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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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- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Economic Council, Georgia
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- PNOC Exploration Corporation - Philippines
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Thai Mozambique Logistica
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- The University of Queensland
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Edison Trading Spa - Italy
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
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