Spain Energy Profile

Spain is a important producer of mercury, slate, feldspar, fluorspar, and potash. in general it provides a important share of the world's annual supply of mercury. Coal and iron ore are mined in substantial amounts, except production does not meet domestic requirements. Also produced are copper, lead, zinc, uranium, and small amounts of petroleum and natural gas.

The Spain Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Spain's oil and gas industry.

The latest Spain Oil & Gas Report forecasts that the country will account for 12.09% of Developed European regional oil demand by 2014, while making no appreciable contribution to supply. In Developed Europe, overall oil consumption is set to average an estimated 13.10mn barrels per day (b/d) in 2010. It is set to recover to around 13.29mn b/d by 2014. Developed Europe regional oil production was 6.96mn b/d in 2001, and in 2010 is expected to be around 4.45mn b/d. It is set to fall to just 3.69mn b/d by 2014. Oil imports are growing steadily because supply is contracting and demand is rising, albeit slowly. In 2010, net crude imports will be an estimated 8.65mn b/d. By 2014, they are expected to have reached 9.60mn b/d. Norway will remain the only major net exporter, with the UK a net importer.

As regards natural gas, the Developed Europe region is expected to consume an estimated 419.5bcm in 2010, with demand of 458.1bcm targeted for 2014, representing 9.2% growth. Production of an estimated 259.3bcm in 2010 is set to fall to 259.0bcm in 2014, which implies net imports rising from the estimated 2010 level of 156.6bcm to some 199.1bcm by the end of the period. Spain’s share of gas consumption in 2010 is forecast to be an estimated 8.41%, while it has no meaningful share of production. By 2014, its share of gas consumption is forecast to be 8.80%.

For 2010 as a whole, we continue to assume an average OPEC basket price of US$83.00/bbl (+36.4% yo- y). Risk is now clearly on the downside, thanks to the slow progress made during June-August. However, a full year outturn in excess of US$80 remains a strong possibility and we see no need to review our assumptions at this point. BMI is assuming an OPEC basket price of US$85.00/bbl in 2011, with WTI averaging US$89.74. Our central assumption for 2012 and beyond is an OPEC price averaging US$90.00/bbl, delivering WTI at just over US$95.00.

For premium unleaded gasoline is an average global price of US$95.45/bbl. The overall y-o-y rise in 2010 gasoline prices is put at 36%. Gasoil is expected to average US$93.23/bbl. The full-year outturn represents a 35% increase from the 2009 level. For 2010, the annual jet price level is forecast to be US$95.90/bbl, compared with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$83.53/bbl, up 41% from the previous year’s level.

Spanish real GDP will fall by 0.6% in 2010. We are assuming 1.1% average annual growth in 2010-2014. In terms of oil demand, the Spanish market continues to grow more rapidly than the EU norm, although there was an assumed reduction in 2009/10 consumption thanks to economic weakness. Beyond 2009/10, we expect to see 0.5-1.0% annual demand growth. Oil consumption has risen from just over 1mn b/d in 1990 to 1.49mn b/d in 2009. Our target for 2014 is demand at an average 1.61mn b/d. No meaningful local oil supply is available, with crude imports reaching 1.59mn b/d by 2014. Our gas demand forecast is for an average annual growth rate of up to 4%, taking the 2014 total consumption to 40.3bcm.

Between 2010 and 2019, we are forecasting an increase in Spanish oil and gas liquids consumption of 14.34%, with volumes rising steadily from an estimated 1.51mn b/d in 2010 to 1.73mn b/d by the end of the 10-year forecast period. Gas demand should rise from the estimated 2010 level of 35.3bcm to 45.6bcm by 2019, based on LNG and pipeline imports. Details of BMI’s 10-year forecasts can be found in the appendix to this report.

Spain’s long-term political risk score is 80.2 out of 100, compared with the Developed Markets average of 86.7 and the global average of 63.0. Our long-term economic rating for the country is 59.5, below the Developed Markets average of 66.8 but above the global average of 53.2. Spain has a privatised energy sector operating under EU guidelines. There is a very small upstream oil and gas segment, dominated by domestic companies. Downstream oil is controlled largely by former state-owned company Repsol YPF.