Kuwait Oil and Gas Report Q3 2011

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Kuwait Oil and Gas Report Q3 2011 Published on August 2011

Report Summary BMI forecasts that Kuwait will account for 5.3% of Middle East regional oil demand by 2015, providing 9.1% of supply. Middle East regional oil use rose to an estimated 7.6mn b/d in 2010 and should average 7.9mn barrels per day (b/d) in 2011, before climbing to around 8.9mn b/d by 2015. Regional oil production was 22.83mn b/d in 2001 and averaged an estimated 24.5mn b/d in 2010. After reaching an estimated 25.7mn b/d in 2011, it is set to rise to 30.5mn b/d by 2015. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average of 17.85mn b/d. This total eased to an estimated 16.88mn b/d in 2010 and is forecast to reach 21.54mn b/d by 2015. Iraq has the greatest export growth potential, followed by Qatar. In terms of natural gas, the region consumed an estimated 391bn cubic metres (bcm) in 2010, with demand of 487bcm targeted for 2015, representing 25% growth. Production of an estimated 455bcm in 2010 should reach 642bcm in 2015 (+41%), which implies net exports rising to 154bcm by the end of the period. Kuwait's estimated share of gas consumption in 2010 was 3.6%, while its share of production was 2.9%. By 2015, its share of gas consumption is forecast to be 4.0%, with the country accounting for 2.4% of supply. The 2010 full-year outturn was US$77.45/bbl for OPEC crude, which delivered an average for North Sea Brent of US$80.34/bbl and for West Texas Intermediate (WTI) of US$79.61/bbl. The BMI price target of US$77 was reached thanks to the early onset of particularly cold weather, which drove up demand for and the price of heating oil during the closing weeks of the year. We set our 2011 supply, demand and price forecasts in early January, targeting global oil demand growth of 1.53% and supply growth of 1.91%. With OECD inventories at the top of their five-year average range, we set a price forecast of US$80/bbl average for the OPEC basket in 2011. The unprecedented wave of popular uprisings in the Middle East and North Africa (MENA) that followed the removal of Tunisian President Ben Ali on January 14 has obviously fundamentally altered our outlook, particularly since the unrest spread to Libya in mid-February. Taking into account the risk premium that has been added to crude prices in response to actual and perceived threats to supply, we have now raised our benchmark OPEC basket price forecast for 2011from US$80 to US$101.90/bbl and from US$85 to US$95/bbl for 2012. Based on our expectations for differentials, this gives a forecast for Brent at US$106.00/bbl in 2011 and US$97.60/bbl in 2012. We have kept our long-term price assumption of US$90/bbl (OPEC basket) in place for the time being while we wait to see what path events in the MENA region take. We have also retained our existing supply and demand forecasts until the scheduled quarterly revision at the start of April. BMI calculates that Kuwait's real GDP rose by 2.0% in 2010, with average annual growth of 3.6% expected through to 2015. We expect oil demand to rise from an estimated 423,000b/d in 2010 to 475,000b/d in 2015, lagging the underlying rate of economic expansion. State oil company Kuwait Petroleum Corporation (KPC) is responsible for all domestic oil and gas operations. Despite the absence of near-term international oil company (IOC) investment, crude production is forecast to increase from an estimated 2.49mn b/d in 2010 to 2.79mn b/d in 2015, subject to OPEC quotas. Gas production should reach 15.3bcm by 2015, up from an estimated 13.2bcm in 2010. Consumption is expected to rise from an estimated 13.9bcm in 2010 to 19.3bcm by the end of the forecast period, requiring modest net imports. Between 2010 and 2020, we forecast an increase in Kuwaiti oil production of 38.3%, with crude volumes rising steadily to 3.45mn b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2020 is set to increase by 25.3%, with growth slowing to an average 3.0% per annum towards the end of the period and the country using 530,000b/d by 2020. Gas production is expected to climb to 19.6bcm by the end of the period. With 2010-2020 demand growth of 77.5%, this provides an import requirement rising to 5.1bcm by 2020. Kuwait takes last place in BMI's composite Business Environment Ratings (BERs) table, which combines upstream and downstream scores. The Gulf state holds eighth place, above only Saudi Arabia, in BMI's updated upstream ratings, which is a surprising outcome in view of its vast oil and gas wealth.

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>> Get this Report Now by email! It is three points behind Oman and may ultimately be able to mount a challenge. Kuwait's score suffers from strict government control of the upstream industry, undermining the healthy resource position. Kuwait is in the lower half of the league table in BMI's downstream ratings, with a few high scores and near-term progress up the rankings a possibility. It is now ranked eighth ahead only of Iraq, thanks to country risk factors that fail to counter the highly regulated and largely state-controlled industry.

Table of Content Executive Summary SWOT Analysis

... 7 .... 9

Kuwait Political SWOT

... 9

Kuwait Economic SWOT

.9

Kuwait Business Environment SWOT

10

Kuwait Energy Market Overview

... 11

Regional Energy Market Overview

...... 14

Oil Supply And Demand

..... 14

Table: Middle East Oil Consumption (000b/d)

15

Table: Middle East Oil Production (000b/d) Oil: Downstream

... 16

. 17

Table: Middle East Oil Refining Capacity (000b/d) Gas Supply And Demand

17

... 18

Table: Middle East Gas Consumption (bcm)

... 18

Table: Middle East Gas Production (bcm) Liquefied Natural Gas

...... 19

.. 20

Table: Middle East LNG Exports/(Imports) (bcm) Business Environment Ratings

.. 20

.... 21

Middle East Region

..... 21

Composite Scores

... 21

Table: Regional Composite Business Environment Rating Upstream Scores

... 22

.... 23

Table: Regional Upstream Business Environment Rating Kuwait Upstream Rating ' Overview

..... 23

. 24

Kuwait Upstream Rating ' Rewards

.. 24

Kuwait Upstream Rating ' Risks

24

Downstream Scores

...... 25

Table: Regional Downstream Business Environment Rating Kuwait Downstream Rating ' Overview

... 26

Kuwait Downstream Rating ' Rewards

.... 26

Kuwait Downstream Rating ' Risks Business Environment

. 25

... 26

... 27

Legal Framework

. 27

Infrastructure

.. 28

Labour Force

.. 28

Foreign Investment Policy

... 29

Tax Regime

..... 30

Security Risk

... 31

Kuwait Oil and Gas Report Q3 2011 (From Issuu)

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>> Get this Report Now by email! Industry Forecast Scenario

.... 32

Oil And Gas Reserves

. 32

Oil Supply And Demand

..... 32

Gas Supply And Demand

... 33

Liquefied Natural Gas

. 34

Refining And Oil Products Trade

..... 34

Revenues/Import Costs

35

Table: Kuwait Oil And Gas ' Historical Data And Forecasts Other Energy

...... 36

37

Table: Kuwait Other Energy ' Historical Data And Forecasts Key Risks To BMI's Forecast Scenario

... 39

Long-Term Oil And Gas Outlook

..... 39

Oil and Gas Infrastructure

...... 40

Oil Refineries

40

Table: Refineries In Kuwait

. 40

Service Stations

.... 43

Oil Storage Facilities

.. 43

Oil Terminals/Ports

.... 43

Oil Pipelines

. 43

LNG Terminals

.... 44

Gas Pipelines

44

Gas Booster Stations

... 45

Macroeconomic Outlook

. 46

Table: Kuwait - Economic Activity Competitive Landscape

.... 48 .. 49

Executive Summary

49

Table: Key Players ' Kuwaiti Oil And Gas Sector Overview/State Role

.. 49

.... 50

Licensing And Regulation

.... 50

Government Policy

50

International Energy Relations

. 51

Table: Key Upstream Player

53

Table: Key Downstream Players Company Monitor

53

..... 54

Kuwait Petroleum Corporation (KPC)

... 54

Kuwait National Petroleum Company (KNPC) Chevron

.... 38

..... 59

... 62

Royal Dutch Shell ' Summary Total ' Summary

.... 65 .. 65

Oula Fuel Marketing Company ' Summary

... 66

Soor Fuel Marketing Company ' Summary

..... 66

Others ' Summary

. 66

Oil And Gas Outlook: Long-Term Forecasts Regional Oil Demand

.... 67

. 67

Table: Middle East Oil Consumption (000b/d) Regional Oil Supply

.... 68

Table: Middle East Oil Production (000b/d) Regional Refining Capacity

Kuwait Oil and Gas Report Q3 2011 (From Issuu)

67 ... 68

...... 69

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>> Get this Report Now by email! Table: Middle East Oil Refining Capacity (000b/d) Regional Gas Demand

70

Table: Middle East Gas Consumption (bcm) Regional Gas Supply Kuwait Country Overview

...... 71 .. 71

Methodology And Risks To Forecasts

..... 72

... 73

Oil And Gas Ratings: Revised Methodology Introduction

... 70

... 71

Table: Middle East Gas Production (bcm)

Glossary Of Terms

69

.... 74

.. 74

Ratings Overview

. 74

Table: BMI Oil And Gas Business Environment Ratings: Structure Indicators

.... 75

...... 76

Table: BMI Oil And Gas Business Environment Upstream Ratings: Methodology Table: BMI Oil And Gas Business Environment Downstream Ratings: Methodology BMI Methodology

..... 77

..... 79

How We Generate Our Industry Forecasts Energy Industry

... 80

Cross Checks

80

Sources

... 76

.... 79

.. 81

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