New Energy market report from Business Monitor International: "Saudi Arabia Oil & Gas Report Q3 2013"

Boston, MA -- (SBWire) -- 08/12/2013 --As the world's swing producer, and the largest oil producer in 2012, Saudi Arabia maintains an outsized influence in the global market. Pressured by rising production from Iraq and non-OPEC members, as well as bearish sentiment regarding global demand, we expect a decline in Saudi output in 2013 compared to 2012. Looking ahead, we see slow gains in production, with downside risks as Saudi Arabia seeks to balance growing supply and recovering demand while keeping prices high enough to support fiscal expenditures. On gas, we highlight reports of potential LNG imports a sign of tighten supplies stemming from subsidies and set prices which may prove problematic as the country looks to bring online new supplies, including unconventional sources.

We highlight the following trends and developments in Saudi Arabia's oil and gas sector:

- At the time of writing, output was hovering around the 9.3mn b/d market, an increase from the 9.0-9.1mn b/d figure around the start of 2013. Bearish sentiment regarding Asia and rising production from Iraq and non-OPEC North America have kept the market well supplied and look set to limit the room for a previously anticipated increase in production over H213.
- Over the longer term, we see more downside risk to oil production. While we are still forecasting supply growth, we cannot preclude cutbacks in production as part of an individual effort to balance production within OPEC or as a concerted effort to keep prices within the US$100/bbl range.
- For 2013, we expect crude oil production to rise to an average of 11.7mn b/d, including natural gas liquids (NGL) and processing. Total liquids supply by the end of the forecast period is set to rise to 12.6mn b/d by 2022. Domestic consumption will increase to 4.3mn b/d by the end of our 10-year forecast period, from an estimated 3.3mn b/d in 2013.
- Rising crude consumption has placed pressure on more lucrative oil exports necessitating efforts to boost both exploration and production of natural gas. Saudi Arabia has accelerated a number of planned projects as it seeks to increase use of gas as feedstock for both power and the strategically important petrochemicals industry.
- Yet, efforts to attract foreign players to gas projects in the Kingdom have been unsuccessful, with Shell the latest party to halt exploration work.
- We expect Saudi Arabia to remain self-sufficient in natural gas, with production rising from an estimated 116.2bn cubic metres (bcm) in 2013 to 173bcm by 2022. However there is more downside than upside risk to this view, highlighted by reports officials were considering temporary LNG imports to ease supply shortfalls and allow time for new domestic sources to come online.

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