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World Oil Supply - Apr 11

Source: OPEC_RP110407 4/14/2011, Location: Europe

Non-OPEC
Estimate for 2010
Non-OPEC oil supply is estimated to have averaged 52.26 mb/d in 2010, representing growth of 1.13 mb/d over the previous year. The estimate for 2010 remained steady from the previous report with a minor downward revision of 10 tb/d to growth. There were minor upward and downward revisions to all the quarters of 2010; however, annual supply estimates continued at the same level from the previous MOMR as revisions offset each other.

Non-OPEC supply growth in 2010 was the highest since 2002. North America oil supply growth in 2010 was the highest in the past ten years, while the decline in OECD Western Europe was the largest since 2006. Similarly, China oil supply growth in 2010 reached a record high of 0.28 mb/d. Total DC oil supply in 2010 experienced the highest growth since 2005. On a quarterly basis, non OPEC supply in 2010 is estimated at 52.13 mb/d, 52.11 mb/d, 51.93 mb/d and 52.86 mb/d respectively.

Revisions to the 2010 estimate
There were a few revisions to non-OPEC supply estimates in 2010 in both directions compared to the previous report, with the bulk affecting the fourth quarter. Supply estimates for the US, Other Western Europe and Brazil experienced the largest revisions. The revisions were introduced to adjust for updated production data.

US oil supply in the fourth quarter 2010 experienced an upward revision as new data required an adjustment. In Brazil, a downward revision affected the whole year, due to revised production data. There were a few other revisions that affected the fourth quarter 2010; however, they did not change the annual figure.

Forecast for 2011
Non-OPEC supply is forecast to average 52.84 mb/d in 2011, representing an increase of 0.58 mb/d over 2010 and an upward revision of 60 tb/d from last month. Compared to the previous month, the upward revisions were in the first, third and fourth quarters of 2011, with the second quarter encountering a downward adjustment.

The first quarter 2011 projection experienced the largest upward revision, driven mainly by adjustments to actual production data as well as changes to some countries’ supply profiles. OECD supply forecast encountered the highest upward revision, while Developing Countries experienced the largest downward adjustment compared to the previous month. On a regional basis, Latin America supply is expected to achieve the highest growth among all non-OPEC regions in 2011, while OECD Western Europe supply is expected to see the largest decline. On a quarterly basis, non-OPEC supply is expected to average 52.89 mb/d, 52.65 mb/d, 52.60 mb/d and 53.22 respectively.

OECD
Total OECD oil supply is anticipated to remain steady in 2011 compared to the previous year, with a minor increase of 10 tb/d to average 19.94 mb/d. This growth represented an upward revision of 50 tb/d compared to the previous report. Despite the relatively steady state, OECD oil supply forecast for 2011 stands higher by 190 tb/d over the average of the previous ten years and 100 tb/d higher than the average of the previous five years.

North America is expected to be the only contributor to growth in 2011, supported by projected growth in the US and Canada. The upward revision to the OECD supply forecast came from North America and OECD Western Europe, while the OECD Pacific forecast encountered a minor downward revision. Compared to the previous month, supply forecasts from the US, Mexico, Norway, the UK and Denmark experienced upward revisions, with the US experiencing the largest, while supply predictions for Canada and Australia saw downward revisions.

The upward revisions to individual countries’ supply profiles more than offset the downward revisions. The first quarter supply forecast saw the highest upward revision while other quarters encountered lower upward revisions. On a quarterly basis, OECD oil supply is seen to average 20.19 mb/d, 19.86 mb/d, 19.70 mb/d and 20.03 mb/d respectively. According to preliminary data, total OECD actual supply averaged 20.18 mb/d in January and February.

North America
North America oil supply is forecast to increase by 0.21 mb/d over 2010 to average 15.16 mb/d in 2011, indicating an upward revision of 46 tb/d from last month. The expected supply growth for the US and Canada is seen to more than offset the reduced decline in Mexico. On a quarterly basis, North America oil supply in 2011 is expected to stand at 15.26 mb/d, 15.11 mb/d, 15.04 mb/d, and 15.23 mb/d respectively.

US
US oil production is expected to increase by 120 tb/d to average 8.72 mb/d in 2011, representing an upward revision of 40 tb/d from the previous report. The revision came mainly in the first quarter and was partially carried over to the rest of the year. Preliminary actual production data required the upward revision in the first quarter, where output came in higher than previously anticipated. Furthermore, the approval of various Gulf of Mexico deepwater wells in March that were delayed after the Macondo spill, supported the upward revision.

On a quarterly basis, US oil supply is expected to average 8.77 mb/d 8.72 mb/d, 8.67 mb/d and 8.74 mb/d respectively. The final approval for the floating production, storage and offloading (FPSO) unit that will be used at the Cascade & Chinook development, the first permanent FPSO in the Gulf of Mexico, was granted in March, despite an equipment malfunction setback. The development is expected to support US output with its designed capacity of 80 tb/d; however, it is still not clear whether the technical setback will cause a startup delay.

The project is expected to start up in the second half of 2011. Moreover, oil shale and NGLs as well as biofuel production are seen to further increase US oil supply in 2011. According to preliminary data, US oil supply is estimated to have averaged 8.77 mb/d in first quarter of 2011, a decline from the fourth quarter of 2010.

Canada and Mexico
Oil supply from Canada is projected to average 3.51 mb/d in 2011, representing growth of 120 tb/d from the 2010 estimate and a downward revision of 15 tb/d from last month. The downward revision came despite positive indicators supporting growth in Canada, such as the record-high utilization of the oil and gas rigs fleet. Royalty incentives supported horizontal drilling, which surged for unconventional oil such as in the Cardium play in Alberta.

Additionally, work is reported to be at the final stage for the expansion at the Jackpine development with anticipated new volume coming by the beginning of the second half of 2011. First quarter oil supply encountered an upward revision due to updated production data for the early part of the year. However, the downward revision for the rest of the quarters, especially the second quarter, more than offset the upward revision.

The downward revision came due to the expected maintenance effect on the output in the coming period. On a quarterly basis, Canada’s oil supply is foreseen to average 3.52 mb/d, 3.46 mb/d, 3.48 mb/d and 3.57 mb/d respectively.

Mexican oil supply is expected to decline by 30 tb/d in 2011 to average 2.93 mb/d, following an upward revision of 20 tb/d compared to the previous MOMR. The relatively healthy production level during the first quarter of 2011, with data covering more than half of March, indicated growth compared to the fourth quarter 2010. The strong production necessitated the upward revision. Additionally, the opening of bidding for a performance-based contract is further supporting the confidence of Mexico’s ability to arrest the decline that struck output in the past year, which was largely controlled in 2010. On a quarterly basis, Mexican oil supply is expected to average 2.97 mb/d, 2.93 mb/d, 2.89 mb/d and 2.92 mb/d respectively.

Western Europe
Oil supply from OECD Western Europe is forecast to decline by 180 tb/d in 2011 from the previous year to average 4.21 mb/d, indicating an upward revision of 40 tb/d over the previous month. The bulk of the upward revision occurred in the first quarter 2011 due mainly to adjust for updated production data. All main producers in the region saw upward revisions to their supply projections. On a quarterly basis, OECD Western Europe supply in 2011 is anticipated to stand at 4.42 mb/d, 4.15 mb/d, 4.06 mb/d and 4.21 mb/d respectively.

Norway’s oil supply is expected to average 2.02 mb/d in 2011, a decline of 110 tb/d from the previous year, indicating a slight upward revision of 10 tb/d from the previous MOMR. The upward revision came despite the shutdown of the Troll C on the back of technical issues. The revision came mainly in the first quarter of 2011 as the forecast was assessed lower than the actual data in the first two months of the year.

However, output is expected to decline in the second quarter as maintenance is anticipated to affect production. The loading programme suggests lower output in April than the previous month. On a quarterly basis, Norway’s supply is expected to average 2.15 mb/d, 1.97 mb/d, 1.93 mb/d and 2.03 mb/d respectively. According to preliminary data, Norway oil supply averaged 2.14 mb/d in January and February 2011, a drop of around 0.2 mb/d compared to the same period of 2010.

UK oil supply is predicted to decrease by 50 tb/d over a year earlier to average1.32 mb/d in 2011, an upward revision of 15 tb/d compared to the previous month. The upward revision came mainly in the first quarter where production data suggested higher-than-previously-expected output. Additionally, the startup of the Crestal development in the second half of 2011 further supported the upward revision. The recent tax hike by the government on oil and gas producers had irritated operators with expectations that some companies might reevaluate their investment choices. On a quarterly basis, UK oil supply is forecast at 1.38 mb/d, 1.30 mb/d, 1.27 mb/d and 1.31 mb/d respectively.

Asia Pacific
OECD Asia Pacific oil supply is forecast to average 0.57 mb/d in 2011, a minor decrease of 20 tb/d over the previous year and a slight downward revision of 10 tb/d from the previous evaluation. The bulk of the revision occurred in the first quarter of 2011. Australia saw a downward revision of 15 tb/d, while New Zealand experienced a minor upward revision of 6 tb/d. On a quarterly basis, OECD Asia Pacific supply is expected to average 0.52 mb/d, 0.60 mb/d, 0.60 mb/d and 0.58 mb/d respectively.

Australia’s oil supply is anticipated to experience a minor decline of 20 tb/d in 2011 to average 0.48 mb/d, following a downward revision of 15 tb/d from the previous month. The downward revision affected only the first quarter, where production data required the undertaken adjustment. According to preliminary estimated data, Australia oil supply averaged 0.42 mb/d in first quarter 2011, down by 100 tb/d from the same period a year ago.

The adverse weather conditions during the first quarter forced many producers to shut down their operations and hence strongly affected production. The Cossack field was shut for FPSO change. However, output is expected to recover in the second quarter. Furthermore, the Cliff Head field has resumed production in the second half of March after a one-month shutdown due to contamination. On a quarterly basis, Australian supply is seen to average 0.42 mb/d, 0.50 mb/d, 0.51 mb/d and 0.50 mb/d respectively.

Developing Countries
Total Developing Countries (DCs) oil supply is expected to increase by 0.34 mb/d over 2010 to average 13.09 mb/d in 2011, indicating a downward revision of 60 tb/d from the previous report. The downward revision came from the Middle East, Other Asia and Africa oil supply forecast while Latin America supply encountered an upward revision. Latin America remains the region with the highest projected growth among all non- OPEC regions.

The revision came mainly in the first half of 2011 while the second half experienced smaller revisions. The downward revision was introduced to adjust for preliminary actual production data as well as changes to various countries’ supply elements as well as political factors. On a quarterly basis, DC’s total oil supply is estimated to stand at 12.86 mb/d, 13.01 mb/d, 13.15 mb/d and 13.35 mb/d respectively.

Other Asia oil supply is foreseen to remain steady in 2011 compared to the previous year with a minor decline of 10 tb/d, representing a downward revision of 30 tb/d compared to the previous month. The downward revision came mainly from India, Indonesia and Malaysia supply forecasts. Partial first quarter oil output data as well as minor changes to the supply forecast elements required the downward revision. India oil supply is expected to average 0.90 mb/d in 2011, representing growth of 40 tb/d and a downward revision of 10 tb/d compared to the previous report.

The adjustment came as reports suggested an output drop from the MA field in the Krishna Basin on geological grounds. On a quarterly basis, Other Asia supply is expected to stand at 3.66 mb/d, 3.67 mb/d, 3.69 mb/d and 3.71 mb/d respectively. Indonesia oil supply is forecast to decline by 40 tb/d in 2011 to average 0.98 mb/d, indicating a downward revision of 10 tb/d compared to the previous month’s assessment.

The downward revision was driven by lower output in the early part of the first quarter. Additionally, government consideration of lowering the production target for 2011 supported the downward revision. Despite that, government authorities are calling for the state-run company to redevelop old wells and idle fields. Malaysia oil supply is seen to drop 40 tb/d in 2011 to average 0.66 mb/d in 2011, indicating a downward revision of 10 tb/d from the previous month. The downward revision came mainly in the first quarter, which was partially carried over, to adjust for updated production figures. In Vietnam, the Te Giac Trang field’s FPSO is expected to set sail in July, which is in line with our anticipation of the field startup in the third quarter.

Latin America oil production is forecast to increase by 0.27 mb/d to average 4.95 mb/d in 2011, indicating an upward revision of 20 tb/d from last month. Argentina oil supply forecast experienced an upward revision of 10 tb/d due to healthy production figures during the early part of the first quarter, supported by strong biodiesel production.

Colombia oil production is expected to grow by 100 tb/d to average 0.89 mb/d in 2011, with an upward revision of 10 tb/d compared to the previous month. The healthy production level during the first two months of the year supported the upward revision. Colombia oil output in February registered a new record high with a monthly increase of 30 tb/d. Additionally, some operators are planning to drill more wells in 2011, compared to the previous year, which is supporting the anticipated growth. Moreover, the return of the Cano Limon-Covenas pipeline, after the recent outage, as well as the agreement on the enhanced oil recovery (EOR) approach for the Quifa field, are all expected to support production.

On a quarterly basis, Latin American supply is expected to average 4.82 mb/d, 4.92 mb/d, 4.98 mb/d and 5.09 mb/d respectively. Brazil oil supply is projected to increase by 0.18 mb/d in 2011 to average 2.85 mb/d, unchanged from the previous report. Despite the steady state, Brazil oil supply forecast encountered upward and downward revisions that offset each other. The lower output in February compared to January required a downward adjustment to the first quarter. The decline in February was mainly due to maintenance on several offshore platforms.

Despite the monthly decline, the February production figure indicated annual growth of 80 tb/d or 3%. The Brazil supply forecast experienced upward revisions in the second half of the year, as the production of the Lula field will increase gradually. Additionally, the increasing confidence of the operators – with reports suggesting that the statecontrolled operator might exceed the production target – supported the upward revision in the second half. On a quarterly basis, Brazil supply is seen to stand at 2.75 mb/d, 2.85 mb/d, 2.87 mb/d and 2.94 mb/d respectively.

Middle East oil production is estimated to remain steady in 2011 with a minor increase of 10 tb/d to average 1.78 mb/d, indicating a downward revision of 35 tb/d compared to the previous month. The downward adjustment came from Oman, Syria, and Yemen as political turmoil and demonstrations affected production. In Yemen, the damage to the pipeline that connects some producers to Ras Issa export terminal have caused several shutdowns with reports suggesting that output was cut by 70 tb/d.

Similarly, Oman oil production is seen to have been affected by the demonstrations of some oil industry workers. Despite the minor downward revision to Oman supply forecast, it is still expected that production will grow by 50 tb/d in 2011 to average 0.92 mb/d. On a quarterly basis, Middle East supply is expected to average 1.76 mb/d, 1.77 mb/d, 1.79 mb/d, and 1.81 mb/d respectively.

Africa oil supply is seen to increase by 80 tb/d to average 2.68 mb/d in 2011, indicating a downward revision of 20 tb/d from last month. The downward revision came on the back of adjustments to updated production data from Sudan. The estimated lower output in the first quarter was partially carried over to other quarters. Additionally, the relatively short strike action by oil workers in Gabon halted almost all production on 1 April. However, it was reported that operators began restarting production after the strike was halted on 4 April. In Tunisia, the Hasdrubal field resumed operation after having been disrupted for five months on the back of technical issues at the processing plant. On a quarterly basis, Africa supply is expected to average 2.63 mb/d, 2.65 mb/d, 2.69 mb/d and 2.74 mb/d respectively.

FSU, Other Regions
Total FSU oil supply is projected to increase by 140 tb/d over the previous year to average 13.36 mb/d in 2011, indicating a minor upward revision of 10 tb/d from the previous month. The minor upward revision came from Kazakhstan and Other FSU, while Azerbaijan oil supply forecast experienced a minor downward revision. Updated production data during the first quarter was the main driver to this month’s revisions. However, high levels of risk and uncertainty remain associated with the FSU supply forecast. The expected growth in FSU supply remains limited compared to the 500 tb/d average growth over the past ten years.

All FSU major producers are still expected to experience supply growth in 2011, although lower in terms of volume compared to the previous years. On a quarterly basis, total oil supply in the FSU is expected to stand at 13.38 mb/d, 13.37 mb/d, 13.31 mb/d and 13.38 mb/d respectively. Other Europe is seen to remain flat in 2011 compared to the previous year at an average of 0.14 mb/d. China’s oil supply is anticipated to grow by 90 tb/d over the previous year to average 4.23 mb/d in 2011.

Russia
Russia oil production is forecast to increase by 50 tb/d over 2010 to average 10.19 mb/d in 2011, unchanged from the previous report. Despite the steady state, the supply outlook experienced a minor downward revision in the first quarter that did not influence the annual figure. According to the preliminary data, Russia oil supply in March experienced a minor decline compared to the previous month; however, on an annual basis, output in March indicated an increase of 70 tb/d.

Russian oil supply is expected to remain within the first quarter level until the second half of the year, where production is foreseen to slightly decrease. The current high price level is supporting companies to maintain the production levels in brown fields by controlling the decline in mature producing areas. Moreover, reports are suggesting that it is likely that the export duty for the Vankor field will rise in May to a standard level, a move that the field’s operator has voiced concerns, citing that it will affect field expansion to reach targeted output. On a quarterly basis, Russian oil supply is anticipated to average 10.21 mb/d,10.21 mb/d, 10.17 mb/d and 10.18 mb/d respectively. March preliminary data indicates that Russia’s production stood at 10.20 mb/d, down 20 tb/d from the previous month.

Caspian
Kazakhstan oil production is predicted to increase by 60 tb/d to average 1.65 mb/d in 2011, indicating a minor upward revision of 10 tb/d from last month. The upward revision reflected the updated production data in the early part of the first quarter, which was partially carried over throughout the year. On the other hand, reports are suggesting that some changes to the taxation system might occur, with a possibility of ending the tax exemption. On a quarterly basis, Kazakhstan supply is seen to stand at 1.67 mb/d, 1.64 mb/d, 1.63 mb/d, and 1.68 mb/d respectively.

Azeri oil supply is anticipated to increase by 20 tb/d to average 1.09 mb/d in 2011, representing a downward revision of 10 tb/d compared to the previous report. The revision was experienced due to adjustment to updated production data in the first quarter that came lower than expected. However, production is expected to increase slightly in the second quarter. On a quarterly basis, Azerbaijan oil supply is estimated to average 1.07 mb/d, 1.09 mb/d, 1.09 mb/d, and 1.10 mb/d respectively.

China
China’s oil production is estimated to average 4.23 mb/d in 2011, an increase of 90 tb/d over the previous year and an upward revision of 30 tb/d from the previous month. The strong production figures from the first two months required the upward revision, which was partially carried over to the rest of the year. In February, China oil production averaged 4.21 mb/d, slightly lower than the previous month but still representing y-o-y growth of 200 tb/d or 5%. The expected strong growth from relatively new projects is seen to support the increase in 2011. On a quarterly basis, China’s oil supply is seen averaging 4.24 mb/d, 4.21 mb/d, 4.22 mb/d, and 4.24 mb/d respectively.

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

OPEC crude oil production
Total OPEC crude oil production averaged 29.31 mb/d in March, according to secondary sources, a drop of 627 tb/d from last month. The crude oil output increases from Angola, Iraq, Saudi Arabia, Venezuela, Kuwait and the UAE partially offset the disruption in Libyan oil production in March. OPEC crude oil output, not including Iraq, averaged 26.56 mb/d in March, a drop of 690 tb/d from the previous month.

World Oil Supply
Preliminary figures indicate that global oil supply fell 0.29 mb/d in March to average 87.46 mb/d. Non-OPEC supply experienced a healthy increase of 0.34 mb/d, while total OPEC crude supply dropped by 0.63 mb/d. The share of OPEC crude oil production saw a minor decline to 33.5% in March from 34.1% in the previous month. The estimate is based on preliminary data for non OPEC supply, estimates for OPEC NGLs and OPEC crude production based on secondary sources.



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