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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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Friday, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
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