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World Oil Supply - Jan 11

Source: OPEC_RP110107 1/19/2011, Location: Europe

Non-OPEC Forecast for 2010
Non-OPEC oil supply is estimated to have grown by 1.13 mb/d in 2010 to average 52.26 mb/d, indicating an upward revision of 0.04 mb/d compared to the previous assessment. The continued healthy output from various non-OPEC countries required the adjustment in this month’s report.

Similar to the previous month, there was a minor upward revision that affected the outlook from the historical data in 2009. In general, the non-OPEC supply profile remains steady with growth in 2010 coming mainly from North and Latin America, FSU, and China while output from OECD Western Europe declined.

The revisions introduced to the supply outlook were mainly in the second half of the year to adjust for updated production data. Many non-OPEC countries’ supply profiles experienced an adjustment, with considerable revisions encountered in the US, Norway, Azerbaijan and China. On a quarterly basis, non-OPEC supply is estimated at 52.12 mb/d, 52.11 mb/d, 51.96 mb/d and 52.82 mb/d respectively.

The estimated strong annual non-OPEC supply growth in 2010 of 1.13 mb/d is the highest increase since 2002. The non-OPEC supply forecast for 2010 has encountered many revisions since the initial projection in 2009. Most of the revisions to total non- OPEC were upward. By the end of the first quarter 2010, actual production data started to provide strong indications that supply was on the verge of healthy growth, however, the risk continued to exist and develop in different forms. Accordingly, the forecast responded to shifting the balance of risk and data showing gradual increases to the current level of 1.13 mb/d for 2010.

Nonetheless, the growth level is still subject to adjustments, even after the end of the year, as actual production data from different non-OPEC countries remains unavailable at this point. Compared to the initial forecast, Russia oil supply experienced the largest upward revision of 0.33 mb/d, followed by the US and China.

Revisions to the 2010 estimates
Non-OPEC supply estimates in the first three quarters of 2010 remained relatively steady compared to the previous month, with a minor upward revision of less than 30 tb/d on average. However, the estimates for the fourth quarter encountered an upward revision of 80 tb/d compared to a month earlier. Despite the total upward revision, there were a few downward revisions in this month’s evaluation.

Oil supply estimates for the US, Canada, Mexico, Denmark, Vietnam, Yemen, Chad, Egypt, Russia and China encountered upward revisions influenced mostly by updated production data. On the other hand, Norway, Australia, India, Brazil, Kazakhstan, and Azerbaijan oil supply estimates experienced downward revisions, similarly driven by updated production data in addition to other factors.

In the US, the above-average initial production from wells in the Bakken formation supported the upward revision of 40 tb/d. Additionally, the startup of the small Balboa field as well as the positive effect on operating efficiency by the cold weather in Alaska further supported the upward adjustment. US oil supply is now estimated to have averaged 8.58 mb/d in 2010, an increase of 0.44 mb/d over the previous year, indicating the largest growth among all non-OPEC countries.

Canada oil supply profile experienced an upward revision of 10 tb/d compared to the previous month. The upward revision came as maintenance work had been completed in different projects including the White Rose, Horizon (where a fire damaged the upgrader in early January 2011) and Syncrude. The revision came despite the pipeline outage in Enbridge that forced some producers to reduce production.

Norway oil supply is seen to have averaged 2.14 mb/d in 2010, a decline of 0.22 mb/d over 2009, indicating a downward revision of 20 tb/d compared to previous month. The downward revision came to reflect the drop of production in the fourth quarter, partially due to the short shutdown of the Kristin and Tyrihans fields as well as lower output from the Statfjord and Valve developments.

The downward revision came despite the startup of the Vega project. Similarly, Brazil oil estimate in 2010 encountered a downward revision of 10 tb/d compared to a month earlier. The downward adjustment was due to updated production data in the fourth quarter which indicated lower output than previously expected. Despite the startup of the P-57 platform at the Jubarte field, as well as production from the extended well testing at the Caratinga field, a downward revision was experienced in the fourth quarter.

China oil supply is estimated to have averaged 4.14 mb/d in 2010, growth of 0.29 mb/d over 2009, indicating an upward revision of 20 tb/d compared to the previous month. The upward revision came as production data continued to indicate better performance than earlier anticipated. The strong growth at the recent offshore developments, as well as the Yanchang and Changqing projects, is strongly supporting growth and upward revision in China’s oil supply profile.

Forecast for 2011
Non-OPEC supply in 2011 is forecast to grow by 0.41 mb/d over the previous year to average 52.67 mb/d, displaying an upward revision of 50 tb/d from a month earlier. The upward revision was due to various updates to countries’ supply profiles in addition to carrying over some of the revisions introduced to 2010 supply estimates. On a quarterly basis, non-OPEC supply is expected to average 52.74 mb/d, 52.60 mb/d, 52.35 mb/d and 52.98 respectively.

OECD
Total OECD oil production in 2011 is foreseen to average 19.81 mb/d, a drop of 0.08 mb/d compared to the previous year and an upward revision of 0.09 mb/d from the previous report. The upward revision came mainly from North America, while other regions within OECD experienced minor revisions.

Within the OECD, supply in the North American and Asia-Pacific regions are anticipated to show growth in 2011, while OECD Western Europe is expected to decline. On a quarterly basis, total OECD supply is seen to stand at 19.99 mb/d, 19.81 mb/d, 19.55 mb/d and 19.90 mb/d respectively.

According to preliminary data, OECD oil supply averaged 20.14 mb/d in the fourth quarter of 2010, growth of 0.21 mb/d over the same period in 2009.

North America
OECD North America oil output is projected to increase by 0.07 mb/d in 2011 over the previous year to average 14.97 mb/d, representing an upward revision of 0.10 mb/d compared to the previous month. Both the US and Canadian oil supply are expected to show growth in 2011, while Mexico is estimated to decline. On a quarterly basis, North American oil supply is forecast to average 14.96 mb/d, 15.01 mb/d, 14.87 mb/d and 15.06 mb/d respectively.

US
Total US oil supply is forecast to remain relatively steady in 2011 with a minor increase of 0.03 mb/d over 2010 to average 8.61 mb/d, indicating an upward revision of 0.07 mb/d from the previous month. The strong level of production in the fourth quarter of 2010 supported the upward revision.

The reported increase in the US rig count, which has reached a 23-year high, is also supporting the upward revision. Moreover, the expected increase in biofuel requirement in 2011 is seen to improve output in 2011. Additionally, projects such as the Cascade, Chinook as well as Caesar Tonga, in addition to the Bakken oil shale supply are seen to support US production in 2010.

However, a high level of uncertainty remains surrounding the US oil output in 2011 as the extent of the drilling delays, as a result of the deep water moratorium, is still not clear. Moreover, the decline in mature producing areas, such as Alaska, is expected to negatively affect the US output in 2011. On a quarterly basis, US oil supply is anticipated to stand at 8.67 mb/d, 8.67 mb/d, 8.52 mb/d, and 8.59 mb/d respectively.

Canada and Mexico
Canada’s oil production is projected to average 3.47 mb/d in 2011, growth of 0.11 mb/d over the previous year, indicating an upward revision of 20 tb/d over the previous month. The healthy level of production in the fourth quarter drove the upward revision in 2011. Additionally, the expected increase in investment in 2011 is seen to support growth in Canada.

However, the fire incident at the Horizon facility had offset some of the gains. Canada oil supply is expected to gain from the ramp-up of various oil sand projects such as the Jack Pine AOSP, Leismer, Syncrude, and Christina Lake in 2011.

However, the risk to the forecast is on the high side as the details of the effect of the fire on the Horizon project do not yet – at the time this report is being written – provide a clear view of when the capacity will return to normal levels. On a quarterly basis, Canada’s supply is expected to average 3.39 mb/d, 3.44 mb/d, 3.47 mb/d and 3.57 mb/d respectively.

Mexico oil supply is expected to decline by 0.06 mb/d in 2011 compared to the previous year to average 2.90 mb/d, broadly unchanged from the last report, with a minor upward revision. The year 2011 will be a very demanding year in terms of stabilizing oil output. Despite the drop in production in November 2010 of nearly 60 tb/d, Mexico crude oil supply demonstrated a healthy level of output in contrast to the output stabilization target.

With limited new volume expected from the Chicontepec, Ayun-Alux, and Kuil in 2011, Mexico will have to work hard to achieve its target. Nonetheless, the possibility of accomplishing the set objective remains within reach, similar to the performance realized in 2010, to maintain the uncertainty surrounding the forecast for 2011.

On a quarterly basis, Mexico’s oil supply is seen to average 2.91 mb/d, 2.90 mb/d, 2.88 mb/d, and 2.90 mb/d respectively.

Western Europe
OECD Western Europe supply is anticipated to decline by 0.16 mb/d over the previous year to average 4.23 mb/d in 2011, relatively unchanged from last month. Nevertheless, there were minor upward and downward revisions to individual countries, mostly offsetting each other. OECD Western Europe is expected to have quarterly supply of 4.42 mb/d, 4.19 mb/d, 4.07 mb/d and 4.24 mb/d respectively.

Oil supply from Norway is foreseen to drop 0.08 mb/d compared to the previous year to average 2.06 mb/d in 2011, representing a downward revision of 0.01 mb/d from last month. The downward revision reflected the recent short shutdown of the Snorre and Vigdis fields. Additionally, the drop in output in November 2010 further had a small effect on the outlook of 2011 supply.

The expected decline in 2011 is significantly lower than the drop in 2010, mostly due to the fact that the level of comprehensive maintenance stoppage expected in 2011 is less than a year earlier, as the heavy maintenance experienced in 2010 tends to revolve in a three-year cycle. Additionally, new volume from the Yme, Gjoa, Morvin, and Vega is expected to offset the decline in mature producing areas.

Furthermore, the projected investment in 2011 is seen to reach a new record high in Norway, which is seen to further support the improvement of supply in 2011, compared to 2010. The risk on the forecast remains with the ability of producers to reduce their production shutdowns in 2011. On a quarterly basis, Norway’s production is seen to average 2.19 mb/d, 2.01 mb/d, 1.96 mb/d and 2.07 mb/d respectively.

UK oil supply is anticipated to average 1.31 mb/d in 2011, representing a decline of 0.07 mb/d over the previous year and unchanged from last month. The expected new volume from developments such as Fiddich, Bardolino, Burghley, Rochelle, Causeway, and Bentley (started in late December 2010) is expected to partially offset the output decline from mature producing areas. Furthermore, the effect of maintenance on output is expected to be lower than in 2010. On a quarterly basis, UK oil output is expected to average 1.35 mb/d, 1.30 mb/d, 1.26 mb/d and 1.32 mb/d respectively.

Denmark oil supply is forecast to average 0.23 mb/d in 2011, a drop of 0.02 mb/d over the previous year, representing an upward revision of 10 tb/d compared to a month earlier. The upward revision experienced in 2011 was due to the adjustment in the fourth quarter on the back of updated production data. Other Western Europe oil supply is expected to remain flat in 2011, averaging 0.64 mb/d, indicating a minor upward revision that was due to the start of production at the Wijk field in the Netherlands.

Asia Pacific
OECD Asia Pacific oil supply is predicted remain relatively flat in 2011 compared to the previous year, with a minor increase of 10 tb/d, indicating a downward revision of 25 tb/d compared to the previous month. The downward revision came mainly from Australia, while New Zealand supply forecast remained unchanged from a month earlier.

On a quarterly basis, total OECD Asia Pacific oil supply is expected to average 0.61 mb/d, 0.62 mb/d, 0.61 mb/d and 0.60 mb/d respectively.

Australia oil production is projected to increase 20 tb/d in 2011 to average 0.53 mb/d, indicating a downward revision of 25 tb/d compared to the most recent assessment. The downward revision came mainly from the anticipated lower production in the late fourth quarter and early January, due to shutdowns at different fields because of bad weather and flooding.

However, the shutdown fields have returned to operation. In addition, supply is expected to improve with the startup and ramp-up of projects such as Pyrenees, Van Gogh, Kitan, and Turrum. On a quarterly basis, Australian oil supply is seen to stand at 0.52 mb/d, 0.53 mb/d, 0.53 mb/d and 0.52 mb/d respectively.

Developing Countries
Developing Countries (DCs) oil supply is forecast to grow by 0.34 mb/d over the previous year to average 13.13 mb/d in 2011, representing a minor upward revision of less than 10 tb/d from the previous month. Despite the unlucky “13” myth surrounding the average production figure, DC supply is expected to be the jewel of non-OPEC supply growth in 2011.

All the regions within DCs are anticipated to show supply growth in 2011, with Latin America and Africa heading the list and Middle East and Other Asia expected to remain relatively flat. On a quarterly basis, total oil supply in DCs is seen to average 12.93 mb/d, 13.07 mb/d, 13.15 mb/d and 13.36 mb/d respectively.

Oil production from Other Asia in 2011 is foreseen to remain relatively flat over the previous year and increase 10 tb/d to average 3.70 mb/d, unchanged from the last assessment. Despite the steady state compared to the previous month, there were a few upward and downward adjustments that offset each other. India is expected to show the largest growth in oil supply in 2011 among the Other Asia region.

On a quarterly basis, Other Asia supply is seen to average 3.69 mb/d, 3.69 mb/d, 3.70 mb/d and 3.72 mb/d respectively. Output from India is expected to increase by 40 tb/d in 2011 to average 0.89 mb/d, indicating a downward revision of less than 10 tb/d, which was introduced to adjust for updated production figures in the fourth quarter 2010 that came lower than previously expected due to poorer output of different fields. The Mangala development is expected to continue to support output in 2011.

Vietnam oil supply is expected to increase 20 tb/d in 2011 to average 0.38 mb/d, indicating a minor upward revision compared to previous month’s assessment. The upward revision came mainly to reflect healthy output data in the second half of 2010.

The minor growth is supported by projects such as the Su Tu Den and Chim Sao in addition to biofuel production. Indonesia oil output is expected to decline by 30 tb/d in 2011 to average 1.00 mb/d, unchanged from the previous evaluation. The decline is anticipated despite the government scrapping plans to curb upstream recovery cost, which is regarded by many analyst as a supportive step toward improving production.

Additionally, the foreseen increase in investment in 2011 supports production. However, the decline in mature producing areas is expected to offset the anticipated limited new volume. The Philippines oil supply is expected to decline in 2011, which is reflected in Other Asia, on the back of abandoning the Tindalo oil field due to increased water cut from the field.

Latin America oil supply is expected to increase by 0.23 mb/d in 2011 to average 4.94 mb/d, the highest growth among all non-OPEC regions. The forecast indicates a downward revision of 35 tb/d compared to the previous month. On a quarterly basis, Latin American supply is expected to stand at 4.82 mb/d, 4.93 mb/d, 4.96 mb/d and 5.07 mb/d respectively. Brazil oil supply is projected to average 2.87 mb/d in 2011, an increase of 0.16 mb/d over the previous year.

The supply outlook shows a downward revision of 35 tb/d compared to the previous month’s assessment. The downward revision was introduced to adjust for fourth quarter 2010 production data that came lower than previously anticipated. Despite the downward revision, Brazil’s expected supply growth in 2011 marks the highest anticipated growth among all non-OPEC countries.

This healthy growth is supported by developments such as the Paraques das Conchas, Tupi, Jubarte and other Santos basin projects. In addition, biofuel supply is expected to grow in 2011 as well as production from private companies. The expected new volume is seen to more than offset the decline from mature producing areas.

Colombia oil supply is foreseen to increase by 0.08 mb/d in 2011 to average 0.88 mb/d, unchanged from the previous month’s evaluation. The expected growth is supported by the Quifa and Rubiales developments. However, the risk of the transportation bottleneck remains a major factor that could affect the development of oil production in 2011. Argentina oil production is expected to decline by 20 tb/d in 2011 to average 0.74 mb/d, indicating a downward revision of 10 tb/d compared to a month earlier.

The downward revision was experienced due to an adjustment in the fourth quarter 2010 that was carried over to the 2011 supply forecast.

Oil supply from the Middle East is forecast to increase slightly by 20 tb/d from the previous year to average 1.80 mb/d in 2011, indicating an upward revision of 20 tb/d from the previous report. The revision was introduced to Syria and Yemen oil supply, while other countries in the region remain unchanged. The upward revision was due to historical adjustments that were carried over to the 2011 estimate. Oman is expected to lead the region in terms of growth, with output forecast to increase by 50 tb/d in 2011. Growth is expected to continue from 2010, where production achieved a healthy increase. Syria and Yemen oil supply are expected to experience a minor decline in 2011, driven by a decline in mature producing areas. On a quarterly basis, Middle East supply is seen to average 1.78 mb/d, 1.79 mb/d, 1.79 mb/d and 1.81 mb/d respectively.

Africa oil supply is foreseen to average 2.69 mb/d in 2011, representing a growth of 0.08 mb/d over the previous year, and an upward revision of 25 tb/d from last month’s assessment. Supply outlook for Chad, Egypt and Gabon experienced upward revisions mainly on the back of updated production figures in the fourth quarter 2010, where output indicated better performance. Ghana is expected to drive the growth in Africa with the Jubilee field.

The field has started up in December and the first cargo has been offered. The quarterly distribution for 2011 stands at 2.63 mb/d, 2.67 mb/d, 2.70 mb/d and 2.76 mb/d respectively.

FSU, Other Regions
Total FSU oil supply is anticipated to grow by 0.11 mb/d in 2011 to average 13.33 mb/d, indicating a downward revision of 0.10 mb/d compared to the previous month. FSU remains the region with the highest production volume among all non-OPEC regions, however, projected growth in 2011 is lower than the growth experienced in previous years. All the major producers in to show oil supply growth in 2011, yet at a slower pace than in previous years. On a quarterly basis, total oil supply from the FSU is seen averaging 13.40 mb/d, 13.34 mb/d, 13.27 mb/d and 13.32 mb/d respectively. China oil supply is expected to increase by 30 tb/d in 2011 to average 4.18 mb/d and Other Europe is seen to remain steady in 2011 at 0.14 mb/d.

Russia
Oil supply from Russia, the world’s largest producer in 2010, is projected to remain relatively flat in 2011 with a minor increase of 10 tb/d, unchanged from the previous assessment. Russia oil supply forecast in 2011 has the highest level of risk and uncertainty. Despite the expected new volume from a few developments such as Talakan, Vankor, Uvat and Yuri, the expected decline at major producing areas is seen to offset the foreseen volume addition.

Furthermore, the developments that drove growth in 2010, such as the Vankor field, are expected to add lower volume in 2011 than in 2010. On the other hand, the decline rate that was offset by strong growth in 2010 is expected to continue to depress Russian output in 2011. Moreover, the supply development in Russia during recent years interacted robustly with the government policy.

With increases in taxation and duties, Russia oil supply showed a decline and vice versa. Accordingly, government policy regarding taxation and duties will have a major role in shaping the Russian oil supply profile in 2011. The risk with the Russian oil supply forecast is the highest among all non-OPEC countries, given the size of production as well as the various factors affecting the output. On a quarterly basis, Russian oil supply is foreseen to average 10.19 mb/d, 10.17 mb/d, 10.12 mb/d and 10.12 mb/d respectively.

Caspian
Oil supply from Kazakhstan is forecast to increase by 70 tb/d over the previous year to average 1.66 mb/d in 2011, indicating a downward revision of 20 tb/d from the previous month. The downward revision was introduced to adjust for updated fourth quarter production figures. Despite the downward revision, the anticipated growth in 2011 is supported by the Tengiz and Karachaganak developments.

Kazakh oil production is expected to remain relatively steady in 2011. On a quarterly basis, Kazakhstan oil supply is expected to average 1.67 mb/d, 1.64 mb/d, 1.63 mb/d, and 1.69 mb/d respectively.

Azerbaijan oil production is forecast to increase by 40 tb/d over the previous year to average 1.12 mb/d in 2011, representing a downward revision of 65 tb/d from the previous month. The downward revision was partially carried over from the fourth quarter 2010, when production data suggest slower growth at the ACG field. The downward revision was introduced despite the restart of the Chirag platform, after the short shutdown. Quarterly supply is seen to stand at 1.13 mb/d, 1.12 mb/d, 1.11 mb/d and 1.11 mb/d respectively.

China
China oil supply is estimated to increase by 30 tb/d over the previous year to average 4.18 mb/d in 2011, indicating an upward revision of around 50 tb/d from the previous month. The upward revision was introduced to adjust for continued healthy production from China in the fourth quarter 2010. However, the base of the growth seen in 2010 is expected to slow in 2011. The anticipated decline from China’s mature producing areas is expected to offset most of the anticipated new volume in 2011. On a quarterly basis, China oil supply is seen to average 4.21 mb/d, 4.16 mb/d, 4.16 mb/d and 4.18 mb/d respectively.

OPEC natural gas liquids and non-conventional oils
OPEC NGLs and non-conventional oils are estimated to average 4.79 mb/d in 2010, representing growth of 0.44 mb/d over the previous year. In 2011, OPEC NGLs are projected to average 5.25 mb/d, an increase of 0.46 mb/d over the previous year.

OPEC crude oil production
According to secondary sources, total OPEC crude oil production averaged 29.23 mb/d in December, an increase of 0.17 mb/d from the previous month. Crude oil output saw an increase from the UAE, Saudi Arabia, Iraq, Kuwait and Nigeria, while production fell in Angola. According to secondary sources, OPEC crude production, not including Iraq, stood at 26.78 mb/d in December, an increase of 0.13 mb/d over the previous month.

World Oil Supply
Preliminary data indicates that global oil supply remained relatively steady in December compared to the previous month. The decline in non-OPEC supply in December offset the gains in OPEC crude oil production. The share of OPEC crude oil in global production remained steady at 34% in December. The estimate is based on preliminary data for non-OPEC supply, estimates for OPEC NGLs and OPEC crude production from secondary sources.



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