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