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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, 26 February 19
THE RELATIVELY DISAPPOINTING SCENE PORTRAYED IN THE DRY BULK MARKET RIGHT NOW - ALLIED SHIPBROKING
The relatively disappointing scene portrayed in the dry bulk market right now (especially in the Capesize segment) is undoubtedly one of the prevai ...
Friday, 22 February 19
AUSTRALIAN HIGH CV THERMAL COAL PRICES AT 19-MONTH LOW, BUT NOT FOR LONG - WOOD MACKENZIE
The benchmark Newcastle high energy thermal coal price has fallen from US$100/tonne at the turn of the new year to US$88/tonne. Thermal coal has be ...
Wednesday, 20 February 19
EFFECTIVE NOTICES OF ARBITRATION - AVOIDING WASTED COSTS AND A POTENTIALLY TIME-BARRED CLAIM
KNOWLEDGE TO ELEVATE
In a recent case, The Amity [2017], charterers successfully set aside an arbitration award on the basis that ow ...
Wednesday, 20 February 19
SHIPPING MARKET INSIGHT - INERMODAL
Market experts mostly agree that the recent dry bulk market downtrend was caused by seasonal slowdown amid the Chinese New Year celebrations in com ...
Tuesday, 19 February 19
AUSTRALIA'S COAL FUTURE UNDER THREAT AS MORE CHANGES HIT FOSSIL FUELS GLOBALLY - ABC
Two disparate decisions from opposite corners of the world have sounded warnings for the future of Australia’s coal industry.
...
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- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- London Commodity Brokers - England
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- The University of Queensland
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Trasteel International SA, Italy
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
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