & Gas Outlook
• Macroeconomic Outlook
• Competitive Landscape
• Executive Summary
• Overview/State Role
• Company Monitor
• ENAP - Empresa Nacional del Petr??leo
• Copec - Compa???-a de Petr??leos de Chile
• Shell Chile
• ExxonMobil Cono Sur
• Petr??leos Transandinos Repsol YPF
• Strategy
• GeoPark Holdings - Summary
• Wintershall - Summary
• Pan American Energy - Summary
• Others - Summary
• Glossary of Terms
• Introduction
• Ratings Overview
• Indicators
• Oil & Gas Outlook: Long-Term Forecasts
• Regional Oil Demand
• Regional Oil Supply
• Regional Refining Capacity
• Regional Gas Demand
• Regional Gas Supply
• Chile Country Overview
• Methodology & Risks to Forecasts
• BMI Forecast Modelling
• How We Generate Our Industry Forecasts
• Energy Industry
• Cross checks
• Sources
• List of Tables
  • Table: Latin America Oil Consumption (000b/D)
  • Table: Latin America Oil Production (000b/D)
  • Table: Latin America Oil Refining Capacity (000b/D)
  • Table: Latin America Gas Consumption (Bcm)
  • Table: Latin America Gas Production (Bcm)
  • Table: Latin America Lng Exports/(Imports) (Bcm)
  • Table: Regional Upstream Business Environment Rating
  • Table: Regional Downstream Business Environment Rating
  • Table: Chile Oil & Gas - Historical Data & Forecasts
  • Table: Chile Other Energy - Historical Data & Forecasts
  • Table: Chile - Economic Activity
  • Table: Key Players
  • Table: Key Upstream Players
  • Table: Key Downstream Players
  • Table: Bmi Oil & Gas Business Environment Ratings: Structure
  • Table: Bmi Oil & Gas Business Environment Upstream Ratings: Methodology
  • Table: Bmi Oil & Gas Business Environment Downstream Ratings: Methodology
  • Table: Latin America Oil Consumption (000b/D)
  • Table: Latin America Oil Production (000b/D)
  • Table: Latin America Oil Refining Capacity (000b/D)
  • Table: Latin America Gas Consumption (Bcm)
  • Table: Latin America Gas Production (Bcm)