Oil & Gas Market

The focus of QGEP’s activities is in the exploration and production of oil and natural gas, which are key components of the energy market. This market is also composed of coal, renewable energy sources, and hydroelectric and nuclear energy generation.

In this section, we present data of the oil and gas market available from recognized consulting sources: BP’s Energy Outlook 2035 (“BPEO 2035”), published in February/2016 by BP; ANP’s Statistical Yearbook of Petroleum, Natural Gas and Biofuels ("Anuário Estatístico ANP 2015"), published in 2015 by ANP; EPE’s Final Report of the National Energy Balance (“BEN 2015”), published in 2015 by EPE, as well as the latest data from the Brazilian oil and gas sector taken from several monthly publications of ANP, entitled “Boletim Mensal de Produção do Brasil”.

According to BPEO 2035, energy consumption will increase 34% from 2014 to 2035. This increase is due to both the growth of the global economy and the increase in world population – in the base case scenario, the world’s Gross Domestic Product (GDP) will more than double, about 20% of that increase comes from population growth and 80% from improvements in productivity.

The majority of this growth will derive from the demand from emerging economies, notably China and India, given their process of industrialization and electrification, although the growth in demand for energy in China is reducing as its economy rebalances to more sustainable growth rates due to the economic reform in the country.

Fossil fuels will remain the main source of supply of energy to the global economy, accounting for about 60% of energy growth, and correspond for about 80% of total energy supply in 2035. Of these, natural gas will be the fuel that presents the highest growth rate, of 1.8% per year, increasing its share in the supply of primary energy. Oil, meanwhile, will continue to grow at the rate of 0.9% per year, but its share in worldwide energy supply will decrease.

Oil

Also according to BPEO 2035, oil market is gradually recovering from the sharp reduction of oil prices since the end of 2014 - the recent low barrel price level has increased the demand for the resource, while it has also reduced supply due to lower profitability from sales of this hydrocarbon in the low price scenario. The expected increase in consumption of liquid fuels from 2014 to 2035 is mainly due to the growth of the global fleet of cars in emerging countries, which is expected to double in the period, from 1.2 billion in 2014 to 2.4 billion in 2035, as well as due to the expansion of the petrochemical industry. It is noteworthy that over 40% of oil used in industrial activities is not for combustion purposes, so this percentage is less affected by climate policies.

BPEO 2035 also guides that global demand for liquid fuels (oil, biofuels and other liquids) is expected to grow about 20 million barrels per day, reaching 112 million barrels per day in 2035. The increase in demand will be concentrated in emerging market countries, especially China and India, which together will account for more than half of the increase.

On the supply side, most of the increase will come from countries that are not part of the Organization of Petroleum Exporting Countries (OPEC), contributing with an increase of 11 million barrels per day, while OPEC countries will increase supply with 7 million barrels per day. The entire increase in supply in non-OPEC countries will come from the American continent - from US’ shale gas, Brazil’s deep waters and Canada's oil sands.

Source: Anuário Estatístico ANP 2015

At the end of 2014, proven global oil reserves totaled 1.7 trillion barrels of oil, a 24% increase in the last decade. The Middle East accounts for 48% of proven oil reserves in the world and Venezuela is the country with the largest proven oil reserves, holding alone 18% of world reserves, followed by Saudi Arabia with 16%.

Source: Anuário Estatístico ANP 2015

In 2014, total volume of oil produced in the world was 88.7 billion barrels per day, a 2% increase compared to 2013. The region that showed the highest increase in production was North America, with an 11% increase, while Africa was the only region that registered a decrease annually, of 5%. The largest producers of oil in the world in 2014 were: the United States, with 11.6 million bbl/d, Saudi Arabia, with 11.5 million bbl/d and Russia, with 10.8 million bbl/d.

Source: Anuário Estatístico ANP 2015

World oil consumption of gas in 2014 totaled to 92.1 million barrels per day, a 1% increase from 2013. The United States remained in the top position as the largest consumer of oil with a 21% share, followed by China with 12%, and Japan with 5%. Brazil was the fifth largest consumer of oil in 2014.

Source: Anuário Estatístico ANP 2015

The annual compound rate of oil production growth in the world was 0.8% from 2005 to 2014, while consumption growth was 0.9% in this period. In 2014, the price of the WTI barrel averaged US$93.3/bbl in the spot market, while Brent crude averaged US$99.0/bbl, both lower levels than previous years’ averages. The price difference between Brent and WTI decreased from US$10.7/bbl in 2013 to US$5.7/bbl in 2014, mainly due to the increase of oil production in the United States, which caused inventories to increase in Oklahoma, the WTI delivery point, and affected the balance between supply and demand.

Gas

According to BPEO 2035, among all fuels, gas will present the fastest rising global demand from 2014 to 2035, at an annual rate of 1.8% per year. This significant growth will be due to the large supply of gas and as a result of environmental policies that favor the consumption of gas. The majority of the increase in demand will come from the growth of the emerging market countries economies’, with China and India together accounting for 30% of the increase, and the Middle East, more than 20%. Increased use of gas in emerging economies will be directed to the industrial sector and to power generation.

The increase in gas supply will be in consequence to both the increase in conventional gas production as well as shale gas. Much of the increase in conventional production will come from countries that are not members of the Organization for Economic Co-operation and Development (OECD), with specific increases in the Middle East, China and Russia. According to BPEO 2035, the share of shale gas in total production will increase from 10% to 25% in 2035.

Source: Anuário Estatístico ANP 2015

Proven natural gas reserves in the world were 187.1 trillion m³ at the end of 2014, a 19% increase over the last decade. The Middle East accounts for 43% of proven natural gas reserves in the world and Iran is the country with the largest proven gas reserves, holding 18% of world reserves, followed by Russia, with 17%.

Source: Anuário Estatístico ANP 2015

The global volume of gas produced in 2014 totaled 3.5 trillion m³, an increase of 2% compared to 2013. The United States remained in the top position as the largest producer of gas with a 21% share, followed by Russia, with 17% and Qatar, with 5%. Brazil was the 30th largest gas producer in 2014.

Source: Anuário Estatístico ANP 2015

The world’s gas consumption in 2014 amounted to 3.4 trillion m³, an increase of 3% compared to 2013. The United States remained the largest consumer of gas with a 22% share, followed by Russia, with 12% and China, with 5%. Brazil was the 23rd largest consumer of gas in 2014.

Source: Anuário Estatístico ANP 2015

The annual compound growth rate of gas production in the world was 2.2% from 2005 to 2014, while consumption growth was 2.0% in this period.

Brazilian Energy Market

According to BEN 2015, energy supply in Brazil was 272.6 million toe in 2014, a 6% increase over 2013. 

Source: BEN 2015

Oil stands out as the main energy source, accounting for 43% of the total amount, an increase compared to 2013’s 41% share. Following oil, sugarcane derived products were the second largest source of energy produced in Brazil, with an 18% share, followed by gas and hydropower, accounting for 12% each.

Source: BEN 2015

In the last decade, gas presented the highest annual growth rate of 6% among all Brazilian energy sources, followed by sugarcane products, with a 5% rate, and oil, which presented compounded annual growth rate of 3%.

Source: BEN 2015

In 2014, the final energy consumption in Brazil was 265.9 million toe, an increase of 2% compared to 2013. Industry accounted for 33% of energy consumption in the country, and in it predominated the use of oil with 44%, followed by electricity, with a 17% share. Gas had a 7% share in final consumption of energy.

Source: BEN 2015

In the last decade, ethanol was the source of energy that had the highest increase in consumption, with a compound annual growth rate of 6%, followed by electricity, with 4%, and oil and gas, each with 3%.

The transport sector was the largest consumer of oil products in 2014, accounting for a 57% share, followed by industrial consumption, with 10% of consumer products. In the last decade, the transport sector had a compound annual growth rate of petroleum consumption increase of 1%, while the industrial sector decreased 3% annually in the same period.

Brazilian Oil and Gas Market

At the end of 2014, Brazil was the world’s 13th largest oil producer, producing 2.3 million barrels per day, about 3% of total global production. In the same year, oil consumption was 3.2 million barrels per day - about 4% of the total global consumption. Brazil was a net importer of oil in 2014, the 5th largest consumer worldwide.

Source: Anuário Estatístico ANP 2015

In 2014, Brazil was the 30th country in terms of gas production, with a 20 billion m³ production in 2014, almost double the volume of 11 billion m³ recorded a decade earlier. In this period, domestic gas consumption doubled from 20 to 40 billion m³, making the country a net importer of gas.

Source: Anuário Estatístico ANP 2015

Proven oil reserves in Brazil were 16.2 billion barrels at the end of 2014, a 4% increase compared to 2013 and a 37% increase in the last decade. Regarding gas, domestic proved reserves were 0.5 trillion m³, an increase of 2% compared to 2013 and 53% over the last decade. The country has achieved a new status in the international oil and gas market with the discovery of new deposits of oil and gas in the pre-salt layer that were announced in 2006, extracting first oil from these accumulations in 2008. Today, with about 1% of global oil reserves, Brazil occupies the 15th position in oil reserves.

Quarterly Brazilian Oil and Gas Production Data

Average oil production in the fourth quarter of 2015 was 2,440 kbbl/d, 1% lower than the previous quarter and up 1% compared to the fourth quarter of 2014. Average gas production in the same period was 613 kbbl/d or 97 million m³/d, stable compared to the third quarter of 2015 and an increase of 5% compared to the fourth quarter 2014.

Source: Boletim Mensal de Produção do Brasil – consolidated data

Pre-salt production acceleration is responsible for a great part of this increase, although from the third quarter of 2015 to the fourth quarter of 2015 production remained stable: in the fourth quarter, the average oil production of pre-salt was 34% of the total volume of oil produced in the country, remaining stable compared to the third quarter of 2015’s share, but representing a significant increase compared to 26% in the fourth quarter 2014.

Source: Boletim Mensal de Produção do Brasil – consolidated data

Pre-salt gas production in relation to the total production of gas produced in the country increased from 23% to 33% for the fourth quarter of 2014 to fourth quarter of 2015, but remained stable compared to the third quarter of 2015.

Source: Boletim Mensal de Produção do Brasil – consolidated data

Last updated on 2016-08-01T11:47:53

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