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Saturday, 22 June 19
OPEC'S BATTLE FOR CONTROL OF THE OIL MARKET - WOOD MACKENZIE
 Oil supply is confounding expectations. We have just raised our forecasts for non-OPEC production, the latest in a series of incremental increases. Cumulatively, we’ve increased volumes for 2025 by an astonishing 9 million b/d compared with our forecasts in 2016, the oil price nadir. Non-OPEC supply has already bounced from the 2016 low of 54 million b/d and will touch 60 million b/d this year. Our latest Macro Oils Long Term Outlook expects a peak of 66 million b/d in 2025, 5% above our forecast last year. Oil demand too has grown more quickly than expected, up 6 million b/d on 2016 forecasts.
“Did we, like many others, underestimate the industry’s ability to adapt and innovate in the face of financial adversity – and keep on producing oil? Maybe.”
Simon Flowers
Chairman and Chief Analyst
Production keeps on growing despite structurally lower oil prices and upstream investment still 40% below peak. Did we, like many others, underestimate the industry’s ability to adapt and innovate in the face of financial adversity – and keep on producing oil? Maybe. But where on earth is it all coming from? There are four main buckets.
1. US Lower 48
tight oil and NGLs together contribute 4.3 million b/d, half of the increase versus 2016. This primarily reflects the emergence of the Permian basin as the dominant tight oil play. The delineation of sweet spots, more efficient drilling, and the present shift to industrialised exploitation have led to a significant improvement in Permian well economics. Innovation has boosted expected recovery from the more mature Bakken, Eagle Ford and Scoop-Stack plays to a lesser extent. NGLs associated with the gassier parts of the Permian and shale gas plays make up about one-third of the US L48 increase.
2. Russia
Our forecasts for 2025 are 1.4 million b/d higher than three years ago, in spite of sanctions which restrict inward investment and the transfer of the latest technological advances. Rouble weakness has buoyed upstream margins in Russia since the price fell, supporting higher investment, including an intense drilling programme in deeper, low-permeability plays in West Siberia. Sanction of some greenfield projects has been deferred by Russia’s involvement in OPEC+, effectively pushing new volumes out by a few years.
3. Guyana
Only the original Liza discovery was in our 2016 forecasts. We’ve added another 0.5 million b/d by 2025, reflecting multiple subsequent deepwater discoveries. First production is due in 2020, setting Guyana on track to enter the top 12 non-OPEC producers with over 1 million b/d by the end of the decade.
4. Mature producers
Together, these have added over 2 million b/d compared with our 2016 forecasts. Colombia, UK, Norway, US (Alaska) and Canada are among a plethora of countries which have surprised on the upside. Cost cutting, efficiencies, reduced maintenance outages, high-grading and streamlining of new projects, new discoveries tied into existing infrastructure and, in some cases, reduced tax rates have combined to slow decline rates and boost production. There are valid questions whether production from ultra-mature basins is sustainable at these rates, or volumes are merely being accelerated. As a result , some of these producers are slated to see steeper declines.
Non-OPEC supply won’t grow at this rate forever
In fact, Non-OPEC supply stops after 2025 as tight oil plateaus, with decline setting in by 2030. In the meantime, the OPEC+ strategy to boost revenues by constraining production and buoying up price has helped its competitors boost production and gain market share.
We estimate non-OPEC production will swallow up 4.3 million b/d, or 76%, of contestable demand over the next five years. OPEC’s scope to increase volumes through this period is limited to just 1.3 million b/d. The maths sits at odds with Abu Dhabi, Kuwait and Iraq which are investing heavily in new capacity. Some producers in OPEC do see flat or declining volumes in this period.
Major supply outages are helping OPEC+ to balance the market today. Disruptions are set to leap to a record 5 million b/d later this year, including 2.5 million b/d from Iran (sanctions) and Venezuela (economic meltdown and US sanctions). It may suit the rest of OPEC, as well as the US, if exports from Iran and Venezuela are kept off the market for some years – at least until non-OPEC production growth shows signs of abating.
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Tuesday, 16 July 19
SUPRAMAX: THE ASIAN ARENA WAS SPLIT, WITH A BUILD-UP OF TONNAGE AND LACK OF ENQUIRY IN THE NORTH - BALTIC BRIEFING
Capesize
It was a Brazilian affair with a strong splash of bunkers characterising the Capesize market over the past week. Largely traded in Eur ...
Wednesday, 10 July 19
KOREA SOUTH-EAST POWER INVITES BIDS FOR HCV AND LCV COAL FOR AUGUST 2019 LOADING
COALspot.com: South Korea’s Korea South-East Power Co., Ltd. (KOEN) has issued an international tender for total 460,000 to 500,000 Metric To ...
Wednesday, 10 July 19
SHIPPING MARKET INSIGHT - INTERMODAL
In contrast with the general expectations for the dry bulk market, the sector was not positive or even stable during the past 6 months. The warning ...
Monday, 08 July 19
INDONESIAN COAL PRICE REFERENCE POSTS BIGGEST MONTHLY LOSS SINCE JANUARY 2017
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down again the benchmark price of Indonesian th ...
Monday, 08 July 19
ULTRAMAX: A 52,000-TONNER OPEN CJK FIXED FOR A TRIP VIA INDONESIA WITH RE-DELIVERY CHINA AT $6,100 - BALTIC BRIEFING
Capesize
The Capesize market surged over the past week, reaching highs not seen since August last year. Widespread activity in both basins saw ...
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- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- The University of Queensland
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Australian Coal Association
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
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