BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Oil & Gas Sector Of Poland

The latest Poland Oil & Gas Report from BMI forecasts that the country will account for 9.3% of CEE regional oil demand by 2010, while providing less than 0.2% of supply. CEE regional oil demand rose to 5.1mn barrels per day (b/d) last year and should average 5.2mn b/d in 2006, before reaching 5.9mn b/d by 2010. Production of 12.0mn b/d last year is forecast to reach 14.7mn b/d by 2010. CEE gas consumption in 2005 was 571bn cubic metres (bcm), with demand of 688bcm targeted for 2010. Production last year of 670bcm should reach 743bcm by the end of the decade. Poland's share of consumption in 2005 was 2.5%, while it provides an insignificant contribution to regional supply. By 2010, its share of demand is forecast to be 2.9%.

Assuming an uneventful Q4, we are now predicting an OPEC basket price for 2006 averaging US$61.10/bbl – an increase of US$1.10 from our June forecast. This also represents a 19% rise from the FY05 average. Our forecasts for the US, Brent and Urals are US$66.40, US$65.40 and US$61.60/bbl respectively. For 2007, we continue to assume an OPEC basket price of US$50/bbl, which implies US$55.40 for the US, US$53.40 for Brent and US$49.50 for Urals. Prices are then forecast to fall by around US$5/bbl in 2008-2010, with the OPEC price averaging US$45/bbl over the period.

Polish real GDP growth is now forecast by BMI at 5.2% for 2006, up from 3.5% in 2005. We are assuming 4.6% growth in 2007 and 4.0% in 2008, followed by 4.2% in 2009 and 4.0% in 201. A small but growing motor vehicle population and renewed economic activity should push oil demand to 551,000b/d by 2010, representing annual growth of around 3%. Given a bleak outlook for local supply, in spite of efforts by state explorer Polskie Górnictwo Naftowe i Gazownictwo (PGNiG) and some international oil company (IOC) partners, the end-decade import volume can be expected to reach 534,000b/d. We are assuming gas consumption reaching 20bcm by 2010, requiring imports of 15.2bcm.

In the BMI Business Environment Ranking matrix, Poland receives an unchanged composite score of 36, which still ranks the country third out of 12 states included in the CEE region. The country's overall business environment can be considered attractive in a regional context, thanks largely to low levels of perceived political and economic risk, an established competitive landscape involving several IOCs and a reasonable regulatory/licensing regime. There is very little in the way of domestic upstream oil or gas resources, which limits Poland's appeal. However, the fuels market is growing fast, with EU membership stimulating both privatisation and liberalisation.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Poland Political SWOT

Poland Economic SWOT

Poland Business Environment SWOT

Chapter 3 - Regional Market Overview

Central/Eastern Europe Region

Table Central/Eastern Europe Oil Consumption (000b/d)

Table Central/Eastern Europe Oil Production (000b/d)

Table: Central/Eastern Europe Oil Refining Capacity (000b/d)

Table Central/Eastern Europe Gas Consumption (bcm)

Table Central/Eastern Europe Gas Production (bcm)

Table Central/Eastern Europe LNG Exports/(Imports) (bcm)

Poland

Chapter 4 - Business Environment Rankings

Poland

Central/Eastern Europe Region

Chapter 5 - Poland Business Environment Ranking

Economics – long-term risk

Politics – long-term risk

Oil & Gas Growth

Oil/Gas Reserves

Licensing/Regulation

Competitive Environment

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Legal Code/Corruption

Red Tape

Foreign Direct Investment

Tax Regime

Chapter 6 - Oil Market Outlook

Table: Crude Price Forecasts 2006

Revised Forecasts

Table: Oil Price Forecasts

Chapter 7 - Regional Supply and Demand

Central/Eastern Europe

Table: Oil Production (000b/d) – Central/Eastern Europe

Table: Oil Consumption (000b/d) – Central/Eastern Europe

Chapter 8 - Global Picture

Table: Global Oil Consumption (000b/d)

Table: Global Oil Production (000b/d)

Chapter 9 - Industry Forecast Scenario

Oil and Gas Reserves

Oil Supply and Demand

Gas Supply and Demand

LNG

Refining and Oil Products Trade

Revenues/Import Costs

Table: Poland Oil & Gas – Historic Data & Forecasts

Other Energy

Table: Poland Other Energy – Historic Data & Forecasts

Key Risks to BMI’s Forecast Scenario

Chapter 10 - Economic Outlook

Table: GDP, Output & Population

Chapter 11 - Country Snapshot: Poland Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 12 - Regional Case Study

Emerging Player

Table: Lukoil Investment*

Chapter 13 - Competitive Landscape

Executive Summary

Table: Key Players – Poland Oil & Gas Sector

Overview/State Role

Lotos – Summary

PKN Orlen – Summary

Table: Key Upstream Players

BP – Summary

Statoil – Summary

Shell – Summary

Table: Key Downstream Players

MOL – Summary

ExxonMobil – Summary

ConocoPhillips – Summary

Neste Oil – Summary

Chapter 14 - Company Monitor

PKN Orlen

Grupa Lotos

BP Poland

Shell Poland

Chapter 15 - BMI Forecast Modelling

How we generate our industry forecasts

Energy Industry

Cross checks

Sources

Chapter 16 - Appendix: Regional Demographic Data

Wages (ave labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Network of European Oil & Gas Sources

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BMI's European Oil & Gas Reports are based on an extensive network of multilateral organisations, government departments, oil and gas industry associations, chambers of commerce and company reports. Information sources include: