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World Oil Supply - Aug 07

Source: OPEC_RP070802 8/14/2007, Location: Europe

Non-OPEC
Forecast for 2007
Non-OPEC oil supply is expected to average 50.33 mb/d in 2007, an increase of 0.88 mb/d over the previous year and a net downward revision of 85,000 b/d versus the last assessment. Downward revisions were made to Mexico, Norway, Brunei, Malaysia, Brazil, Colombia, Chad, Congo, Egypt, Sudan and Kazakhstan, partially offset by the upward revisions to USA, Canada, UK, Australia, New Zealand, Gabon, and South Africa. On a quarterly basis, total non-OPEC supply stands at 50.23 mb/d, 49.79 mb/d, 50.14 mb/d and 51.16 mb/d respectively with downward revisions of around 0.03 mb/d, 0.16 mb/d, 0.09 mb/d and 0.06 mb/d respectively compared with last month’s assessment. Historical figures for 2006 have been revised downward slightly by around 14,000 b/d.

OECD
Total OECD oil supply is expected to average 20.27 mb/d, an increase of around 84,000 b/d over last year’s figure. On a quarterly basis, OECD oil supply is expected to average 20.38 mb/d, 19.98 mb/d, 20.09 mb/d and 20.64 mb/d respectively. Growth in North America and OECD Pacific was partially offset by declines in the Western Europe group.

USA
Oil supply in the USA is expected to average 7.48 mb/d in 2007 representing an increase of 89,000 b/d over the 2006 figure and an upward revision of 17,000 b/d compared with last month’s assessment. The revisions for the first half of 2007 were mainly due to adjustments to actual data received and the return of the Prudhoe Bay production which suffered from the compound effect of a sharper decline rate and shutdowns due to technical problems. Upward revisions to the second half were mainly due to the coming onstream of the Deimos field in the Gulf of Mexico on 26 July which is expected to peak at 30,000 b/d by the 4Q07. Preliminary data for July show that production rose by around 63,000 b/d over the June figure.

Mexico and Canada
The total Mexican oil supply is expected to average 3.62 mb/d in 2007, a decline of around 72,000 b/d compared with 2006. The quarterly distribution stands at 3.58 mb/d, 3.59 mb/d, 3.67 mb/d and 3.64 mb/d respectively. The downward revision of around 8,000 b/d to the annual average was due to adjustments made to the second-quarter figures as actual data have been released and implemented. Preliminary data for July put production at 3.56 mb/d, a decline of 71,000 b/d.

Canadian oil supply is expected to average 3.29 mb/d in 2007, representing an increase of 120,000 b/d over 2006. The quarterly distribution stands at 3.30 mb/d, 3.18 mb/d, 3.26 mb/d and 3.42 mb/d respectively. The upward revision of around 10,000 b/d was due to the ramping up of the White Rose field which is currently producing at 136,000 b/d and expected to reach 140,000 by late 2007 or early 2008. Preliminary data for July show production of 3.12 mb/d, a significant 210,000 b/d over June, due to the return of some fields from scheduled maintenance.

Western Europe
Oil supply in OECD Europe is expected to average 5.25 mb/d in 2007, representing a drop of 127,000 b/d from the previous year. The quarterly figures are expected at 5.47 mb/d, 5.10 mb/d, 5.09 mb/d and 5.35 mb/d respectively. Most of the decline is expected to be contributed by Norway and Denmark while other Western Europe, especially Germany, is expected to increase 94,000 b/d over the 2006 figure due to non-conventional production.

Oil supply in OECD Europe is expected to average 5.25 mb/d in 2007, representing a drop of 127,000 b/d from the previous year. The quarterly figures are expected at 5.47 mb/d, 5.10 mb/d, 5.09 mb/d and 5.35 mb/d respectively. Most of the decline is expected to be contributed by Norway and Denmark while other Western Europe, especially Germany, is expected to increase 94,000 b/d over the 2006 figure due to non-conventional production.

Production in Norway in 2007 is expected to average 2.61 mb/d, representing a decline of 172,000 b/d compared with 2006. As mentioned in last month’s report, the earlier and heavier maintenance, in addition to the shutdowns of some fields in the North Sea, was behind the largerthan- expected losses. However, the downward revision of around 15,000 b/d for the year was mainly due to the loss of 8 days production from the 120,000 b/d Heidrun field on 20 July due to a valve leak in addition to adjustments for the second-quarter figure following the release of actual data. The preliminary July figure of around 2.57 mb/d represents a significant return of some of the major losses in May and June, an increase of around 402,000 b/d over the June figure.

The UK production level for 2007 is expected to average 1.70 mb/d, almost flat compared with the 2006 figure. The Buzzard field production of around 200,000 b/d has helped postpone UK production declining due to maturity and the technical problems. The downward revision by around 15,000 b/d was due to losses due to sulphur problems in the Buzzard field in addition to the release of actual data for the second quarter. UK preliminary production figure for July stands at around 1.60 mb/d, a drop of around 50,000 b/d from June, due to the unplanned shutdown of the Central Area Transfer System (CATS) which mainly deals with gas in addition to around 50,000 b/d of oil. Elsewhere, Denmark was revised down slightly following adjustments to actual figures while Germany experienced a minor upward revision of around 15,000 b/d from last month’s assessment.

Asia Pacific
Oil supply in the OECD Asia Pacific region is expected to average 0.63 mb/d in 2007, representing growth of 74,000 b/d compared with the 2006 figure. On a quarterly basis, total oil supply is expected to average 0.57 mb/d, 0.59 mb/d, 0.67 mb/d and 0.71 mb/d respectively.

Australia is expected to show growth of around 49,000 b/d over the 2006 figure, representing an upward revision of 7,000 b/d compared with last month’s assessment. The expected startup of the Puffin field in late August-September and ramp up to reach 30,000 b/d by late 2007 was behind the upward revision. July preliminary figure stands at around 0.51 mb/d which is 10,000 b/d less than the June figure.

New Zealand’s Tui field has already begun production and is expected to ramp up to its peak of 50,000 b/d by the end of the current year. The annual average it is expected to grow by 25,000 b/d over the 2006 figure to reach a level of 78,000 b/d in 2007.

Developing Countries
Oil supply in the Developing Countries (DCs) is expected to average 11.61 mb/d in 2007, representing an increase of 82,000 b/d over 2006. On a quarterly basis, total oil supply in DCs is expected to average 11.53 mb/d, 11.48 mb/d, 11.61 mb/d and 11.79 mb/d respectively. The Other Asia group is expected to have oil supply growth of around 15,000 b/d over 2006 to reach a level of 2.72 mb/d in 2007 with quarterly distribution averaging 2.72 mb/d, 2.69 mb/d, 2.73 mb/d and 2.75 mb/d respectively. Malaysia witnessed a downward revision of around 13,000 b/d due to adjustments to match actual figures and the schedule for the start-up and ramp up of the Kikeh field which is now expected to come on stream late 3Q07 with initial production of around 40,000 b/d and ramp up through 4Q07 and 1Q08 to reach a level of around 120,000 b/d. The preliminary July figure now stands at 0.69 mb/d, around 20,000 b/d less than the June figure. India’s annual figure has been revised upwardly by around 12,000 b/d as actual figures for the second quarter have been received. The annual figure now stands at 0.80 mb/d which represents a slight increase of around 18,000 over the previous year.

The African Group is expected to increase output by 97,000 b/d over the 2006 figure to reach a level of around 2.71 mb/d, a downward revision of around 90,000 b/d from the last assessment as the group performance was weaker than expected (mainly from Chad, Congo, Equatorial Guinea, Egypt, and Sudan). The quarterly distribution average now stands at 2.68 mb/d, 2.68 mb/d, 2.71 b/d and 2.75 mb/d respectively. Most of the growth is contributed by Sudan (105,000 b/d), Equatorial Guinea (14,000 b/d) and others (35,000 b/d) while declines are expected in Egypt, Congo and South Africa.

The Latin American group is expected to see a gain of 63,000 b/d over 2006 to reach a level of 4.50 mb/d with a downward revision of around 28,000 b/d mainly from Colombia as more actual data become available. The quarterly distribution is expected to average 4.44 mb/d, 4.42 mb/d, 4.50 mb/d and 4.63 mb/d respectively.

Output from the Middle East is expected to decline by 93,000 b/d to 1.68 mb/d, with losses coming from Oman, Syria and Yemen. On a quarterly basis, production is expected to average 1.70 mb/d, 1.69 mb/d, 1.67 mb/d and 1.65 mb/d respectively.

FSU, Other Regions
Oil supply in the FSU is expected to average 12.59 b/d, representing an increase of 0.57 b/d versus 2007 and a downward revision around 33,000 b/d mainly from Kazakhstan. On a quarterly basis, total oil supply in the FSU is expected to average 12.50 mb/d, 12.48 mb/d, 12.55 mb/d and 12.80 mb/d respectively. China is expected to grow by around 125,000 b/d in 2007 to reach a level of 3.80 mb/d. Also Other Europe is expected to stay flat over 2006 at 0.15 mb/d.

Russia
Russian oil supply is expected to average 9.89 mb/d in 2007, an increase of 239,000 b/d versus 2006. On a quarterly basis, Russian oil supply is expected to average 9.87 mb/d, 9.83 mb/d, 9.89 mb/d and 9.96 mb/d respectively. Upward revisions due to the progressive ramp up of the 160,000 b/d Salym field in addition to the expected startup of 150,000 b/d Yuzhno-Khylchuyskoye late 4Q07 were totally offset by downward revisions made to adjust the second-quarter figure as result of actual data becoming available. The net downward revision of the annual average figure was around 2,000 b/d.

Caspian
Azeri oil supply is expected to average 0.92 mb/d in 2007, representing an increase of 267,000 b/d versus 2006. The quarterly level now stands at 0.85 mb/d, 0.88 mb/d, 0.91 mb/d and 1.02 mb/d respectively.

Kazak oil production is expected to average 1.35 mb/d in 2007, representing an increase of 47,000 b/d versus 2006 and a downward revision of around 31,000 b/d as actual data for the second quarter become available. The quarterly supply figures are currently expected at 1.35 mb/d, 1.34 mb/d, 1.32 mb/d and 1.39 mb/d respectively.

China
Total oil supply is expected to average 3.80 mb/d in 2007, representing an increase of around 125,000 b/d over 2006 and a net upward revision of around 29,000 b/d versus last month’s assessment due to actual data for second-quarter production. The quarterly figures are expected to average 3.75 mb/d, 3.79 mb/d, 3.82 mb/d and 3.85 mb/d respectively.

Forecast for 2008 Non-OPEC oil supply is expected to average 51.40 mb/d in 2008, an increase of 1.07 mb/d over 2007 and a downward revision of around 25,000 b/d versus the last assessment. On a quarterly basis, non-OPEC supply is expected to average 51.54 mb/d, 50.97 mb/d, 50.96 mb/d and 52.13 respectively. Most of the revisions made for 2007 have been extended to 2008 as they affect the base forecast, while the latest information regarding project startups and ramp ups has also been taken into account.

In Canada, the Tucker project operated by Husky is now expected to startup by January 2008. China’s Peng Lai phase II is now expected to startup by the fourth quarter of 2008 and ramp up during 2009 to reach its peak of around 120,000 b/d. Gabon’s Onal and Avouna small fields have also been added with expected startups in 1Q08 and 3Q08 respectively and ramping up through the year to peak at 12,000 b/d and 18,000 b/d. In Malaysia, the ramp up schedule for Kikeh has been changed and is now expected to reach around 100,000 b/d by late 1Q08. The introduction of progressive ramp up in the Salym field operated by Shell in 2007 is expected to continue during 2008 in addition to the ramp up of the Yuzhno-Khylchuyskoye field which is operated by Lukoil and ConocoPhilips and expected to continue ramping up through 2009. In Vietnam, the Song Doc field operated by PetroViet is expected to startup in the 3Q08, peaking at 25,000 b/d by the end of 2008.

OPEC natural gas liquids and non-conventional oils
OPEC NGLs and non-conventional oils are expected to average 4.39 mb/d in 2007, an increase over 2006 of around 0.3 mb/d. In 2008, the level for OPEC NGLs is expected to average 4.91 mb/d, an increase of around 0.52 mb/d over the 2007 figure. This significant increase is mainly due to the introduction of various projects in Iran, Saudi Arabia, Qatar and the UAE.

OPEC crude oil production
Total crude oil production averaged 30.38 mb/d in July, an increase of 241,700 b/d over the June figure, according to secondary sources. OPEC production (excluding Angola and Iraq) averaged 26.57 mb/d, a gain of 44,700 b/d over June. Iraq’s oil production averaged 2.15 mb/d, an increase of 177,200 b/d over the previous month, while Nigeria’s oil production stood at 2.18 mb/d, a gain of 128,100 b/d over June.

World Oil Supply
Preliminary figures for the month of July indicate that world oil supply averaged 84.73 mb/d, representing a gain of 1 mb/d over the previous month, with OPEC crude share estimated at 35.9%. The estimate is based on preliminary data for non-OPEC supply, estimates for OPEC NGLs and OPEC crude production from secondary sources.

FSU net exports of crude and products
Total FSU net oil exports are expected to average 8.63 mb/d in 2007, an increase of 0.50 mb/d over the previous year. In 2008, total net oil exports are expected to average 9.10 mb/d or 0.47 mb/d over 2007.

Current trends
Actual figures for the month of May indicate that total crude exports from the FSU averaged 6.58 mb/d. The preliminary figures for June averaged 6.20 mb/d, a decline of 382,000 b/d from the previous month. Russian pipeline exports were down by around 310,000 b/d. The CPC pipeline also fell by 63,000 b/d in June compared with the previous month.

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