Caspian and China Oil Supply – November 2011

Source: OPEC 11/27/2011, Location: Asia

Kazakhstan oil production is anticipated to increase by 20 tb/d in 2011 to average 1.62 mb/d, indicating a minor downward revision of 10 tb/d compared to the previous month. The downward revision affected third quarter supply as updated production data came slightly lower than expected. Tengiz oil field maintenance during the third quarter mainly caused the lower production. Reports suggested that 98% of the construction of the Kashagan first phase project was completed in October and the field is expected to start up by the end of 2012.

Kazakhstan production is expected to increase in the fourth quarter as maintenance comes to an end. During the first three quarters of 2011, Kazakhstan oil production increased by 20 tb/d on average, compared to the same period of 2010. On a quarterly basis, Kazakhstan oil supply is estimated to average 1.66 mb/d, 1.60 mb/d, 1.54 mb/d and 1.68 mb/d, respectively.

Azerbaijan oil production is expected to decline by 80 tb/d in 2011 to average 0.99 mb/d, representing a downward revision of 30 tb/d compared to the previous MOMR. The downward revision affected the second half of 2011 and a further downward revision seems to be on the horizon as heavy maintenance is planned for the Azeri-Chirag-Guneshli (ACG) fields. Each of the three ACG platforms is expected to be out of service for a period of two weeks in the fourth quarter. The Azerbaijan export programme in the fourth quarter indicates a sharp drop in volume. During the first three quarters, Azerbaijan oil supply decreased by 80 tb/d over the same period of 2010. On a quarterly basis, Azerbaijan oil output is expected to stand at 1.02 mb/d, 1.00 mb/d, m0.98 mb/d and 0.96 mb/d, respectively. China oil production is foreseen to increase by 30 tb/d in 2011 to average 4.15 mb/d, indicating a downward revision of 35 tb/d compared to last month. The downward revision was introduced to the second half of 2011 as updated production data indicated lower output than previously expected. Furthermore, updated reports suggested that the shutdown production of the Peng Lai field will remain offline during the fourth quarter which required a downward revision to the quarter’s estimation. Output from the Peng Lai field is then expected at a reduced level for an extended period of time.

Additionally, the shutdown of the Jinzhou 9-3 small output during October, due to leaks, negatively affected the outlook for the fourth quarter. Moreover, the new taxation system, applicable from November, is seen as putting some pressure on operators. On the other hand, the Changqing field output indicated further growth in 2011, reaching a new peak after forty years of production, which partially offset some of the decline. According to preliminary data, China oil production during the third quarter indicated a decline of 0.11 mb/d compared to the second quarter, mainly on the impact of offshore production shutdown. During the first three quarters of 2011, China oil supply increased by 90 tb/d compared to the same period in the previous year. On a quarterly basis, China oil supply is estimated to average 4.22 mb/d, 4.19 mb/d, 4.08 mb/d and 4.12 mb/d, respectively.


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