BMI-UKTI Webinar Presentation On Asia O&G Opportunities
-
Upload
umang-parikh -
Category
Documents
-
view
103 -
download
0
Transcript of BMI-UKTI Webinar Presentation On Asia O&G Opportunities
www.bmiresearch.comwww.bmiresearch.com
Opportunities In Asia’s O&G Sector Amid A Weak Oil Price Environment
Umang ParikhSenior Oil & Gas Analyst
June 2015
www.bmiresearch.com
Key Themes
Bright Spots In Asia’s E&P Amid Low Oil Prices
Positive Consumption Story Will Drive Energy Demand
Transportation Sector Growth Positive For Gasoline Trade
LNG Trade Will Open New Opportunities
www.bmiresearch.com
Oil Prices: Short-Term Weakness Ahead
We expect renewed weakness in prices over the course of H215 as ample supply interacts with stable demand.
• Supply: OPEC remains committed to its output target of 30mn bbl/day amid a well-supplied global market.
• Iran wildcard: A breakthrough in Iranian nuclear sanctions will bring additional crude supplies into the market — Q116 at the earliest.
• Demand: Global demand will remain stable over the next six months, supported by China’s stockpiling activities.
Jan-
15Ja
n-15
Jan-
15Ja
n-15
Jan-
15Ja
n-15
Feb-
15Fe
b-15
Feb-
15Fe
b-15
Feb-
15Fe
b-15
Mar
-15
Mar
-15
Mar
-15
Mar
-15
Mar
-15
Mar
-15
Apr-
15Ap
r-15
Apr-
15Ap
r-15
Apr-
15Ap
r-15
May
-15
May
-15
May
-15
May
-15
May
-15
May
-15
Jun-
15Ju
n-15
40
60
80
Weekly Front-Month Brent (USD/bbl)
Source: Bloomberg, BMI
www.bmiresearch.com
Oil Prices: Sub-$100/bbl Ahead
Subdued long-term outlook: Prices to trade below USD75/bbl through to 2019.
• Shale oil will become the new global swing production as US producers improve efficiency to tide over period of lower oil prices.
• Producers under fiscal pressure will continue to pump more oil.
• Production growth will exceed consumption increase up to 2019.
• Output growth to be driven by countries in the Middle East, Atlantic Margin and the US Gulf of Mexico.
2011 2012 2013 2014 2015f 2016f 2017f 2018f 2019f20
40
60
80
100
120
Brent Price ForecastBrent, USD/bbl
2011 2012 2013 2014 2015f 2016f 2017f 2018f 2019f80
82
84
86
88
90
92
94
96
Global Crude Oil Balance
World oil production, mnb/d World oil consumption, mnb/d
f = BMI forecast. Source: Bloomberg, National statistical agencies, EIA, BMI
www.bmiresearch.com
Risk: Long-Term Blow To Asia UpstreamLower oil prices will undercut short-term investment and long-term production potential in certain countries.
• Companies will see lower revenues, a more challenging borrowing environment and therefore cut capex.
• The exploration and development of deepwater and LNG will be affected.
• The countries most at risk are Vietnam, Australia and Thailand.
Chevr
on
Exxon
Mob
il
Shell
Tota
lBP
Stato
il
CNOOC*
Conoc
oPhi
llips
Petro
nas*
BG Gro
up*
Perta
min
a
PTTEP (5.0)
5.0
15.0
25.0
35.0
45.0
2014
2015 target
Changes In Capex (USDbn)
2011
2012
2013
2014
e
2015
f
2016
f
2017
f
2018
f
2019
f
2020
f
2021
f
2022
f
2023
f
2024
f
0
200
400
600
800
1,000
1,200
1,400
Crude Oil & Liquids Production ('000b/d)
Vietnam Australia Thailand
e/f = BMI estimate/forecast. Source: *Company data, National statistical agencies, EIA, BMI
www.bmiresearch.com
Asia Upstream Bright SpotsThere will still be bright spots, especially in China’s tight gas production and certain South East Asian producers.
• More sophisticated techniques will allow China to commercialise its vast unconventional sources.
• Improvement in regulatory environment will benefit Indonesia’s E&P.
• Upside to oil prices will reverse Malaysia’s crude oil production decline.
• Australia and Papua New Guinea will see rising natural gas production over the coming years as projects from previous capex cycle come online.
2011
2012
2013
2014
2015
f
2016
f
2017
f
2018
f
2019
f
2020
f
2021
f
2022
f
2023
f
2024
f
0.0
50.0
100.0
150.0
200.0
250.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
China - Natural Gas Production, bcm
China Natural Gas Production (LHS) % chg y-o-y (RHS)
2011
2012
2013
2014
e
2015
f
2016
f
2017
f
2018
f
2019
f
2020
f
2021
f
2022
f
2023
f
2024
f
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
0.010.020.030.040.050.060.070.080.090.0
Malaysia & Indonesia – Crude Oil & Natural Gas Production
Malaysia Crude Oil & Liquids Production, '000b/d (LHS)Indonesia Gas Production, bcm (RHS)
e/f = BMI estimate/forecast. Source: National statistical agencies, EIA, BMI
www.bmiresearch.com
Focus On Cost EfficiencyRenewed focus on brownfield projects with lower cost and greater efficiency.
• Asia has one of the highest production costs in the world.
• Companies will focus on developing competitive brownfield projects and avoid exploration risk where possible.
• Renewed focus on innovation and R&D, Petronas says it will focus investment in enhanced oil recovery (EOR) techniques to increase output.
Africa and Middle East
Canada Asia Europe South and Central America
US0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Production Costs As A Percentage Of Revenues
2012 2013 2013 Global AverageThis data takes the ratio of production costs to revenues in a particular region of the 75 largest O&G companies during the year. Production costs of these companies include production taxes, transportation cost and production-related general and administrative expenses. Source: EY Global oil and gas reserves study, BMI
Sources: EY Global oil and gas reserves study, BMI
www.bmiresearch.com
Opportunities: A Consumption StoryWe see greater opportunities in energy
consumption, rather than exploration and production (E&P).
• Rising urbanisation rates in emerging Asia from 55% to 63% over the coming decade. Lower energy subsidies will increase infrastructure spending.
• Energy-intensive manufacturing sector will average 10.0% growth annually over the next decade.
• Soaring car ownership will create upward pressure on energy consumption.
• Slight shift in opportunities away from China towards South and South East Asia.
2014 2015f 2016f 2017f 2018f 2019f
China 6.9 5.7 5.9 6.2 5.3 5.4
India** 2.5 5.9 6.1 6.0 5.9 5.7
Indonesia -1.8 -6.6 9.7 9.1 8.5 7.8
Philippines 29.5 13.2 8.2 7.8 7.4 7.0
Table: New Vehicle Sales, %
Car Ownership To Soar*
Aust
ralia
Japa
n
Mal
aysia
Taiw
an
Thai
land
Chin
a
Indo
nesia
Viet
nam
Indi
a
Phili
ppin
es
0
100
200
300
400
500
600
Car Density (Per 1,000)
3.2bn People
f = BMI forecast, *Includes used cars. **Refers to Fiscal Year (April-March). Source: National automotive associations, BMI
www.bmiresearch.com
Opportunities: Gasoline Trade
Strong growth in transportation sector will provide another opportunity of increased gasoline trade in the region.
• The build-up of refining capacity in emerging markets (EMs) is focused on diesel fuels.
• However, rising car sales will drive regional gasoline demand into deficit and open the door for increased trade.
• Developed markets facing demand stagnation could look to export surplus gasoline production to EMs.
e/f = BMI estimate/forecast. Sources: National statistical agencies, EIA, BMI
2012
2013
2014
e
2015
f
2016
f
2017
f
2018
f
2019
f
2020
f
2021
f
2022
f
2023
f
2024
f
0
5,000
10,000
15,000
20,000
25,000
Asia Refined Fuels Production, '000 b/d
Developed Economies Emerging Economies
2012
2013
2014
2015
f
2016
f
2017
f
2018
f
2019
f
2020
f
2021
f
2022
f
2023
f
2024
f
-2000.0
-1500.0
-1000.0
-500.0
0.0
500.0
Gasoline Supply And Demand Gap, ‘000 b/d
Indonesia India China
www.bmiresearch.com
Strong natural gas demand and a lack of regional pipelines will encourage greater LNG trade over the decade.
• Power sectors of countries to switch from other energy sources to gas to reduce pollution.
• Lack of cross-border pipelines will keep LNG dominant in regional gas trade over the next decade.
• LNG demand growth in South and South East Asia from 2018 will be supported by import capacity build-up.
• The fall in prices of oil-indexed LNG contracts will make long-term deals more viable.
Opportunities: LNG Demand
2012
2013
2014
e
2015
f
2016
f
2017
f
2018
f
2019
f
2020
f
2021
f
2022
f
2023
f
2024
f
-50
0
50
100
150
200
Net LNG Imports, bcm
Asia Europe Latin America
2015f 2016f 2017f 2018f 2019f0
20
40
60
80
100
120
South & South East Asia - LNG Import & Regasi-fication Capacity (bcm)
India Pakistan Singapore Thailand MalaysiaIndonesia Taiwan Philippines Vietnam
e/f = BMI estimate/forecast. Sources: National statistical agencies, EIA, BMI
www.bmiresearch.com
Shifting LNG Export LandscapeRegional LNG demand will be supported by exports from Australia and Papua New Guinea (PNG).
• Investments made during 2010-2014 will see Australia and PNG become significant regional LNG exporters.
• Australia will overtake Malaysia (the current export leader) to become the regional LNG export juggernaut.
• Australian exports will reach countries such as Japan, China, India, South Korea and Taiwan.
• The abundance of LNG supplies will mean that bargaining power still lies with the consumers.
2013
2014
e
2015
f
2016
f
2017
f
2018
f
2019
f
2020
f
2021
f
2022
f
2023
f
2024
f
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Net LNG Exports, bcm
Papua New Guinea Malaysia Australia
Table: Net LNG Exports, bcm
2014 2015f 2016f 2017f 2018f 2019f
Australia 16.3 26.3 44.0 59.7 63.9 64.7
Malaysia 30.1 28 27.2 27.9 26.9 27.1
PNG 4.6 9.0 9.0 9.0 9.0 10.9
f = BMI forecast. Source: National statistical agencies, EIA, BMI
www.bmiresearch.com
Summary
Low Oil Prices Will Shift E&P Focus In Asia
Transportation Sector Demand Will Drive Regional Gasoline Trade
Australia and PNG LNG Exports To Create Opportunities