Eric Watkins
Oil Diplomacy Editor
LOS ANGELES, Nov. 12 -- Mexico will account for 26.1% of Latin America's regional oil demand by 2012 while providing 28.34% of supply, according to a recent analyst report.
BMI's Mexico Oil & Gas Report said Latin American regional oil use, which stood at 6.66 million b/d in 2001 and reached 7.47 million b/d in 2007, should average 7.59 million b/d in 2008 and then rise to around 8.23 million b/d by 2012.
In terms of natural gas, Latin America consumed 183 billion cu m (bcm) in 2007 with demand of 254 bcm targeted for 2012, representing a 39% growth.
BMI said production of 196 bcm in 2007 should reach 279 bcm in 2012, and implies 25 bcm of net exports by the end of the period.
In 2007, Mexico consumed 29.52% of the region's gas, with its market share for 2012 forecast at 29.33%. In 2007, Mexico produced 23.52% of the region's gas, and is expected to be contributing 20.08% by 2012.
OPEC basket price
In the second quarter of 2008, BMI estimates that the Organization of Petroleum Exporting Countries' basket price averaged just under $115/bbl—up 24% from the first quarter 2008 level.
The OPEC basket price had exceeded $127/bbl on May 22, slipping back towards $121/bbl later in the month.
In June, BMI assumed an average of around $120/bbl, to deliver its quarterly estimate of $114.98/bbl.
The estimated second quarter 2008 average prices for the main marker blends are now $118.63/bbl for Brent, $119.61/bbl for West Texas Intermediate, and $115.89/bbl for Russian Urals (Mediterranean delivery).
BMI said its projections for 2008 as a whole have been revised upwards from the last quarterly report.
"We are now assuming an OPEC basket price average of $106/bbl for 2008, compared with the $81/bbl estimate provided by our last quarterly report," the analyst said.
Based on recent price differentials, this implies Brent at $109.71/bbl, WTI averaging $110.64/bbl, and Urals at $106.88/bbl.
Mexico's GDP growth down
Mexican real GDP growth is now forecast by BMI at 2.9% for 2008, down from 3.3% in 2007.
"We are assuming 3.4% growth in 2009, 3.5% in 2010, followed by 3.9% in 2011, and 3.7% in 2012," the analyst said.
"Unless the government introduces a radical shift in energy policy, we expect state-owned Petroleos Mexicanos to retain full responsibility for oil production, without international oil company involvement," it said.
BMI is assuming oil and gas liquids production of no more than 3.18 million b/d by 2012. Consumption is forecast to increase by less than 2%/year to 2012, implying demand of 2.15 million b/d by the end of the forecast period.
Gas up, oil down
The export capability would therefore be 1.03 million b/d by 2012, it said.
Gas production is forecast to increase from 46 bcm in 2007 to 56 bcm over the period, with 19 bcm of net imports required by 2012.
Between 2007 and 2018, BMI is forecasting a decrease in Mexican oil production of 9.4%, with crude volumes falling steadily to a low point of 3 million b/d in 2015, before recovering somewhat at the end of the 10-year forecast period.
Oil consumption between 2007 and 2018 is set to increase by 19%, with growth slowing to an assumed 2%/year towards the end of the period and the country using 2.41 million b/d by 2018.
Gas production is expected to rise gradually, from around 46 bcm in 2007 to 70 bcm in 2018. With demand growth of 81%, this implies a need for imports to rise from 8 bcm to 28 bcm between 2007 and 2018.
Contact Eric Watkins at [email protected].
