BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Oil & Gas Sector Of Saudi Arabia

The latest Saudi Arabia Oil & Gas Report from BMI forecasts that the country will account for 17.9% of MEA regional oil demand by 2010, while providing a dominant 30.9% of supply. MEA regional oil demand rose to 10.7mn barrels per day (b/d) last year and should average 10.9mn b/d in 2006, before reaching 12.2mn b/d by 2010. MEA gas consumption in 2005 was 343bn cubic metres (bcm), with demand of 533bcm targeted for 2010. Production last year of 448bcm should reach 774bcm by the end of the decade. Saudi’s share of consumption in 2005 was 20.4%, while its contribution to production was 15.6%. By 2010, its share of demand is forecast to be 18.2%, with the country accounting for 12.5% of supply.

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.

Saudi real GDP growth is now forecast by BMI at 6.4% for 2006, following 6.6% in 2005. We are assuming 3.7% growth in 2007 and 3.8% in 2008, followed by 5.0% in 2009 and 4.0% in 2010. We expect oil demand to rise from 1.89mn b/d last year to 2.17mn b/d in 2010, representing 3.0% annual growth that lags our underlying economic assumptions. State-owned Saudi Aramco is wholly responsible for oil and liquids production forecast to rise from 11.04mn b/d last year to 12.00mn b/d by 2010. There is no foreign involvement in the upstream oil segment, although international oil companies (IOCs) will have a role in future gas field development and are major players in refining and petrochemicals. Gas production should reach 97.5bcm by 2010, up from 69.5bcm last year. Consumption will match the trend, leaving Saudi with no import requirement or export potential during the period.

In the BMI Business Environment Ranking matrix, Saudi Arabia this quarter receives an unchanged composite score of 23, which ranks the country 16th (and last) out of 16 states included in the MEA region. The overall business environment can be considered very unattractive in a regional context, thanks largely to a high level of perceived political risk and the absolute state control over the upstream oil and gas industry. On the positive side, the sheer volume of the country's untapped oil and gas reserves provides a high reserves-to-production ratio (RPR). There is IOC involvement in downstream oil and petrochemicals, providing some form of competitive landscape.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Saudi Arabia Economic SWOT

Saudi Arabia Political SWOT

Saudi Arabia Business Environment SWOT

Chapter 3 - Regional Market Overview

Middle East/Africa Region

Table: MEA Oil Consumption (000b/d)

Table: Middle East/Africa Oil Production (000b/d)

Table: Middle East/Africa Oil Refining Capacity (000b/d)

Table: Middle East/Africa Gas Consumption (bcm)

Table: Middle East/Africa Gas Production (bcm)

Table: Middle East/Africa LNG Exports/(Imports) (bcm)

Saudi Arabia

Chapter 4 - Business Environment Rankings

Saudi Arabia

Middle East/Africa Region

Chapter 5 - Saudi Arabia 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

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

Middle East/Africa

Table: Middle East/Africa Oil Production (000b/d)

Table: Oil Consumption (000b/d) – Middle East/Africa

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

Refining and Oil Products Trade

Revenues/Import Costs

Table: Saudi Arabia Oil & Gas – Historic Data & Forecasts

Other Energy

Table: Saudi Arabia Other Energy – Historic Data & Forecasts

Key Risks to BMI’s Forecast Scenario

Chapter 10 - Economic Outlook

Table: Economic Activity

Chapter 11 - Country Snapshot: Saudi Arabia 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

Chapter 12 - Regional Case Study

Global Player With Conflicting Domestic Needs

Chapter 13 - Competitive Landscape

Table: Key Players - Saudi Oil & Gas Sector

Overview/State Role

Shell – Summary

Table: Key Upstream Players

ExxonMobil – Summary

Total – Summary

Eni – Summary

ConocoPhillips – Summary

BP – Summary

RepsolYPF – Summary

Lukoil – Summary

Sinopec – Summary

Table: Key Downstream Players

Chevron – Summary

Sumitomo – Summary

Chapter 14 - Company Monitor

Saudi Aramco

Shell Saudi Arabia

ExxonMobil Saudi Arabia

Chevron

Chapter 15 - BMI Forecast Modelling

How we generate our industry forecasts

Energy Industry

Cross checks

Sources

Chapter 16 - Appendix: Regional Demographic Data

The Long View: Data Over The Economic Cycle (2000-2007)

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Network of Middle Eastern and African Oil and Gas Sources

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BMI's Middle Eastern and African Oil and 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: