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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, 12 June 19
SHIPPING MARKET INSIGHT - INTERMODAL
This year’s tanker S&P activity keeps edging higher compared to the same period in 2018. Year to date we have seen some 143 ships, rangin ...
Tuesday, 11 June 19
INDONESIAN COAL PRICE REFERENCE SET AT $81.48 PER TON IN JUNE, DOWN 15.66 PERCENT YEAR-ON-YEAR
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, 10 June 19
CONSECUTIVE OWNERS OF CARGO: WHO HOLDS TITLE AND THE RIGHT TO SUE? - COLIN BIGGERS & PAISLEY
KNOWLEDGE TO ELEVATE
In Tritton Resources Pty Ltd v Ever Rock Navigation S.A. [2019] FCA 276, the Federal Court considered the application of ...
Monday, 10 June 19
KOSPO INVITES BIDS FOR 1,305,000 MT OF MIN 5600 KCAL/KG NCV COAL FOR SEPT 2019 TO DEC 2021
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 435,000 MT (per year) of max 5,600 kcal/kg N ...
Sunday, 09 June 19
SUPRAMAX: ASIA LOST GROUND; THE INDIAN OCEAN SAW SLOWER ACTIVITY - BALTIC BRIEFING
Capesize
The market continued in an unusually steady ascent last week. With no major news in the market, each day improved on the last, breakin ...
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- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- The University of Queensland
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- White Energy Company Limited
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
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