New Energy market report from Business Monitor International: "Saudi Arabia Oil & Gas Report Q4 2012"

Boston, MA -- (SBWire) -- 12/13/2012 --BMI View: While refinery expansion is proceeding broadly to schedule, Saudi Arabia cannot claim the same about its gas exploration and development programme. Drilling has again been delayed in the Empty Quarter, which is a further sign of a frustrating process that may leave the Kingdom short of gas as demand continues to rise. There has been little apparent progress on plans to boost productive capacity from the current 12mn barrels per day (b/d) to 14-15mn b/d.

We highlight these trends and developments in Saudi Arabia's oil & gas sector:

- After reaching 10.1mn b/d in July 2012, Saudi crude production is believed to have edged a fraction lower in August as Asian demand dried up. With domestic consumption moving higher, Saudi Arabia's output could creep above 10.2mn b/d, in spite of a commitment from OPEC to maintain its existing production quotas.
- BMI expects Saudi crude production alone to have reached almost 11.1mn b/d by 2021, with the slow rise symptomatic of a desire to control oil prices and maintain relative market tightness. Total liquids supply by the end of the forecast period is set to reach around 13.2mn b/d.
- Oil consumption is expected to rise by about 1.1mn b/d during the period to 2021, with much of the increase driven by the rising utilisation of crude oil for power generation.
- We expect Saudi Arabia to remain self-sufficient in natural gas, with production and consumption rising from an estimated 94.8bn cubic metres (bcm) in 2011 to 131bcm by 2021. Greater exploration of the Red Sea and prospects for tight gas production could bode well for gas reserves, although progress in the so-called Empty Quarter remains slow.
- Sino Saudi Gas, a joint venture (JV) between China's state-controlled Sinopec and Saudi Arabia's state-owned Saudi Aramco, in August 2012 announced a delay in plans to drill for gas in the Empty Quarter. The delay was attributed to the need to further evaluate the 'economic and technical aspects of the well' according to an unnamed Sinopec executive quoted by Reuters. - The advancement of refinery projects could turn Saudi Arabia into a gasoline exporter, while petrochemicals producers continue to take advantage of cheap feedstock (gas, naphtha).
We are assuming an average OPEC basket oil price for 2012 of US$107.05/bbl, falling to US$99.10 in 2013. By 2016, we expect the price to average US$93.25, edging lower to US$91.50/bbl by 2021. Based on these assumptions and BMI's production forecasts, Saudi Arabia's oil revenues should decrease from an estimated US$334.5bn in 2012 to US$301.1bn by 2021.

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