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