BMI View: The Bulgarian business environment remains challenging, suffering from high levels of corruption and inefficiency. Lower oil prices are reducing the incentive to invest in domestic production as import costs fall. The refining sector has picked up due to low oil prices.
|e/f = BMI estimate/forecast. Source: BMI, JODI, EIA|
|Crude, NGPL & other liquids prod, 000b/d||1.4||1.4||1.4||1.3||1.3||1.2||1.2|
|Dry natural gas production, bcm||0.1||0.2||0.2||0.2||0.2||0.2||0.2|
|Dry natural gas consumption, bcm||3.0||3.0||3.1||3.1||3.2||3.3||3.3|
|Refined products production & ethanol, 000b/d||123.5||104.3||124.1||124.6||125.2||125.8||126.4|
|Refined products consumption & ethanol, 000b/d||78.2||72.5||72.6||73.0||72.6||73.3||74.0|
The main trends and developments in Bulgaria's oil and gas sector are:
Low crude feedstock has increased production at the Neftochim refinery over H115, particularly of gasoline. We forecast a 19% increase in refined fuels production in 2015.
In May, Lukoil officially opened a new 50,000b/d heavy residue processing unit at Neftochim. We forecast gasoline, jet fuel and diesel production to increase in 2015 and 2016.
Total, the lead company on the Khan Asparuh block has delayed its drilling programme by a year to H216. The project has been pushed to the margins of Total's portfolio given the unproven resource and high cost.
The Bulgarian government is retendering the Silistar and Teres Blocks in the Black Sea. The Blocks received no bids in a 2012 auction, though Shell, ExxonMobil, Statoil and Anadarko are reportedly interested.
Gas production is set to increase in H215 with the tie-in of the Kavarna East field into the Galata production platform. We forecast output to plateau at around 200mn cubic metres to 2017.
Gazprom officially cancelled the South Stream project to Bulgaria meaning it will lose out on transit fees and a more secure gas supply route.
The interconnector Greece-Bulgaria (IGB) is targeting completion for 2018.
Our refined fuels consumption outlook over the ten year forecast remains flat. Despite lower fuels prices, continued deflation, a soft macro-economic outlook and negative demographics, point to long-term flat demand for liquid fuels consumption.