Pakistan Oil and Gas Report Q3 2009

The latest Pakistan Oil & Gas Report from BMI forecasts that the country will account for just 1.38% of Asia Pacific regional oil demand by 2013, while providing 0.86% of its supply. Asia Pacific regional oil use of 21.40mn barrels per day (b/d) in 2001 reached an estimated 25.87mn b/d in 2008. It should average 25.79mn b/d in 2009, then rise to around 29.12mn b/d by 2013. Regional oil production was just under 8.41mn b/d in 2001, and averaged an estimated 8.41mn b/d in 2008. It is set to increase to 8.74mn b/d by 2013.

In terms of natural gas, in 2008 the region consumed an estimated 440bn cubic metres (bcm) and demand of 551bcm is targeted for 2013. Production of an estimated 364bcm in 2008 should reach 486bcm in 2013, but implies net imports easing from an estimated 76bcm per annum in 2008 to 65bcm in 2013. This is in spite of many Asian gas producers being major exporters. Pakistan's share of gas consumption in 2008 was an estimated 7.09%, while its share of production is put at 8.58%. By 2013, its share of gas consumption is forecast to be 7.13%, with the country accounting for 7.83% of supply.

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.

Pakistan's real GDP growth for 2009 is forecast by BMI at 2.5%, down from 5.8% in 2008. In 2010, growth is put at 3.5%, followed by 4.3% in 2011, and 4.8% in 2012/2013. Several state-controlled oil and gas companies are in the throes of privatisation and already work with international oil companies (IOCs) in the upstream segment. We foresee oil and gas liquids production of no more than 75,000b/d by 2013, with the country also able to pump an estimated 75,000b/d in 2009. Consumption beyond 2009 is forecast to increase by around 3.5% per annum to 2013, implying demand of 401,000b/d by the end of the forecast period. The import requirement would therefore be approximately 326,000b/d by 2013. Gas demand is set to rise from an estimated 31.2bcm in 2008 to 39.2bcm by 2013, requiring imports of at least 1.2bcm.

Between 2008 and 2018, we are forecasting a decrease in Pakistan oil production of 19.1%, with crude volumes falling steadily to 55,000b/d in 2018. Oil consumption between 2008 and 2018 is set to increase by 27.1%, with growth slowing to an assumed 3.0% per annum towards the end of the period and the country using 468,000b/d by 2018. Gas production is expected to rise from around 31.2bcm in 2008 to a possible 45.0bcm by 2017/2018. With demand growth of 60.5%, this requires imports rising to 5.1bcm by the end of the forecast period. Details of BMI's 10-year forecasts can be found in the appendix to this report, which provides global, regional and country-specific projections.

Pakistan now ranks fourth, ahead of Malaysia, in BMI's updated Upstream Business Environment rating, reflecting a reasonable resource position, better-than-average output growth outlook and falling state involvement. The country sits five points ahead of China, and may not be able to keep it at bay over the longer term. Pakistan now ranks 10th, behind Vietnam and the Philippines, in BMI's Downstream Business Environment rating, reflecting its refinery capacity expansion plans, average oil and gas demand growth outlook and low level of retail site intensity.