Countries covered: Kazakhstan
The latest Kazakhstan Oil & Gas Report from BMI forecasts that the country will account for 4.66% ofCentral and Eastern European (CEE) regional oil demand by 2013, while providing 16.36% of supply.
CEE regional oil use of 4.65mn barrels per day (b/d) in 2001 rose to 5.41mn b/d in 2008. It shouldaverage 5.15mn b/d in 2009 and then rise to around 5.63mn b/d by 2013. Regional oil production was8.83mn b/d in 2001, and in 2008 averaged 12.91mn b/d. It is set to rise to 14.37mn b/d by 2013. Oilexports 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 and isforecast 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. Kazakhstan’s share of gas consumption in 2008 was 3.64%, while its share of production is put at5.47%. By 2013, its share of demand is forecast to be 4.59%, with the country accounting for 8.28% ofsupply.
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.
Kazakhstan’s real GDP is now forecast by BMI to contract by 1.9% in 2009, compared with growth of3.0% in 2008. We are assuming 2.4% growth in 2010, 5.5% in 2011, followed by 6.6% in 2012 and 6.7%in 2013. Consumption growth, beyond the likely weakness of 2009, should keep pace with the growingeconomy, but is unlikely to have much negative impact on export potential. We are forecasting domesticoil demand reaching 263,000b/d by 2013. State-owned KazMunaiGaz (KMG) accounts for more than10% of oil production and participates in joint venture (JV) projects with international oil companies(IOCs), which should deliver rapid volume growth after the Karachaganak field builds up to full output inexcess of 200,000b/d. Expansion of the Tengiz field and activation of the offshore Kashagan projectshould push Kazakh production towards 2.35mn b/d by 2013. This implies that oil exports should risefrom an estimated 1.33mn b/d in 2008 to 2.09mn b/d by the end of the forecast period.
Between 2008 and 2018, we are forecasting an increase in Kazakh oil and gas liquids production of48.4%, with volumes reaching a peak of 2.6mn b/d in 2014, before falling to 2.3mn b/d by the end of the10-year forecast period. Oil consumption between 2008 and 2018 is set to increase by 48.9%, with growthslowing to an assumed 5.0% per annum towards the end of the period and the country using 335,000b/dby 2018. Gas production should rise from 2008 level of 30bcm to 95bcm by 2018. Gas demand rising80.8% provides export potential increasing to 56bcm. Details of BMI’s 10-year forecasts can be found inthe appendix to this report.
Kazakhstan still occupies first place in BMI’s updated Upstream Business Environment rating, havingremained just ahead of neighbour Azerbaijan. Its oil and gas production growth outlook, asset immaturity,high reserves to production ratios (RPR) and competitive landscape work in the country’s favour, but areundermined by a relatively unappealing risk environment. The country is just above the mid-point of theleague table in BMI’s updated Downstream Business Environment rating, although there are a fewparticularly high scores and progress further up the rankings from sixth place seems possible. The lowlevel of retail site intensity represents a strong suit, along with region-leading oil demand growthprospects. Azerbaijan is just a point ahead of it in the regional rankings, and there is therefore somechance of Kazakhstan moving ahead over the medium term.
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