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Oil and gas in Europe: Part 5

Hydrocarbon Engineering,

Czech Republic

The Czech Republic is expected to remain dependent on imported oil and gas, mainly from Russia due to the limitation on conventional hydrocarbons production domestically. BMI has also said that demand trends remain relatively weak in the country and a small increase in refinery utilisation rates should see only a modest rise in net refined product import needs to 2023.

A slow ramp up in gas consumption is anticipated by BMI in the Czech Republic mainly in the power and residential sectors. When it comes to refined fuels, the country is a very small consumer due to electricity generation mainly coming from coal and nuclear. The country does however have a refining capacity of 173 000 bpd from two refineries.


BMI has said that it is looking at a subdued outlook for Italy’s oil and gas industry due to the anticipated gradual decline in the country’s oil and gas reserves as well as the shrinking of its refining sector. Eni has recently made announcements to cut its refining capacity extensively, including the closure of three refineries as it reacts to Europe’s deteriorating refining sector.


Due to disappointing shale flows in the country, BMI has lowered its long term gas outlook for the country. BMI has also said that it does not expect shale gas to increase much at all until 2020, until then it will be the production of conventional natural gas that boosts production levels. The gas consumption forecast for Poland has also been downgraded as the company has become increasingly bearish with regards to Poland’s switch to gas in the power sector.

There is very little oil production in Poland, and what little that is present is expected to shrink further. Poland is going to remain largely dependent on the import of crude oil. Refined product consumption is however expected to increase to 2023 due to demand from the transport sector.


The biggest obstacle in the way of further growth Russia’s oil and gas sector, according to BMI, is the dominance of a few large local and state backed players in the market, which makes projects vulnerable to these firms’ growing financial commitments. The far east, and in particular China, is however expected to continue to remain a key market for Russia’s oil and gas sector, as well as Turkey and the Caspian where Russia is currently expanding its sales reach.

Sanctions currently placed on Russia are causing problems when it comes to shale and offshore exploration. However, they are also causing problems in the LNG sector as new projects are coming under threat due to limited access to finance. The startup of the Yamal LNG project, due to sanctions is now not expected until 2020. The natural gas production level is expected to fall this year due to European export levels.

Looking more closely at oil, crude output is expected to become stagnant to 2023 and refined fuels output is anticipated to increase due to a moderate expansion in the country’s refining capacity.


BMI believes that Turkey is going to remain dependent on imports of oil and gas for the foreseeable future. Crude imports in fact rose between January and March of this year by 3.9% year on year and import levels for H214 are expected to increase even more due to the lower oil prices being experienced. In the downstream sector, SOCAR has agreed US$ 3.29 billion in funding from 23 lenders to support the construction of the STAR refinery. Azeri company will reportedly be funding the remaining US$ 2.2 billion required to complete the project.

Looking at gas in Turkey, from October 1 this year, the country increased the price of natural gas by 9% due to the weakening lira reducing the country’s buying power. BMI anticipates gas demand growth to be down next year. Also in the gas sector, the World Bank has approved a US$ 400 million loan for the country to build its first gas storage facility.

Edited from report briefs by Claira Lloyd

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