Oceania > Papua New Guinea > Papua New Guinea Oil and Gas Report Q1 2011

Papua New Guinea: Papua New Guinea Oil and Gas Report Q1 2011

2011/01/17

Papua New Guinea will account for 0.13% of Asia Pacific regional oil request by 2015, while providing 0.36% of supply. Regional oil use of 21.42mn barrels per day (b/d) in 2001 will have reach an estimated 27.11mn b/d in 2010, again rises to around 30.64mn b/d by 2015. Regional oil production was around 8.35mn b/d in 2001, and will average an estimated 8.91mn b/d in 2010. It is set to decrease slightly to 8.89mn b/d by 2015.

Oil imports are growing rapidly, because request increase is outstripping the pace of supply expansion. In 2001, the region was importing an average of 13.07mn b/d. This total will rise to an estimated 18.20mn b/d in 2010, and is estimate to reach 21.75mn b/d by 2015. The principal importers will be China, Japan, India and South Korea. By 2015 the only net exporter will be Malaysia.

In terms of natural gas, in 2010 the region is expected to consume 489bn cubic metres (bcm) and request of 633bcm is targeted for 2015. Production of an estimated 412bcm in 2010 should reach 548bcm in 2015, implying net imports rising from around 77bcm to 84bcm. This is thanks to a lot of Asian gas producers being major exporters. PNG’s share of gas consumption in 2010 is an estimated 0.03%, while its share of production is put at 0.04%. By 2015, its share of gas consumption is estimate to be 0.04%, with the country accounting for 6.57% of supply. there is considerable oil request and oil price uncertainty, but still a very strong possibility that oil will trend higher. Economic increase may have been subdued late in 2010 and into early 2011, but should still support meaningful oil request increases. Non-OPEC supply is likely to emerge only slightly higher so, with continued OPEC discipline, the foundations have been laid for an oil price rise – albeit falling well short of the improvement seen this year. It seems likely that the 2010 average OPEC basket price will have emerged around the US$77.00 per barrel (bbl) level, representing a year-on-time(y-o-y) gain of approximately 27%. Evolution towards at least US$80 is seen as achievable in 2011.

There is indirect national involvement in the upstream oil and gas industry, as the government is a minority owner of leading producer Oil Search, which is responsible for the country’s current oil and gas supply, inclunding being a partner in a planned gas export scheme that is due to enter production by 2014. BMI are assuming that oil and gas liquids will fall to around 32,000b/d by 2015. Consumption is estimate to increase by around 5.0% per annum, implying request of at least 41,000b/d by 2015. The import requirement will therefore be around 9,000b/d by the end of the estimate period.

Between 2010 and 2020, we are forecasting a decrease in PNG oil production of 30.67%, with crude volumes falling steadily to 26,000b/d by the end of the period. Oil consumption between 2010 and 2020 is set to increase by 62.89%, with increase averaging around 5.0% per annum during the estimate period and the country using 52,000b/d by 2020. Gas production is expected to rise rapidly, from an estimated 0.2bcm in 2010 to a possible 38.0bcm by 2019/20. Even with request increase of 135.3%, this provides export potential rising to 37.6bcm, amount in the form of LNG.

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