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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, 07 May 19
UNDOUBTEDLY A VERY TROUBLED YEAR FOR THE DRY BULK MARKET, SAYS ALLIED SHIPPING
Undoubtedly a very troubled year for the dry bulk market says Allied Shipping in its latest weekly report.
Thomas Chasapis, Re ...
Saturday, 04 May 19
HOW THE 'FAIR VALUE' OF COAL ASSETS IS AFFECTED BY COMMODITY CYCLES - CRU
As with any commodity, valuing coal assets can be tricky due to the cyclical nature of the market. In this insight, CRU discusses how commodity cyc ...
Friday, 03 May 19
SUPRAMAX: WITH WIDESPREAD HOLIDAYS DURING THE WEEK, THE MARKET LACKED IMPETUS - BALTIC BRIEFING
Capesize
The market last week was a tale of two halves, with substantial volatility. Beginning the week on a positive note the C5 West Australi ...
Friday, 03 May 19
COAL INDIA APRIL OUTPUT RISES 1% TO 45.29 MILLION TONNE - PTI
Coal India Ltd (CIL) Wednesday said its coal production in April 2019 rose by 1 per cent to 45.29 million tonne as compared with 44.86 million tonn ...
Sunday, 28 April 19
SUPRAMAX: A 54,000DWT VESSEL OPEN GRESIK FIXED VIA AUSTRALIA, REDELIVERY CHINA, IN THE MID $12,000S - BALTIC BRIEFING
Capesize
Following the holidays, activity increased in both the Pacific and Atlantic Basins. The 5TC average rallied, closing at $8,596, up $1, ...
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- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- VISA Power Limited - India
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- Latin American Coal - Colombia
- White Energy Company Limited
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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