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Monday, 02 December 19
OPEC PREPS FOR OIL'S 2020 BALANCING ACT - WOOD MACKENZIE
 What steps should OPEC and its non-OPEC partners take to keep the market in balance in 2020? Ahead of OPEC’s meeting in Vienna on 5 and 6 December, I turned to Ann-Louise Hittle, Vice President Macro Oils, for answers.
What does good look like for OPEC in 2020? Given the uncertainty around global supply growth, demand and geopolitics, OPEC will do well to get an outcome like 2019. Brent will average U.S.$64 per barrel in 2019, down on last year’s U.S.$71, but still the second-highest annual price since 2014. It’s a measure of OPEC’s success so far in balancing what is a fundamentally an oversupplied market.
Will demand recover in 2020? We think so. This year has disappointed because of a series of one-off factors and the slowing global economy. The 0.6 million barrels per day (b/d) outcome will be well down on the 1.1 million b/d we forecast back in January 2019.
Sanctions-related demand destruction in Venezuela and Iran, plus warm weather in Europe shouldn’t feature next year. We think annual growth will double in 2020 to 1.4 million b/d. China will be key – we expect growth there to double to 0.6 million b/d, buoyed by strong demand for marine gasoil, as bunker volumes move in response to the new low-sulphur IMO regulations on shipping fuels.
Is global supply still growing rapidly? Yes, we expect an increase of 1.8 million b/d in 2020 –assuming OPEC+ maintains its current production cuts.
What’s changing is the mix, and for the first time in years, the U.S. Lower 48 won’t dominate as much. U.S. is about half the 2020 growth, with the rest coming from other non-OPEC producers including Guyana, Brazil and Norway. The giant Norwegian field, Johan Sverdrup, on stream since October, will add 0.3 million b/d in 2020.
So, U.S. tight oil is still growing? Yes, but at a much slower rate. We expect an increase of 0.5 million b/d, well below the 2018 annual peak of 1.5 million b/d. The rig count is down by 18%, or almost 200 rigs from the November 2018 high, across all tight oil plays. Monthly production growth year-on-year peaked at 1.8 million b/d in August 2018 and could slip to just 0.4 million b/d by end 2020.
Did we anticipate that? We expected 2018 to be the peak year of U.S. tight oil growth – but not the rate of slowdown we’re seeing unfold. Investors are forcing U.S. independents, which account for 80% of tight oil production, to pare back spend on growth and generate cash flow.
What growth there is by end 2020 will come mostly from the Majors (ExxonMobil, Chevron, BP and Shell) whose plans are unaffected by capital constraints.
There’s a certain irony that the free market, through shareholder influence, is succeeding in slowing growth – to OPEC’s advantage.
Time will tell how long it lasts – we think we’ll see tight oil growth recover in 2021 though not back to peak rates.
What about OPEC production? A lot of OPEC oil is off the market – volumes are 2.5 million b/d below a year ago. Around half of that is involuntary, due to U.S. sanctions on Venezuelan and Iranian exports. The other 1.2 million b/d are deliberate cuts by OPEC+. Admirable adherence by key producers in the OPEC+ group has been instrumental in balancing the market and holding Brent above U.S.$60 this year. Without cuts, prices would be much lower.
What does OPEC need to do in December? The current agreement on cuts expires in March 2020. OPEC+ needs to rollover through to the end of 2020. But with global supply growth outpacing demand in 2020, we’ll need further cuts if demand growth disappoints again. OPEC will have to move promptly, in this case, and take out additional production if it wants to support price.
Will fundamentals or geopolitics drive the market in 2020? A bit of both. Tension in the Middle East and U.S. global influence are risks again next year. U.S. foreign policy has been emboldened by the rise of tight oil in 2019, indirectly affecting export sanctions – on Venezuela and Iran – and the attack on the giant Abqaiq facility in Saudi Arabia in September.
None of the geopolitical challenges of 2019 has gone away. But we can see signs already that the U.S. is refocusing on domestic policy in the run-up to the presidential election next November.
Source: Wood Mackenzie
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Saturday, 11 January 20
BALTIC BRIEFING TANKER REPORT - WEEK 2
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Friday, 10 January 20
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Thursday, 09 January 20
NEW IMO LIFEBOAT REQUIREMENTS ENTER INTO FORCE - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Three new compulsory IMO resolutions entered into force on 1 January 2020. These resolutions deal with the maintenance, t ...
Thursday, 09 January 20
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- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Central Electricity Authority - India
- Planning Commission, India
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- The University of Queensland
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Anglo American - United Kingdom
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
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