2013-12-24 22:27:23 - Fast Market Research recommends "Czech Republic Oil & Gas Report Q1 2014" from Business Monitor International, now available
With a moratorium on shale gas exploration, the Czech Republic will remain highly dependent on imported fuel, as conventional hydrocarbons potential is limited. Demand trends are not particularly strong, but refinery disruptions show that the domestic fuels market is in a precarious state of balance. This, in turn, has prompted the government to investigate ownership options for the national refining segment.
The main trends and developments we highlight for the Czech Republic's oil and gas sector are:
* Plans to freeze shale gas exploration for two years to allow the government to draft and implement new legislation have found plenty of support, meaning that drilling activity is unlikely until post-2014. In May 2013, Czech Prime Minister Petr Necas reiterated that shale
mining was not on the agenda and that the moratorium on shale gas exploration would be maintained, stressing that the adoption of relevant legislation would be a precondition of shale gas prospecting and mining. Several domestic and foreign companies had earlier applied for shale gas exploration permits, including the UK's Cuadrilla Resources and Basgas Energia Czech, a unit of Australia-based Basgas. Domestic upstream company MND had also applied for an exploration permit.
* Unipetrol insisted on January 23 2013 that it has no intention of selling control of the Czech Republic's major refiner Ceska Rafinerska. The statement came a day after Czech Industry Minister Martin Kuba said the government is preparing a plan to take over the company, confirming long-standing market speculation. The move is prompted by the government's desire to bolster energy security, Kuba told Reuters in an interview. To that end, an expert group has been formed to study the plan, which aims to combine the refiner with state-held crude and oil products pipeline operators Mero and Cepro.
* In November 2013, Shell announced that it has signed an agreement to sell its 16.3% stake in Ceska Rafinerska to Unipetrol. This will bring Unipetrol's shareholding interests to 67.5%, providing it with the qualified majority of votes in Ceska Rafinerska. The sale will be finalised in 2014.
* Unipetrol has now permanently stopped crude oil refining at its 20,000 barrel per day (b/d) Pardubice refinery. The decision was made due to the weak refining margins post 2008, the low conversion capacity and low complexity of the refinery which impacted its profitability, and a weak demand for diesel and refining overcapacity in Europe. As a result, national crude distillation capacity is now reduced to 163,000b/d.
* Consumption of natural gas fell during 2011/12, dampened by a decline in manufacturing and warm weather. However, the fuel is finding increased residential/commercial use and may displace coal in power generation projects. We expect that overall demand will rise from an estimated 8.2bcm in 2012 to around 9.0bcm by 2017, then reach 9.9bcm by 2022. Carpathian Resources has identified potentially gas-bearing structures for future drilling; however, we do not expect to see domestic gas production rise above 0.2bcm over the medium term. We rather expect a decline in production to an estimated 0.15bcm in 2022.
Full Report Details at
- www.fastmr.com/prod/754508_czech_republic_oil_gas_report_q1_2014 ..
German utility RWE has wrapped up another asset sale, with the disposal of Czech gas transmission operator Net4Gas for EUR1.2bn. The asset was purchased by a partnership comprising Allianz Capital Partners and Borealis. In addition to the EUR1.2bn purchase price, the partners are assuming debt of EUR400mn. Net4Gas holds the exclusive rights to operate around 3,600km of natural gas pipeline in Czech Republic. The company is responsible for the national transmission of natural gas, as well as international natural gas transit.
In 2013, we forecast that the Czech Republic will consume some 195,490b/d of oil. Using our current GDP growth forecasts, it is unlikely that medium-term oil demand will increase dramatically. Assuming an average rise in consumption of no more than 1.5% per annum, below the Central and Eastern European (CEE) norm, demand will reach 208,500b/d in 2017, then 223,180b/d by 2022 - resulting in end-period imports of 214,930b/d.
The forecast cost of crude oil imports in 2013 is US$7.44bn, reflecting an OPEC basket oil price of US $105.00/bbl. By 2017, crude imports will cost an estimated US$7.35bn. The cost of importing some 8.7bcm of gas by 2017 is forecast at US$4.28bn. The combined crude oil and natural gas import bill for the Czech Republic in 2017 is put at almost US$11.63bn, at an OPEC basket oil price of US$97.00/bbl
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