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Spain Oil & Gas Report Q2 2014 - New Market Study Published

Fast Market Research recommends "Spain Oil & Gas Report Q2 2014" from Business Monitor International, now available

 
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Boston, MA -- (SBWIRE) -- 04/16/2014 -- Although current domestic production of oil and gas negligible, with imports meeting around 98% of current demand, we are witnessing a gradual but notable uptick in investment targeting Spain's upstream. The acceleration of onshore and offshore activity could cut Spain's hefty import bill, but there are political and regulatory risks that hold sizable downs risks to both conventional and unconventional efforts.

While we are seeing increasing opportunities in Spain, we cannot yet quantify the upside risk to our forecast given the challenges and nascent stage of activity. Therefore our core view remains for Spain to see domestic production, although efficiency gains and lower prices globally will translate into some relief for its energy costs.

The main trends and developments we highlight in Spain's oil and gas sector are:

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- The Spanish government legalised the process of hydraulic fracturing, also known as fracking, on October 31 2013. The government took the decision to promote shale gas exploration and drilling projects as part of its efforts to boost the economy. It has published rules for oil and gas drillers using fracking in the country, allowing water-intensive drilling. Under the new rules, shale exploration projects across Spain will not have to go through the Environmental Impact Assessment. The new rules limiting the power of regional governments to prohibit hydraulic fracking in the country are being now used to challenge in the country's Constitutional Court the fracking ban in the region of Cantabria.
- A delay to a planned shale gas exploration programme by Repsol underscores the threat local bans on fracking pose to shale gas in Spain. Although support continues at the national level, regional bans remain a key downside risk. However, we highlight with Spain heavily dependent on imports and energy bill set to rise under government reforms, the call for greater domestic production could go stronger.
- In November 2013, Australian junior Petrel Resources revealed that its Tesorillo licence in the Guadalaquivir Basin had been independently certified to contain prospective gas resources of up to 84bn cubic metres (bcm). P50 reserves were placed at 34bcm, but given Spain's current natural gas reserves are estimated by the US Energy Information Administration to be just 2.5bcm presently, Tesorillo offers sizable upside to our forecast if the appraisal proves successful. Drilling is due to test the prospect over 2014, but Petrel noted that given the Maghreb pipeline is located some 3km away, 'any reasonable flow rate would be readily commercial.'

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