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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, 16 July 19
SUPRAMAX: THE ASIAN ARENA WAS SPLIT, WITH A BUILD-UP OF TONNAGE AND LACK OF ENQUIRY IN THE NORTH - BALTIC BRIEFING
Capesize
It was a Brazilian affair with a strong splash of bunkers characterising the Capesize market over the past week. Largely traded in Eur ...
Wednesday, 10 July 19
KOREA SOUTH-EAST POWER INVITES BIDS FOR HCV AND LCV COAL FOR AUGUST 2019 LOADING
COALspot.com: South Korea’s Korea South-East Power Co., Ltd. (KOEN) has issued an international tender for total 460,000 to 500,000 Metric To ...
Wednesday, 10 July 19
SHIPPING MARKET INSIGHT - INTERMODAL
In contrast with the general expectations for the dry bulk market, the sector was not positive or even stable during the past 6 months. The warning ...
Monday, 08 July 19
INDONESIAN COAL PRICE REFERENCE POSTS BIGGEST MONTHLY LOSS SINCE JANUARY 2017
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down again the benchmark price of Indonesian th ...
Monday, 08 July 19
ULTRAMAX: A 52,000-TONNER OPEN CJK FIXED FOR A TRIP VIA INDONESIA WITH RE-DELIVERY CHINA AT $6,100 - BALTIC BRIEFING
Capesize
The Capesize market surged over the past week, reaching highs not seen since August last year. Widespread activity in both basins saw ...
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- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Posco Energy - South Korea
- PTC India Limited - India
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Eastern Coal Council - USA
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Medco Energi Mining Internasional
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- Central Electricity Authority - India
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- White Energy Company Limited
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- Planning Commission, India
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
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