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