BMI View: We have revised up our Saudi Arabia crude oil production forecast in 2016. Output will remain in a gentle uptrend across the forecast period, as the kingdom looks to maintain its export levels against rising demand domestically. The kingdom is increasingly targeting its resources towards development of its non-associated gas base. The unconventionals potential is vast, but progress will be slowed by the high cost and technically challenging nature of the resource base and a lack of foreign involvement in the sector. Low state-set gas prices are a major deterrent to investment and the December 2015 hike in prices will be insufficient to draw interest from the major internationals. The consumption outlook is bullish for both oil and gas, despite ongoing subsidy reform. However, gas demand will remain capped by production across our 10-year forecast.
|e/f = BMI estimate/forecast. Source: Saudi Aramco, EIA, BMI|
|Crude, NGPL & other liquids prod, 000b/d||11,546.0||12,171.9||12,331.5||12,411.1||12,575.4||12,690.3||12,759.9|
|Dry natural gas production, bcm||116.8||118.7||131.1||136.1||137.5||138.8||150.8|
|Dry natural gas consumption, bcm||116.8||118.7||131.1||136.1||137.5||138.8||150.8|
|Refined products production, 000b/d||2,319.9||2,551.9||2,705.0||2,772.6||2,938.9||3,056.5||3,087.1|
|Refined products consumption & ethanol, 000b/d||2,968.9||3,087.6||3,133.9||3,196.6||3,260.6||3,322.5||3,385.6|
Latest Updates & Key Trends
Saudi output will trend gently upwards across the next five years.
However, we forecast exports to remain flat as new refining capacity is brought online, absorbing forecast production growth.
In order to support exports, the kingdom has looked to increase the role of gas in the domestic power and industrial sectors. However, domestic gas consumption remains heavily capped due to limited production growth.
In spite of Saudi Arabia's heavy focus on unconventional and onshore non-associated gas resources, we expect slow progress in developing these prospects. Domestic production will likely remain insufficient to meet unrestrained demand.
Despite inadequate domestic supply, proposals to import LNG will face major roadblocks, due to concerns over the loss of the kingdom's energy self sufficient status, low domestic gas prices and risks to domestic gas development.
The pace of energy demand growth will begin to slow, as a more ambitious subsidy reform programme begins to take effect.
The Saudi Arabia Oil & Gas Report has been researched at source and features BMI Research's independent forecasts for Saudi Arabia including major indicators for oil, gas and LNG, covering all major indicators including reserves, production, consumption, refining capacity, prices, export volumes and values. The report includes full analysis of industry trends and prospects, national and multinational companies and changes in the regulatory environment.
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