Analyst sees Libya's oil, gas production rising

Libya will supply 17.37% of Africa's regional oil supply by 2012, while accounting for about 7.45% of African oil demand, according to a recent BMI analyst report.

Dec 1st, 2008

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Dec. 1 -- Libya will supply 17.37% of Africa's regional oil supply by 2012, while accounting for about 7.45% of African oil demand, according to a recent BMI analyst report.

BMI said African regional oil production, which reached 7.84 million b/d in 2001 and averaged 10.13 million b/d in 2007, is set to rise to 12.66 million b/d by 2012.

It said regional oil use, which stood at 2.98 million b/d in 2001 and rose to 3.58 million b/d in 2007, should average 3.66 million b/d in 2008 before increasing to around 4.05 million b/d by 2012.

In terms of natural gas, the region in 2007 consumed 100 billion cu m (bcm), with demand of 171 bcm targeted for 2012, representing growth of 71.1%.

"Production of 193 bcm in 2007 should reach 331 bcm in 2012 (+71.6%), which implies net exports rising to 161 bcm by the end of the period, up from 94 bcm in 2007," BMI said.

Libya in 2007 consumed 6.33% of the region's gas, with its market share forecast at 4.29% by 2012. It contributed 7.87% to 2007 regional gas production and by 2012 will account for 9.66% of supply.

OPEC price up 24%
In the second quarter of 2008, BMI estimates that the OPEC basket price averaged just under $115/bbl—up about 24% from the first quarter level. The OPEC basket price exceeded $127 on May 22, slipping back towards $121/bbl later in the month.

In June, BMI assumed an average of about $120 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 for Brent, $119.61 for WTI, and $115.89/bbl for Russian Urals (Mediterranean delivery).

"Our projections for 2008 as a whole have been revised upwards from the last quarterly report," the analyst said, adding, "We are now assuming an OPEC basket price average of $106/bbl for 2008, compared with the $81 estimate provided by our last quarterly report."

Based on recent price differentials, this implies Brent at $109.71, WTI averaging $110.64/bbl, and Urals at $106.88/bbl.

Libyan real gross domestic product growth is now forecast by BMI at 7% for 2008, following 5.6% in 2007. The analyst is assuming 6.6% growth in 2009, followed by 6.8% in 2010-12.

Oil demand to rise
BMI expects oil demand to rise to 302,000 b/d in 2012 from 260,000 b/d in 2007, representing 3% annual growth.

Libya's state-owned National Oil Corp. in 2006 accounted for 45% of oil production and all gas production, but it has a growing number of international oil company partners contributing to a forecast rise in oil production to 2.20 million b/d by 2012 from 1.85 million b/d in 2007.

"The state itself has far more ambitious volume goals that may be frustrated by OPEC quota policy," BMI said.

Libya's gas production should reach 32 bcm by 2012, up from 15.2 bcm in 2007, while its consumption is expected to rise to 7.3 bcm by the end of the forecast period, from 6.3 bcm, allowing exports of 24.7 bcm.

During 2007-18, BMI is forecasting an increase in Libyan oil and gas liquids production of 40.7%, with volumes rising steadily to 2.6 million b/d by the end of the 10-year forecast period.

Oil consumption during 2007-18 is set to increase by 46.7%, with growth slowing to an assumed 4%/year towards the end of the period and the country using 382,000 b/d by 2018.

Gas production is expected to rise to 60 bcm by the end of the period. With demand rising by almost 47% during 2007-18, there should be export potential increasing to about 51 bcm, via pipeline and in the form of LNG.

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