The latest Bulgaria Oil & Gas Report from BMI forecasts that the country will account for 2.20% ofCentral and Eastern European (CEE) regional oil demand by 2013, while making no meaningfulcontribution to supply. CEE regional oil use of 4.65mn barrels per day (b/d) in 2001 rose to 5.41mn b/d in2008. It should average 5.15mn b/d in 2009 and then rise to around 5.63mn b/d by 2013. Regional oilproduction was 8.83mn b/d in 2001, and in 2008 averaged 12.91mn b/d. It is set to rise to 14.37mn b/d by2013. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion.
In 2001, the region was exporting an average 4.18mn b/d. This total had risen to 7.51mn b/d in 2008 andis forecast to reach 8.74mn b/d by 2013.
In terms of natural gas, the region in 2008 consumed 592.7bn cubic metres (bcm), with demand of663.4bcm targeted for 2013, representing 12.3% growth. Production of 754.6bcm in 2008 should reach906.1cm in 2013, which implies net exports rising from 161.9bcm in 2008 to 242.7bcm by the end of theperiod. Bulgaria’s share of consumption in 2008 was 0.63%, while it has no significant share ofproduction. By 2013, its share of demand is forecast to be 0.80%.
For 2009 as a whole, we are now assuming an average OPEC basket price of US$55.00 per barrel (bbl), a41.5% decline year-on-year (y-o-y). This represents an upgrade from the US$52 forecast we have stuckwith during the past three quarters. Our OPEC basket assumption delivers likely Brent, WTI, Urals andDubai prices of US$56.30, US$57.50, US$55.60 and US$55.60/bbl respectively. For 2010, we expect tosee a recovery to US$60.00/bbl for the OPEC price (up from our previous forecast of US$58), gainingfurther ground to US$65.00 in 2011 and to US$70.00/bbl in 2012. Our post-2010 forecasts are unchangedand 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 havingpeaked in June. The overall y-o-y fall in 2009 gasoline prices is put at 40.0%. The BMI gasoil forecast isfor an average price of US$68.62/bbl, assuming a monthly high of US$92.49/bbl in December. The fullyearoutturn represents a 43.4% fall from the 2008 level. The annual jet price level for 2009 is forecast tobe US$65.17/bbl. This compares with US$124.95/bbl in 2008. The 2009 average naphtha price is put byBMI at US$49.06/bbl, down 43.9% from the previous year’s level.
Bulgarian real GDP is now forecast by BMI to fall by 5.3% in 2009, following 2008 growth of 5.8%. Weare assuming 0.4% growth in 2010, followed by 2.4% in 2011, 3.7% in 2012, and 3.4% in 2013. Oildemand beyond the weakness of 2009/10 is forecast to rise by up to 2.0% per annum, which suggests thatconsumption could reach 124,000b/d by 2013. Imports can be expected to grow in line, as explorationefforts in the largely privatised hydrocarbons sector by small international oil companies (IOCs) do notappear likely to deliver increased domestic crude volumes. Gas consumption is rising well ahead ofdomestic supply. While gas output could reach 1.1bcm by the end of 2013, demand is heading for5.3bcm, requiring imports of 4.2bcm
Between 2008 and 2018, we are forecasting an increase in Bulgarian oil consumption of 18.3%, withimport volumes rising steadily from an estimated 119,000b/d in 2008 to 136,000b/d by the end of the 10-year forecast period. Gas production is expected to fall over the short term from the estimated 2008 levelof 0.3bcm to just 0.1bcm in 2009, before recovering to a peak of 1.5bcm by 2014. Import dependencytherefore increases from the estimated 2008 level of 3.0bcm to 5.6bcm at the end of the period. Details ofBMI’s 10-year forecasts can be found in the appendix to this report.
Bulgaria shares eighth place with Romania in BMI’s updated Upstream Business Environment rating. Itsminimal oil and gas reserves, poor production outlook, and limited competitive landscape work againstthe country, but are offset somewhat by reasonable country risk factors. Long-term scope exists forBulgaria to overtake Romania. The country now holds 10th place in BMI’s Downstream BusinessEnvironment rating, with few particularly high scores and no reason to expect near-term progress furtherup the rankings. Refining capacity is among the region’s lowest, while gas consumption is particularlymodest. The relatively high level of retail site intensity represents another weak suit, although gas demandgrowth prospects are among the best in the CEE region.
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