Sudan Oil and Gas Report Q2 2010

The new Sudan Oil & Gas Report from BMI forecasts that the country will account for 3.12% of African regional oil demand by 2014, while providing 6.27% of supply. African regional oil use of 2.98mn barrels per day (b/d) in 2001 rose to an estimated 3.60mn b/d in 2009. It should average 3.66mn b/d in 2010 and then rise to around 4.13mn b/d by 2014. Regional oil production was 7.84mn b/d in 2001, and in 2009 averaged an estimated 9.79mn b/d. It is set to rise to 12.52mn b/d by 2014. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average 4.86mn b/d. This total had risen to an estimated 6.19mn b/d in 2009 and is forecast to reach 8.40mn b/d by 2014. Angola has the greatest production growth potential, with Nigerian exports set to soar if it can resolve recent quasi-political issues.
In terms of natural gas, the region in 2009 consumed an estimated 124bn cubic metres (bcm), with demand of 191bcm targeted for 2014. Production of an estimated 248bcm in 2009 should reach 385bcm in 2014, which implies net exports rising from 124bcm in 2009 to 193bcm by the end of the period. Sudan is neither a consumer nor producer of gas.
For 2009 as a whole, we have assumed an average OPEC basket price of US$59.00 per barrel (bbl), a 37.3% decline year-on-year (y-o-y). This represents an upgrade from the US$55.00/bbl forecast we were using in the previous quarter. For 2010, we expect to see a significant oil price recovery to US$83.00/bbl for the OPEC basket price, gaining further ground to US$85.00/bbl in 2011 and to US$90.00/bbl in 2012 and beyond.
For 2009, BMI has assumed a global average gasoline price of US$67.46/bbl, with the fuel having peaked in June at almost US$80.00/bbl. The overall y-o-y fall in 2009 gasoline prices is put at 33.7%. The BMI gasoil forecast is for an average price of US$70.59/bbl, assuming a monthly high above US$94/bbl in December 2009. The full-year outturn represents a 41.8% y-o-y fall. The annual jet price level for 2009 is estimated at US$68.45/bbl. This compares with US$124.95/bbl in 2008. The 2009 average naphtha price is put by BMI at US$52.66/bbl, down 39.7% from the previous year’s level. Sudan’s real GDP is estimated by BMI to have risen by 4.3% in 2009, compared with 6.8% growth in 2008. We are assuming average annual growth of 5.3% in 2010-2014. We expect oil demand to rise from an estimated 102,000b/d in 2009 to 129,000b/d in 2014. State oil company Sudan National Petroleum Corporation (Sudapet) is active in the country’s oil exploration and production (E&P) sector, working in partnership with foreign (largely Asian) companies in raising oil output from an estimated 528,000b/d in 2009 to 785,000bd in 2014. There are no plans for significant gas production or consumption.
Between 2009 and 2019, we are forecasting an increase in Sudan oil and gas liquids production of 34.4%, with volumes peaking at 785,000b/d in 2014, before falling steadily to 710,000b/d by the end of the 10- year forecast period. Oil consumption between 2009 and 2019 is set to increase by 61.3%, with growth slowing to an assumed 5.0% per annum towards the end of the period and the country using 164,000b/d by 2019. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Sudan now shares ninth place with Equatorial Guinea in BMI’s updated Upstream Business Environment rating. The country’s score suffers from very poor country risk issues, the absence of gas resources and significant state influence. Unless the risk profile changes for the better, Sudan will struggle to edge further away from the foot of the table, in spite of healthy oil resources. The country is below the midpoint of the league table in BMI’s updated Downstream Business Environment rating, with few high scores and progress further up the rankings unlikely unless the energy market grows more rapidly or new refineries are built. It is ranked seventh behind Libya and Angola thanks to low scores for gas demand, country risk factors and nominal GDP.