Canada and Mexico Oil Supply in December 2014

Source: OPEC 12/23/2014, Location: North America

Canada’s oil output is expected to grow by 0.18 mb/d in 2014 to average 4.18 mb/d, a downward revision of 10 tb/d from the previous MOMR. Canada’s supply growth remained the second-largest among all non-OPEC countries. Canada’s supply growth in 2014 has been driven mostly by crude bitumen and synthetic crude, nevertheless outages at the Kearl oil sands project will impact the oil sands production forecast; technical problems have remained since 10 November. Repair work could take several weeks to complete and production will be offline for a month.

Production at the Syncrude oil sands project increased by 80 tb/d from September, continuing its climb from August. Moreover, the expected startup of the Mildred Lake mine train at Syncrude in the fourth quarter of 2014 should help improve reliability, given that it adds redundancy. In addition, production at the Horizon oil sands project, which averaged 82 tb/d during the third quarter of 2014, registered a strong 123 tb/d in October. This is thought to have helped keep overall oil sands production in October at close-to-record levels of 2.18 mb/d. During the first three quarters, Canada’s supply averaged 4.17 mb/d, an increase of 0.21 mb/d from the same period one year earlier, but lower than growth of 0.24 mb/d achieved in 2013.

On a quarterly basis, production in 2014 is estimated to stand at 4.27 mb/d, 4.12 mb/d, 4.13 mb/d and 4.21 mb/d, respectively.

Mexico’s oil supply is seen to average 2.80 mb/d in 2014, denoting a decline of 90 tb/d from 2013 and revised down by 20 tb/d from the previous MOMR. Mexico’s liquids supply fell by 40 tb/d m-o-m to average 2.72 mb/d in October. During the first three quarters, Mexico’s supply averaged 2.83 mb/d, a decline of 60 tb/d from the same period in 2013. This was led entirely by a heavy crude oil decline, particularly from Cantarell, which fell y-o-y by 85 tb/d to average 0.29 mb/d and also the beginning of a gradual decline in KMZ complex fields and Ligero Marino. Mexico’s recently enacted energy reform means that Pemex will face competition for the first time since it was created as a state monopoly in 1938. Since a reintegration in Mexican crude production seems unlikely before end-2015, large projects like Ayatsil- Tekel are unlikely to come online in 2015. Hence, it is anticipated with the recent sharp drop in oil prices that Mexican oil output will decline faster than expected.

On a quarterly basis, Mexico’s production in 2014 is seen to average 2.87 mb/d, 2.85 mb/d, 2.77 mb/d and 2.73 mb/d, respectively.

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