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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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Saturday, 06 April 19
SUPRAMAX: IT WAS A POOR WEEK OVERALL FOR THE BALTIC SUPRAMAX INDEX, WHICH LOST GROUND - BALTIC BRIEFING
Capesize
The Capesize market over the past week looked to have found a floor on Tuesday with the BCI 5TC at $3460 before firming into the rest ...
Thursday, 04 April 19
OVERSUPPLY STILL MAJOR CHALLENGE WARNS ICS
Speaking in Istanbul, Simon Bennett, Deputy Secretary General of the International Chamber of Shipping (ICS) warned that avoiding overcapacity and ...
Thursday, 04 April 19
GLENCORE, TOHOKU ELECTRIC SET COAL CONTRACT PRICE AT $94.75/T - SOURCE, REUTERS REPORTED
Global miner Glencore and Japan’s Tohoku Electric Power agreed on a price of $94.75 per tonne for supplies of thermal coal from Australia for ...
Monday, 01 April 19
FORCE MAJEURE SUCCESS NOT A SEA CHANGE - BALTIC EXCHANGE
KNOWLEDGE TO ELEVATE
It is difficult to successfully argue that contractual performance has been prevented or delayed by force majeure. This i ...
Monday, 01 April 19
AUSTRALIAN COAL AT RISK FROM CHINA MOVE, WARNS GOVERNMENT REPORT - SYDNEY MORNING HERALD
A new government report warns China’s restrictions on coal imports is the number one risk for Australian coal this year and could lead to a s ...
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- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Planning Commission, India
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- The University of Queensland
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- White Energy Company Limited
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- PTC India Limited - India
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Indonesian Coal Mining Association
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