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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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Wednesday, 03 July 19
SHIPPING MARKET INSIGHT - INTERMODAL
The global shipping industry is facing numerous challenges at a time when geopolitical turmoil has escalated in view of the recent tension in the M ...
Monday, 01 July 19
COAL DEMAND RISES, BUT REMAINS BELOW PEAK LEVELS - FORBES
This article is the third in a series on BP’s recently-released Statistical Review of World Energy 2019. The Review provides a comprehensive ...
Saturday, 29 June 19
ULTRAMAX: FROM SOUTHEAST ASIA MORE COAL WAS ENTERING THE MARKET - BALTIC BRIEFING
Capesize
The market showed variability over the past week, as most routes were active yet sentiment differed from region to region. The Pacific ...
Wednesday, 26 June 19
SHIPPING MARKET INSIGHT - INTERMODAL
As the first half of the year is almost over, it is worth looking back at the sale and purchase activity during these months, focusing on the segme ...
Tuesday, 25 June 19
THERMAL COAL FUTURES ON THE ZHENGSHOU EXCHANGE ROSE - DANIEL HYNES
Coal markets were buoyed by ongoing supply side issues.
According to Daniel Hynes, Senior Commodity Strategist of ANZ, the the ...
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- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
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