BMI View: Flagging production and rising domestic demand will see the Philippines' dependence on crude oil and refined fuels imports deepen over the next 10 years. The construction of the country's first LNG import terminal in 2015 will see the Philippines become an importer of LNG, and allow domestic gas consumption to grow beyond local production.
|f = BMI forecast. Source: EIA, BMI|
|Crude, NGPL & other liquids prod, 000b/d||24.0||24.0||26.4||26.2||25.7||25.0||25.7|
|Dry natural gas production, bcm||3.5||3.6||3.7||3.8||3.7||3.6||3.4|
|Dry natural gas consumption, bcm||3.3||3.5||3.8||4.2||4.7||5.0||5.1|
|Refined products production, 000b/d||153.6||162.5||169.0||177.4||186.3||195.6||197.6|
|Refined products consumption & ethanol, 000b/d||333.3||355.8||366.6||374.7||383.8||395.5||409.4|
The main trends and developments we highlight for the Philippines' oil and gas sector are:
We forecast a decline in the Philippines' oil and gas reserves, as sustained weakness in global oil prices slowdown exploration, which in turn limits the chances of making new discoveries.
Crude oil production will fluctuate around the 25,000b/d-28,000b/d range throughout our forecast period to 2024. We note significant downside risk to our forecast particularly from 2019, as these are based on projects where final investment decisions have not been made.
While Phase II upgrades at the Malampaya will boost natural gas production to 2016, natural declines will weigh on overall output thereafter. A decision to proceed with Phase III for Malampaya poses upside risk to this forecast.
Although refining capacity will remain flat, upgrades to the country's two refineries will help improve utilisation rates and refined oil output over our forecast period.
Oil consumption will trend upwards over the long-term alongside economic growth. Strong auto sales growth over the next five years will support robust demand growth for transport-related fuels, such as diesel and gasoline.
The Philippines will remain a net importer of both crude oil and refined fuels, as falling domestic production lags rising consumption. Middle Eastern suppliers, led by Saudi Arabia, followed by UAE, Qatar as well as Iran, will remain the country's largest supplier of crude oil, while South Korea, Taiwan and Singapore will retain their positions as the largest providers of refined fuels.
Gas consumption will see greater growth than oil as it becomes an increasingly important source of fuel for power generation. Greater adoption of gas as an alternative transport fuel poses further upside risk to this forecast.
The start-up of an LNG import terminal at Pagbilao and a likely project at Batangas will allow the Philippines' gas demand to grow beyond domestic gas output. However, we note that infrastructure delays risk pushing back the country's gas demand growth beyond our forecast period.