Countries covered: Iran
BMI forecasts that Iran will account for 15.00% of Middle East (ME) regional oil demand by 2013, whileproviding 15.89% of supply. Regional oil use of 8.24mn barrels per day (b/d) in 2001 rose to 11.25mn b/din 2008. It should average 11.30mn b/d in 2009 and then rise to around 12.17mn b/d by 2013. Regionaloil production was 22.87mn b/d in 2001, and in 2008 averaged 26.29mn b/d. It is set to rise to 28.01mnb/d by 2013. Oil exports are growing steadily, because demand growth is lagging the pace of supplyexpansion. In 2001, the region was exporting an average 14.63mn b/d. This total had risen to 15.04mn b/din 2008 and is forecast to reach 15.84mn b/d by 2013. Iraq has the greatest production growth potential,followed by Qatar.
In terms of natural gas, the region in 2008 consumed 391.5bn cubic metres (bcm), with demand of512.8bcm targeted for 2013, representing 31.0% growth. Production of 389.5bcm in 2008 should reach610.4bcm in 2013 (+56.7%), which implies net exports rising to 98bcm by the end of the period. Iranconsumed 30.04% of the region’s gas in 2008, with its market share forecast at 28.94% by 2013. Itcontributed 29.86% to 2008 regional gas production and, by 2013, will account for 31.13% of supply.
For 2009 as a whole, we forecast an average OPEC basket price of US$55.00 per barrel (bbl), a 41.5%decline year-on-year (y-o-y). This is an upgrade from the US$52 forecast we have stuck with during thepast three quarters. Our OPEC basket assumption delivers likely Brent, WTI, Urals and Dubai prices ofUS$56.30, US$57.50, US$55.60 and US$55.60/bbl respectively. For 2010, we expect to see a recovery toUS$60.00/bbl for the OPEC price (up from our previous forecast of US$58), gaining further ground toUS$65.00 in 2011 and US$70.00/bbl in 2012. Our post-2010 forecasts are unchanged and we continue touse a long-term price assumption of US$70.00 for 2013-2018.
In 2009, BMI forecasts a global average gasoline price of US$62.12/bbl, with the fuel having peaked inJune. The overall y-o-y fall in 2009 gasoline prices is put at 40.0%. The BMI gasoil forecast is for anaverage price of US$68.62/bbl, assuming a monthly high of US$92.49/bbl in December. The full-yearoutturn is a 43.4% fall from the 2008 level. The annual jet price level for 2009 is forecast to beUS$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.
Iranian real GDP growth is estimated by BMI at 1.4% for 2009, following 4.7% in 2008. We areassuming 3.4% growth in 2010 and 4.2% in 2011, followed by 3.8% in 2012 and 3.4% in 2013. Weexpect oil demand to rise from 1.73mn b/d in 2008 to 1.83mn b/d in 2013, failing to match the underlyingrate of economic expansion. The state-owned National Iranian Oil Company (NIOC) is responsible forall upstream oil and gas activities, although there is some small-scale participation by international oilcompanies (IOCs) on a subcontractor basis. The lack of large-scale IOC investment contributes to modestoutput growth, with crude production forecast to increase from 4.33mn b/d in 2008 to 4.45mn b/d in2013, subject to OPEC quotas and the possible impact of sanctions resulting from the nuclear energydebate. Gas production should reach 190bcm by 2013, up from 116bcm in 2008. Consumption isexpected to rise from 118bcm to 148bcm by the end of the forecast period, providing exports of almost42bcm.
Between 2008 and 2018, we are forecasting an increase in Iranian oil production of 7.51%, with crudevolumes rising towards 4.65mn b/d by the end of the 10-year forecast period, although there will be anOPEC-induced dip in 2009. Oil consumption between 2008 and 2018 is set to increase by 16.53%, withgrowth slowing to an assumed 2.0% per annum towards the end of the period and the country using2.02mn b/d by 2018. Gas production is expected to climb to 280bcm by the end of the period. With 2008-2018 demand growth of 52.04%, this provides export potential rising to 101bcm by 2018. Details ofBMI’s 10-year forecasts can be found in the appendix to this report.
Iran holds fifth place behind Turkey in BMI’s updated Upstream Business Environment ratings. It isthree points clear of Oman and is likely to keep the smaller Gulf state at bay for the foreseeable future.The country’s score benefits from the region’s biggest gas reserves base and a very healthy oil reservesposition. Reserves-to-production ratios (RPRs) are high, but strict government control of the upstreamindustry prevents Iran’s achieving a better overall score. The country is below the middle of the leaguetable for BMI’s updated Downstream Business Environment rating, with some high scores but progressfurther up the rankings unlikely. It is rated equal seventh with Bahrain, thanks to high scores for refiningcapacity, oil demand, gas consumption, retail site intensity and population. The growth outlooks foroil/gas consumption and refining capacity represent relatively weak suits. Kuwait is immediately behindit in the regional rankings, and there is some long-term risk of it challenging for Iran’s seventh place.
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