BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Oil & Gas Sector Of South Africa

The latest South Africa Oil & Gas Report from BMI forecasts that the country will account for 5.07% of MEA regional oil demand by 2010, with negligible domestic crude production, but a growing synthetic oil capability. MEA regional oil demand rose to 10.7mn b/d last year and should average 10.9mn b/d in 2006, before reaching 12.20mn b/d by 2010. MEA gas consumption in 2005 was 343bcm, with demand of 533bcm targeted for 2010. Production last year of 448bcm should reach 774bcm by the end of the decade. South Aftrica’s share of consumption in 2005 was just 0.87%, while it made no appreciable contribution to supply. By 2010, its share of demand is forecast to be 1.88%, with the country accounting still accounting for less than 1.0% of regional gas production.

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.

South African real GDP growth is now forecast by BMI at 4.1% for 2006, following 4.9% in 2005. We are assuming 5.0% growth in 2007 and 4.2% in 2008, followed by 3.8% in 2009 and 3.7% in 2010. We expect oil demand to rise from 529,000b/d last year to 616,000b/d in 2010, representing 3.0% annual growth that lags our underlying economic assumptions. There is virtually no domestic crude production, although national companies contribute some 220,000b/d of synthetic oil output. IOCs are restricted largely to roles in oil refining and fuels distribution. Gas production should reach 5bcm by 2010, up from 1bcm last year. Consumption is expected to rise from 3bcm to 10bcm by the end of the forecast period, requiring imports of 5bcm.

In the BMI Business Environment Ranking matrix, South Africa this quarter receives an unchanged composite score of 38, which still ranks the country fourth out of 16 states included in the MEA region. The overall business environment can be considered attractive in a regional context, thanks largely to relatively low levels of perceived economic and political risk, plus a benign competitive landscape and an effective production sharing/licensing framework.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

South Africa Economic SWOT

South Africa Political SWOT

South Africa 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)

South Africa

Chapter 4 - Business Environment Rankings

South Africa

Middle East/Africa Region

Chapter 5 - South Africa Business Environment Ranking

Economics – long-term risk

Politics – long-term risk

Oil & Gas Growth

Oil/Gas Reserves

Licensing/Regulation

Competitive Environment

Chapter 6 - Business Environment Overview

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Legal Code/Corruption

Foreign Direct Investment

Tax Regime

Chapter 7 - Oil Market Outlook

Table: Crude Price Forecasts 2006

Revised Forecasts

Table: Oil Price Forecasts

Chapter 8 - Regional Supply and Demand

Middle East/Africa

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

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

Chapter 9 - Global Picture

Table: Global Oil Consumption (000b/d)

Table: Global Oil Production (000b/d)

Chapter 10 - Industry Forecast Scenario

Oil and Gas Reserves

Oil Supply and Demand

Gas Supply and Demand

Refining and Oil Products Trade

Revenues/Import Costs

Table: South Africa Oil & Gas – Historic Data & Forecasts

Other Energy

Table: South Africa Other Energy – Historic Data & Forecasts

Key Risks to BMI’s Forecast Scenario

Chapter 11 - Economic Outlook

Table: Economic Indicators

Chapter 12 - Country Snapshot: South Africa 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 13 - Regional Case Study

Global Player With Conflicting Domestic Needs

Chapter 14 - Competitive Landscape

Executive Summary

Table: Key Players – South African Oil & Gas Sectors

Overview/State Role

Engen – Summary

Sasol – Summary

Table: Key Upstream Players

Shell – Summary

Total – Summary

BP – Summary

Table: Key Downstream Players

Caltex – Summary

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: