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World Oil Supply - Aug 13

Source: OPEC_RP130807 8/10/2013, Location: Europe

Non-OPEC
Forecast for 2013
Non-OPEC oil supply is expected to increase by 1.01 mb/d in 2013 to average 53.93 mb/d. In absolute terms, the non-OPEC supply forecast shows a minor upward revision of 10 tb/d compared to the previous Monthly Oil Market Report (MOMR). The anticipated growth in 2013 saw an upward adjustment of 20 tb/d compared to a month ago. A historical revision to the 2012 oil supply estimate partially led to the upward revision in 2013, while certain changes to individual countries’ supply profile further impacted the growth forecast. A few upward and downward revisions were introduced this month to supply expectations, mainly on updated production data as well as changes to the supply profile of individual countries.

The oil supply forecast for the 1H13 saw an upward revision while 3Q supply projections remained steady and 4Q oil supply estimates were revised down. Despite the downward revision, 4Q oil supply is seen to rebound from maintenance in 3Q. On a regional basis, OECD Americas was revised the most from a month ago, followed by Other Asia and Latin America. On a quarterly basis, non-OPEC supply is expected to stand at 53.80 mb/d, 53.70 mb/d, 53.88 mb/d and 54.34 mb/d, respectively.

OECD
Total OECD oil supply is forecast to increase by 0.67 mb/d in 2013 to average 21.74 mb/d, constituting an upward revision of 30 tb/d from the previous month. The supply forecasts for the US and Canada were revised up, while that for the Mexico and Denmark were adjusted down. OECD Americas remains the only region within the OECD with expected supply growth in 2013, while supply from OECD Europe and OECD Asia Pacific is expected to decline. On a quarterly basis, OECD oil supply is seen to average 21.71 mb/d, 21.70 mb/d, 21.63 mb/d and 21.94 mb/d, respectively.

OECD Americas
OECD Americas oil production is projected to average 17.69 mb/d in 2013, an increase of 0.95 mb/d over the previous year. This represents an upward revision of 40 tb/d from the previous MOMR, which came from the US and Canada, while Mexico’s supply estimate encountered a minor downward revision. OECD Americas supply is expected to have the highest regional growth among all the non-OPEC regions in 2013, supported by the strong growth forecasts from the US and Canada, as well as a limited decline from Mexico. According to preliminary data, the region’s supply averaged 17.64 mb/d during the 1H13, which is a significant 1.17 mb/d higher than the same period in 2012. On a quarterly basis, OECD Americas oil supply in 2013 is estimated to stand at 17.64 mb/d, 17.64 mb/d, 17.66 mb/d and 17.81, mb/d respectively.

US
US oil supply is forecast to average 10.79 mb/d in 2013, indicating growth of 0.76 mb/d over the previous year and an upward revision of 30 tb/d from the previous MOMR. This growth is the highest among all the non-OPEC countries. The upward revision was incorporated to adjust for updated production data during the 1H13 that was partly carried over to the rest of the year. The upward revision was supported mainly by the strong output of the tight oil. North Dakota oil production achieved a new record high in May as output exceeded the 800 tb/d for the first time. In May, despite the heavy rainfall that impacted drilling activities, North Dakota production averaged 810 tb/d, supported by a record number of wells of 8915 well. Furthermore, Texas oil production continued to increase supported by the growth from Eagle Ford basin, with output exceeding 2.5 mb/d in May, the highest monthly level since April 1982. Crude oil production from the Eagle Ford averaged 580 tb/d in May, a significant increase of more than 200 tb/d compared to same period a year earlier while the Permian basin production averaged 855 tb/d, a minor decline on a y-o-y basis.

The new platform for the Mars field has sailed and expected to start operations by the end of the year toward 2014 and support the output. The start-up of the new NGL facilities in Utica Ohio is seen to further support the growth in the US in 2013. Moreover, the start-up of the US first commercial scale quantities of cellulosic ethanol in Florida is seen to support the anticipated growth despite the volume being small. On the other hand, Alaska oil supply continued to decline with reports providing that June 2013 ending fiscal year indicated an annual decline of 8% from the same period a year earlier and average 533 tb/d. According to preliminary and estimated data, US oil supply averaged 10.78 mb/d during the first half of 2013, a growth of 1.0 mb/d compared to the same period a year earlier. On a quarterly basis, US oil supply is expected to average 10.63 mb/d, 10.94 mb/d, 10.76 mb/d and 10.83 mb/d, respectively.

Canada and Mexico
Canada’s oil supply forecast has been revised up by a slight 15 tb/d from the previous month. It now averages 4.01 mb/d in 2013, representing at 0.24 mb/d above the previous year, the highest annual growth since 1974. The upward revision came only from the first quarter to adjust for updated production data. Canada supply forecast indicates that 2Q output is seen to decline as maintenance is seen impacting oil sand production. Additionally, the severe flooding that caused the shutdown of part of major pipeline and let to reduction of production from some projects, is seen impacting 2Q supply. The Kearl project is ramping up toward the peak capacity of 110 tb/d by the year end and 2014. During the 1H13, Canada’s oil supply increased by 0.22 mb/d from the same period of 2012. On a quarterly basis, Canada oil supply is seen to average 4.08 mb/d, 3.82 mb/d, 4.02 mb/d and 4.12 mb/d, respectively.

Mexico’s oil supply is projected to average 2.88 mb/d in 2013, a decline of 50 tb/d from the previous year, indicating a minor downward revision of 5 tb/d compared to previous month. The downward revision came on the back of updated production figures in the 2Q that was partially carried over to the rest of the year. The downward revision came despite June production indicated an increase from the previous month, marking the highest monthly level since February. According to recent production data, Mexico oil supply averaged 2.89 mb/d during the 1H13, constituting a minor decline of 40 tb/d from the same period of 2012. According to field data, the Cantarell field output continue to be in slow decline so far in 2013. Moreover, the lowering of the production target by the national operators for 2013 is seen in line with Mexico’s forecast. On a quarterly basis, Mexico’s oil supply is expected to average 2.91 mb/d, 2.87 mb/d, 2.87 mb/d and 2.85 mb/d, respectively.

OECD Europe
Total OECD Europe oil supply is forecast to decrease 0.23 mb/d in 2013 to average 3.55 mb/d, representing a downward revision of 10 tb/d from the previous MOMR. Oil supply from all major producers in the region is seen to decline in 2013. On a quarterly basis, OECD Europe supply is expected to stand at 3.62 mb/d, 3.56 mb/d, 3.43 mb/d and 3.58 mb/d, respectively. According to preliminary data, OECD Europe supply averaged 3.59 mb/d during the first half of 2013, a decline of 0.41 mb/d from the same period of 2012.

Norway’s oil production is predicted to decline by 0.12 mb/d from 2012 to average 1.80 mb/d in 2013, unchanged from previous MOMR. Despite the steady state from previous month, Norway oil supply projection encountered upward and downward revisions that offset each other. The 2Q supply estimate experienced an upward revision on updated production data that came slightly higher than expected. The second half supply encountered a downward revision on the back of reported fields shutdown and maintenance. Norway oil supply is expected to decline in the 3Q compared to the 2Q as further maintenance and shutdowns are seen in the horizon. The restart of the Ekofisk output by the end of July is part of the maintenance program. The field output averaged 50 tb/d in June compared to 200 tb/d in previous month. Technical difficulties continued to impact Norway oil production as first half oil production averaged 1.82 mb/d, a decline of 200 tb/d compared to the same period a year earlier. On a quarterly basis, Norway oil supply is expected to average 1.83 mb/d, 1.82 mb/d, 1.72 mb/d and 1.82 mb/d, respectively.

UK oil supply is estimated to average 0.89 mb/d in 2013, a decline of 60 tb/d compared to previous year, unchanged from previous MOMR. The expected 2013 annual average is the lowest level for the UK since 1977. The experienced shutdowns on technical background of some fields were covered by the forecast and required no further revisions. The short shutdown of the Buzzard field in June and reduced output in July on technical reason did not impact the projection. The UK oil supply in the 3Q is expected to decline compared to the 2Q as the upcoming maintenance of the Forties field in August as well as other fields is seen to limited production. According to preliminary data, UK oil supply declined by 0.15 mb/d during the 1H13, compared with the same period in 2012. On a quarterly basis, the UK oil production is seen to stand at 0.92 mb/d, 0.90 mb/d, 0.85 mb/d and 0.91 mb/d, respectively.

OECD Asia Pacific
OECD Asia Pacific oil production is forecast to average 0.51 mb/d in 2013, a drop of 50 tb/d from 2012, flat from last month. On a quarterly basis, OECD Asia Pacific oil output is estimated to average 0.45 mb/d, 0.50 mb/d, 0.53 mb/d and 0.54 mb/d respectively.

Australian oil supply is expected to decline by 50 tb/d in 2013 to average 0.43 mb/d, unchanged from the previous month assessment. The steady state came on the back of the negative impact of the maintenance at the North West Shelf production facilities offset by the ramp-up of the Montara oil production. During the 1H13, Australia oil supply averaged 0.40 mb/d, a decline of 80 tb/d compared to the same period a year earlier. The decline came on the back of the impact of the weather and maintenance on production, especially during the 1Q, which averaged 0.37 mb/d, the lowest level since the 3Q of 1972 for Australia. Production is seen to increase in the 3Q and 4Q as new volume is expected to support Australia output in 2013. On a quarterly basis, Australia oil supply is seen to stand at 0.37 mb/d, 0.42 mb/d, 0.46 mb/d and 0.47 mb/d, respectively.

Developing countries
Total developing countries’ (DC) oil supply is forecast to average 12.19 mb/d in 2013, representing an increase of 70 tb/d over 2012 and a downward revision of 35 tb/d from the previous month. Latin America and Africa are the only two regions with forecast supply growth, while the Middle East production is expected to experience declines in 2013 and Other Asia output is estimated to remain steady. The downward revision to the DCs’ supply forecast came from Other Asia and Latin America, while The Middle East and Africa remained steady from the previous MOMR. Latin America is now forecast to experience the fourth-largest increase among all non-OPEC regions, supported by Colombia. On a quarterly basis, total supply in the DCs is seen to average 12.10 mb/d, 12.04 mb/d, 12.30 mb/d and 12.33 mb/d, respectively. According to preliminary and estimated data, DC oil supply averaged 12.07 mb/d during the 1H13, a decrease of 80 tb/d compared to the same period a year earlier.

Other Asia’s oil supply is expected to remain relatively steady in 2013, averaging 3.65 mb/d, compared with a year earlier, with a minor increase of 10 tb/d, indicating a downward revision of 15 tb/d from the previous month. Malaysia oil supply encountered the only revision among the region’s countries. Oil production from Malaysia, Thailand and Vietnam is expected to encounter growth while Indonesia and India output is seen to decline in 2013.

India’s oil supply is seen to average 0.87 mb/d in 2013, a minor decline of 10 tb/d compared to previous year, and flat from previous MOMR. Indonesia’s oil supply is expected to average 0.93 mb/d, a decline of 50 tb/d from the previous year. The decline is seen coming from limited new development and decline in mature producing areas. The government reduced the output target on the back of the actual data.

During the 1H13, Indonesia oil supply averaged 0.93 mb/d, a drop of 70 tb/d compared to the same period a year earlier. On a quarterly basis, Other Asia’s supply is forecast to stand at 3.64 mb/d, 3.59 mb/d, 3.68 mb/d and 3.69 mb/d, respectively.

Vietnam’s supply is expected to increase by 10 tb/d in 2013 and average 0.40 mb/d, flat from the previous MOMR. Malaysia’s supply is seen to average 0.71 mb/d in 2013, an increase of 50 tb/d, indicating a downward revision of 20 tb/d compared to previous month. This growth is the highest among the region’s countries. The ramp-up of production Gumusut field is expected to drive the growth in 2013.

Latin America’s oil production is projected to increase by 80 tb/d over 2012 to average 4.75 mb/d in 2013, indicating a downward revision of 15 tb/d from the previous month. The revision took Latin America’s growth to fourth on the list from among all the non-OPEC regions. Colombia is expected to support this growth, while Argentina and Trinidad and Tobago are seen to decline slightly in 2013 and Brazil remain steady.

Argentina’s supply is expected to decline by 20 tb/d in 2013 to average 0.67 mb/d, indicating a downward revision of 20 tb/d from the previous MOMR. This revision came from a historical data update. Compared with the same period of 2012, Argentina’s supply dropped 30 tb/d in the 1H13, as per preliminary data. The decline is expected despite the conclusion of the deal to develop the Vaca Muerta shale in Argentina, where minor volume from shale formation is reported from the drilling activities.

Colombia’s supply is expected to average 1.03 mb/d in 2013, representing growth of 80 tb/d, unchanged from the last month. The strong growth remains expected despite the production figure coming below the 1.0 mb/d for the first time in 2013, due to pipeline damages on security issues. Accordingly, the risk remains whether the security situation will continue to impact the supply in the coming period.

According to preliminary data, Latin America’s oil supply averaged 4.67 mb/d during the 1H13, a minor decline of 20 tb/d compared to the same period a year earlier. On a quarterly basis, Latin America’s supply is expected to stand at 4.68 mb/d, 4.66 mb/d, 4.82 mb/d and 4.85 mb/d, respectively.

Brazil’s oil supply is forecast to remain steady in 2013 and average 2.60 mb/d, indicating a minor upward revision of 10 tb/d to the previous MOMR. The revision was introduced to partly adjust for updated production data in the 2Q that turned out to be higher than expected. Brazil oil supply remained below last year level in the 1H13 and the forecast steady state is seen as output is expected to rebound in the 2H13. In May, Brazil oil supply indicated a monthly increase. However, it remained below last year’s levels mainly on maintenance. Brazil oil production in May averaged 2.56 mb/d, 20 tb/d lower than May 2012. The monthly y-o-y decline continued in May and has now reached 14 consecutive months. According to preliminary data, Brazil oil supply averaged 2.54 mb/d in the 1H13, a decline of 100 tb/d compared to the same period a year earlier. On a quarterly basis, Brazil’s oil supply is seen to stand at 2.54 mb/d, 2.54 mb/d, 2.65 mb/d and 2.67 mb/d, respectively.

Middle East oil supply is expected to decrease by 100 tb/d from 2012 to average 1.40 mb/d in 2013, representing a minor downward revision of 5 tb/d from the previous month. Within the Middle East, supply from Oman and Bahrain is expected to grow in 2013, while output in Yemen and Syria is seen to decline.

Oman’s production is forecast to average 0.94 mb/d in 2013, representing growth of 20 tb/d from the previous year and flat from the last MOMR. Yemen’s oil supply is seen to average 0.17 mb/d in 2013, a decline of 10 tb/d from previous year and a downward revision of 5 tb/d from last month. The downward revision came on the back of continued damages on Marib pipeline that led to production shutdown. Reports suggested the Yemen oil production dropped to 100 tb/d in May due to various attacks. Syria’s oil production is estimated to average 90 tb/d in 2013, a decline of 0.12 mb/d compared to previous year and unchanged from last MOMR.

The Middle East supply forecast remains associated with a high level of risk mainly due to unavailability of data and the political situation. On a quarterly basis, Middle East supply is seen to average 1.47 mb/d, 1.37 mb/d, 1.40 mb/d and 1.35 mb/d, respectively.

Africa’s oil production is anticipated to increase by 80 tb/d in 2013 to 2.39 mb/d, unchanged from the previous MOMR. Despite the steady state, there were minor upward and downward revisions that offset each other. In Africa, oil production from South Sudan and Sudan and Ghana is seen to experience annual growth while supply from other countries is seen to either remain flat or decline.

Equatorial Guinea oil supply is seen to remain steady in 2013 and average 0.31 mb/d. The start-up of the Alen field by end of July is seen to support the production and offset the decline from mature producing areas. Similarly, the expected start-up of the Badila oil field in Chad in the 3Q is seen to support the output to remain stable in 2013 and average 0.13 mb/d. Ghana oil supply is seen to increase despite the technical issues that is reported to curtail the Jubilee field average in 2013 at 95 tb/d, lower than the project capacity of 120 tb/d.

South Sudan and Sudan oil production is seen to average 0.21 mb/d in 2013, an increase of 90 tb/d from previous year and a minor upward revision of 5 tb/d from previous MOMR. The revision came to adjust for updated production data, while the ongoing situation between the two nations is driving to adopt wait and see mode regarding the forecast. Sudan issued a deadline to halt oil export from South Sudan due to political issue. In July, South Sudan started a gradual shutdown as the deadline of 7 August approached. Reports suggested that South Sudan output reach more than 200 tb/d and came down to 100 tb/d in July. Sudan deadline was postponed to 22 August. Accordingly, the coming period will be crucial for South Sudan and Sudan oil supply forecast and risk remains on the high side.

On a quarterly basis, supply from Africa is expected to average 2.32 mb/d, 2.42 mb/d, 2.40 mb/d and 2.44 mb/d, respectively.

FSU, Other regions
Total FSU oil supply is estimated to increase by 0.11 mb/d in 2013 to average 13.41 mb/d, representing an upward revision of 10 tb/d from the previous month. The revision came from Kazakhstan and Azerbaijan, while the supply forecast for Russia remained steady from the previous MOMR.

Russia and Kazakhstan supply is expected to drive the growth in the FSU, while Azerbaijan supply is seen as declining in 2013. According to preliminary data, FSU supply averaged 13.41 mb/d in the 1H13, an increase of 0.11 mb/d from the same period of 2012. On a quarterly basis, total FSU supply is forecast to average 13.44 mb/d, 13.38 mb/d, 13.45 mb/d and 13.41 mb/d, respectively. Supply in China is seen to increase by 0.10 mb/d to average 4.27 mb/d in 2013. Other Europe’s supply is expected to remain unchanged from 2012 and average 0.14 mb/d in 2013.

Russia
Russia’s oil production is forecast to increase by 80 tb/d to average 10.45 mb/d in 2013, unchanged from the previous MOMR. The expected growth in 2013 is the lowest since 2008. Preliminary data indicated that Russia’s supply averaged 10.40 mb/d in July, lower by 100 tb/d from the new record of June production. Despite the decline from the previous month, July’s healthy production level is in line with the forecast. Russian authorities approved a government proposal on tax breaks for developing hard-to-recover reserves, which includes tight oil developments, seen as supporting future oil production. The risk to the forecast remains high, especially on price, decline rates, and technical and taxation developments. According to preliminary data, Russia’s supply averaged 10.45 mb/d during the first seven months of the year, indicating an increase of 0.12 mb/d on the same period of 2012. On a quarterly basis, Russia oil production is seen to average 10.45 mb/d, 10.47 mb/d, 10.44 mb/d and 10.44 mb/d, respectively.

Caspian
Kazakhstan’s oil production is projected to increase 50 tb/d in 2013 and average 1.64 mb/d, representing a minor downward revision of 5 tb/d from the previous MOMR. The downward revision was effected in 2H13 due to the delay of the Kashagan startup. The oil minister of Kazakhstan provided that the start-up of the field will be “no later” than October 2013 despite other reports of possible delays up until April of next year, partially due to upcoming winter season. The operators of the fields also maintain that the field will start-up in 2013.

According to preliminary data, Kazakhstan oil production averaged 1.64 mb/d in the 1H13, an increase of 40 tb/d compared to the same period in 2012. On a quarterly basis, Kazakhstan oil production is estimated to stand at 1.68 mb/d, 1.60 mb/d, 1.63 mb/d and 1.66 mb/d, respectively.

Azerbaijan’s oil production is forecast to decline 30 tb/d in 2013 and average 0.87 mb/d, representing an upward revision of 15 tb/d compared to last month. The upward revision came on the back of updated production data in the 2Q that came slightly higher than previously expected and was carried over to the rest of the year. The drop in Azeri oil supply in 2013 is seen on the back of limited new development and decline in mature producing areas.

According to preliminary data, Azerbaijan oil production averaged 0.87 mb/d during the 1H13, a decline of 70 tb/d compared to the same period a year earlier. On a quarterly basis, Azerbaijan’s supply is forecast to stand at 0.87 mb/d, 0.86 mb/d, 0.86 mb/d and 0.87 mb/d, respectively.

China
China’s oil supply is forecast to average 4.27 mb/d in 2013, which is 0.10 mb/d higher than the previous year, unchanged from the last MOMR. China’s oil supply averaged 4.32 mb/d in June, 70 tb/d more than the previous month, and the highest level since September 2012. Oil production from China is seen to remain at the same level in the coming months, with some increases. During 1H13, China oil supply averaged 4.25 mb/d, an increase of 0.16 mb/d compared to the same period a year earlier. On a quarterly basis, China oil output is seen to stand at 4.24 mb/d, 4.27 mb/d, 4.26 mb/d and 4.30 mb/d, respectively.

Forecast for 2014
Non-OPEC oil supply in 2014 is expected to grow by 1.15 mb/d to average 55.08 mb/d, indicating an upward revision of 20 tb/d to the average, while expected growth has increased 10 tb/d from the previous MOMR. Historical revisions to 2012 and 2013 have been carried over to the 2014 supply forecast. On a regional basis, OECD Americas is expected to have the highest growth in 2014, followed by Latin America, the FSU and Africa, while OECD Europe is seen to decline. On a quarterly basis, non-OPEC supply in 2014 is expected to average 54.67 mb/d, 54.57 mb/d, 54.98 mb/d and 56.09 mb/d, respectively.

Revisions to the 2014 forecast
The oil supply forecasts for the US, Indonesia and Azerbaijan have seen some upward revisions for 2014, while the supply projections for Mexico, Norway, Argentina, Ghana and Kazakhstan have been revised down. The revisions were due to changes to the 2011 and 2012 estimates, as well as changes to the 2013 forecast, which were carried over to 2014.

OPEC natural gas liquids and non-conventional oils
Production of OPEC natural gas liquids (NGLs) and non-conventional oils in 2013 are expected to increase by 0.21 mb/d over the previous year to 5.87 mb/d. In 2014, OPEC NGLs and non-conventional oils are forecast to grow by 0.15 mb/d to 6.01 mb/d.

World Oil Supply
Preliminary figures indicate that global oil supply increased by 0.08 mb/d in July to average 89.95 mb/d. Non-OPEC supply saw growth of 0.17 mb/d, while OPEC crude production decreased by 0.10 mb/d. The share of OPEC crude oil in global production remained steady at 33.7%. 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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