New Market Research Report: Denmark Oil & Gas Report Q3 2016

From: Fast Market Research, Inc.
Published: Tue Jul 05 2016

Development delays at the Hejre field and the accompanying forecast change will see Denmark become a crude net importer throughout the forecast period. While its status as a gas net exporter is maintained at the moment, we highlight strong downside risk to gas production and exports after Maersk Oil expressed a potential interest in closing the Tyra East and Tyra West fields by 2018.

Latest Updates And Key Forecasts

The seventh licensing round was launched in April 2014, and licenses were finally awarded in April 2016. Sixteen oil and gas licenses were awarded to 12 companies. Nevertheless, oil and gas reserves are depleting for this small mature North Sea producer and we do not expect the country to significantly reverse this trend. The strong decline in oil prices and our expectation of a lower price environment over the coming years temper this upside risk.

We have downgraded Denmark's oil production forecast from 2017 onwards on the back of new delays to the Hejre field development. While we temporarily have the field starting up in 2018 as opposed to our previous forecast of 2017, we highlight downside risk to this new forecast given no new development option has been identified at the time of writing.

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This quarter, we have changed Denmark's status from a net crude oil exporter to importer throughout the entire forecast period. This is due to our forecast for high refining utilisation rates over the coming years, combined with our downgrade in oil production forecast on the back of the Hejre field development delays.

On the opposite side, we expect the country will become a net exporter of refined fuels throughout the forecast period. This represents a change this quarter from our previous forecast for net imports.

This quarter, we have pushed back the date for a ramp-up in gas production from the Hejre field on the back of announced delays on the project. We also note strong downside risk from other fields, such as the Tyra fields. Indeed, in April 2016 Maersk Oil issued a notification that production from Tyra East and Tyra West will cease in October 2018, if an economically viable solution for continued operations is not identified during 2016. Given that these are the country's largest gas field and that the facilities are the processing and export centre for all gas produced by the Danish Underground Consortium (DUC), this is a worrying signal for the country's long-term gas production outlook.

Denmark is an increasingly small net gas exporter to Sweden, Germany and the Netherlands. While the country should remain a net gas exporter over the forecast period, Denmark increasingly relies on gas imports to meet peak winter demand.

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