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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, 06 March 19
SHIPPING MARKET INSIGHT - INERMODAL
In a downward moving market, softer SnP activity is usually a given, as the gap between Sellers’ and Buyers’ ideas widens, especially w ...
Saturday, 02 March 19
A 60,500-TONNER WAS BOOKED DELIVERY SINGAPORE, VIA INDONESIA, REDELIVERY WEST COAST INDIA, AT $11,250 - BALTIC BRIEFING
Capesize
Vale’s ongoing absence from the Brazil spot market continued to have a negative impact on sentiment, with rates falling in all a ...
Thursday, 28 February 19
COAL'S PERFECT STORM HITS $70 BILLION AUSTRALIAN PROJECTS - BLOOMBERG
It’s been a tough few weeks for our coal industry.
First there was a court ruling blocking a new mine on climate change ground ...
Wednesday, 27 February 19
SHIPPING MARKET INSIGHT - INTERMODAL
With the IMO 2020 approaching, it becomes challenging for the market to accurately explore the run-up to the deadline given that marine fuel-oil of ...
Tuesday, 26 February 19
CHINA RESTRICTS SEABORNE COAL IMPORTS - WOOD MACKENZIE
In response to news on China's Dalian port restricting seaborne coal imports, Wood Mackenzie's experts provide the following commentary.
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- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- GMR Energy Limited - India
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- The University of Queensland
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- VISA Power Limited - India
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- McConnell Dowell - Australia
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
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