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Monday, June 25, 2018

MARKET INFORMATION

Meagre outlook for Middle East oil production- PIW/IEA

Petroleum Intelligence Weekly (PIW) reports that the Middle East is faced with both weak demand and strongly increasing oil production from several areas.  The strongest production increase in the 4th quarter of 2001 is expected in the North Sea due to both the end of a maintenance period, particularly in the Norwegian sector, and the start-up of new British as well as Norwegian oil fields. Total non-OPEC production is projected to increase by almost 1.2 mbd in the 4th quarter and another 0.2 mbd in the 1st quarter of 2002. North Sea production accounts for about half the increase or 0.575 mbd, and most of the increase will come from the British Sector.  The UK is expected to have 10 new oil fields in production by 4th quarter, adding 0.184 mbd, and another 0.33 mbd will come on stream again after repairs and maintenance have been completed.World oil demand is expected to grow by 0.85 mbd from 3rd to 4th quarter 2001. 

Looking at a longer perspective, North Sea oil production it is expected to peak in 2001 or 2002 and to decline rather rapidly from 2003 onwards.  IEA project UK offshore crude oils and NGL (Natural Gas Liquids) production to be 2.639 mbd in 2000, 2.543 in 2001 and 2.503 in 2002. Norwegian oil production is projected to be 3.320 mbd in 2000, 3,406 mbd in 2002, and 3.446 mbd in 2002.

In the period August to September 2001 Russian production grew by 0.02 mbd and Canadian production by 0.06 mbd. In the same period PIW estimate OPEC production to have fallen by 2.127 mbd, with Middle East production having fallen by 1.921 mbd and Venezuelan production by 0.28 mbd

IEA estimate global oil demand to increase by only 0.12 mbd this year to 76 mbd and by 0.60 mbd in 2002.

Looking at oil demand by region, oil demand in N America increased by 0.33 mbd in 2000, and is projected to decline by 0.1 mbd in 2001 to 24 mbd, but to increase by 0.19 mbd in 2002.

European oil demand declined by 0.12 mbd in 2000 and by 0.04 mbd in 2001 to 15.77 mbd, but is projected to increase marginally in 2002 by 0.02 mbd.

OECD Pacific oil demand declined by 0.04 mbd in 2000 and by 0.09 mbd in 2001 to 8.56 mbd, and is projected to decline further in 2002 by 0.07 mbd.

China is one of the few regions with a continuous increase in demand: 0.3 mbd in 2000, 0.09 mbd in 2001 to 4.88 mbd and further by 0.16 mbd in 2002.

The Middle East is the region with the 2nd highest projected increase in demand; 0.039 mbd in 2000, 0.15 mbd in 2001 to 4.53 mbd and further by 0.11 mbd in 2002.

Looking at the supply side, IEA estimates the call on OPEC oil plus stock changes to be 26.2 mbd 3Q 2001 and 25.8 mbd 4Q 2001. Total non-OPEC oil supply is estimated to increase by 0.7 mbd in 2001 to 46.6 mbd and further by 0.9 mbd in 2002 to 47.5 mbd. The strongest increase in oil production is projected to be in FSU: 0.6 mbd in 2001, and a further 0.5 mbd in 2002 reaching 9.0 mbd.  The N American (USA+Mexico+Canada) oil production is also projected to increase by 0.5 mbd in 2002 reaching 14.8 mbd.

Considering a projected global oil demand increase of 0.6 mbd in 2002 and increase in non-OPEC production of 0.9 mbd, the Middle East will have to reduce production by a considerable amount in order to maintain prices.

Web link: tanker oil supply and demand development and graphs 1990 to September 2001: http://www.intertanko.com/pubupload/oilsd.xls