2013-09-21 09:05:16 - Fast Market Research recommends "Angola Oil & Gas Report Q4 2013" from Business Monitor International, now available
We continue to hold a very positive view on Angola's hydrocarbon market. Recent production start-up on fields such as BP's PSVM field and additional output to come online from CLOV and other large prospects from next year support our view that the country's oil sector will continue to grow steadily throughout the decade. The industry is nonetheless impaired by numerous delays and stringent aboveground instabilities. With Angola LNG now online, attempts to cut gas flaring will finally materialise boosting the country's gas output. OPEC quotas, the risk of further project delays and the Angolan political environment still nonetheless imply a significant amount of uncertainty for the country's output.
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The main trends and developments we highlight
for Angola's oil and gas sector are as follows:
* Angola LNG finally started to export cargoes early Q3 2013. The first shipment was directed toward Brazil, illustrating our previously stated view that the Angola will easily find buyers for its liquefied gas in Latin America. We expect that the liquefied natural gas (LNG) capacity of 7.2bcm will be soon saturated, incentivising a capacity extension at some point in the next 10 years.
* BP started production from the PSVM field early 2013, which we expect to reach 150,000 barrels per day (b/d) of peak production by 2014. Chevron's Mafumeira Sul project received a final investment decision and is set to start production from 2016/17.
* We expect oil production to increase from approximately 1.9mn b/d in 2013 to 2.7mn b/d in 2019, followed by a decrease until the end of the forecast period 2022. This is the result of projects that have recently come on stream, such as Pazflor (220,000b/d) or PSVM (150,000 b/d), or that are scheduled to come on stream in the coming years.
* Consumption of crude is likely to rise quickly from 2012 to 2022. This very high rate of growth is boosted by the country's double-digit GDP growth, as the economy experiences a catching up phenomenon following nearly three decades of civil war. We therefore anticipate that consumption will rise from an estimated 98,000b/d in 2012 to hit 179,500b/d by 2022.
* We forecast that gas production will increase from 0.81bn cubic metres (bcm) in 2012 to more than 7.0bcm after 2020, as the authorities and companies reduce the practice of flaring and start to monetise/ associated gas resources from massive fields such as Pazflor (1.5bcm) and PSVM (2.5bcm).
* Gas demand is set to rise steadily for the rest of the decade. Relatively low demand growth when compared to growth in gas production and oil consumption can be explained by the fact that gas plays virtually no role in the country's electricity generation and that there are no plans to expand its share in the energy mix. As a result, we see gas consumption rising from 0.8bcm in 2012 to 0.9bcm by 2022.
* Non-subsalt Angolan oil reserves are likely to reach a peak in the coming decade, although they are set to increase at first thanks to exploration potential; not only in the well known Lower Congo and Kwanza basin, but also in the southern Namibe basin.
* Exploration and recent discoveries in recently allocated subsalt acreages create a serious upside risk to our forecast. However, with still limited information on the commercial viability and speed at which these resources can be monetised, we have decided not to include them in our forecast until more information is made available. These will most likely come as more information on Cobalt's Cameia-1 discovery become available.
* The 45,000b/d Luanda refinery continues to be the sole refined product producer in Angola. The 200,000b/d SonaRef project is stalling but we still expect it to come on stream in the next 10 years, albeit with some delays. The 200,000b/d Soyo plant is still in its early stages and we deem it unlikely to be completed before 2021.
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