World Oil Supply - October 2015
Source: OPEC_RP151007 10/13/2015, Location: EuropeNon-OPEC oil supply is estimated to average 57.24 mb/d in 2015, an increase of
0.72 mb/d over the previous year. Growth was revised down by 0.16 mb/d from
last month’s estimation, on the prediction that US supply declines are likely to
accelerate, given the persistently low oil prices. OECD Americas and Africa oil
supply were revised down, whereas in other regions, particularly OECD Europe,
Other Asia, Latin America and the FSU, supply figures were revised up, partially
offsetting the downward revisions.
Non-OPEC oil supply in 2016 is now forecast at an average of 57.11 mb/d, a contraction of 0.13 mb/d from 2015 levels. This is 0.29 mb/d lower than the previous MOMR’s forecast and is based on an expected steeper production decline in US shale plays, and legacy wells outnumbering newly drilled wells, as well as the negative effects of capex cuts in different regions of the world. Production of OPEC NGLs is forecast to grow by 0.19 mb/d and 0.17 mb/d to average 6.01 mb/d and 6.18 mb/d in 2015 and 2016, respectively. In September, OPEC production increased by 109 tb/d to average 31.57 mb/d, according to secondary sources. As a result, preliminary data indicates that global oil supply decreased by 0.34 mb/d in September to average 94.16 mb/d.
Forecast for 2015
Non-OPEC supply
US tight oil production – the main driver of non-OPEC supply growth – has been declining since May 2015. This downward trend should accelerate in 2H15 and 1H16, given various factors including persistently low oil prices, highly leveraged balance sheets, and increasingly costly debt, coupled with a more cautious approach by equity investors who will limit the availability of cash to allow producers to sustain operations.
Hence, the number of newly-drilled wells is decreasing and the number of active drilling rigs has declined by around half. Furthermore, the high decline rates for tight oil wells pose a serious problem for legacy wells as, within three to five years, these wells produce less than 20% of their initial production capacity. The US and Canada combined saw the highest output of all non-OPEC countries with growth of 2 mb/d in 2014, which mostly came from unconventional sources of shale and tight plays, as well as oil sands. However, persistently low oil price levels have caused the US shale oil sector to shrink. Shale drillers in the US have slashed spending and cut the number of workers this year as prices have fallen. The Chesapeake Energy Corporation, the second-largest producer of natural gas and the eleventh largest producer of combined oil and natural gas liquids in the US, has cut 15% of its workforce.
Chevron is cutting 1,500 jobs worldwide as part of its drive to reduce internal costs at multiple operating units and in the corporate sector. Statoil has also implemented further cost reductions in the current year. The company previously estimated 2015 capital expenditure at $18 billion, down around 10% from the previous estimate of $20 billion. But the target has now been reduced further to $17.5 billion. Oilfield service companies, such as Schlumberger and Halliburton, have also seen job cuts as crude prices began plummeting last year. However, other majors and the large US independents have tried to hold on to their employees on the grounds that it is difficult to rehire skilled workers once the market turns and companies get ready to ramp up operations again.
Outside North America, for instance in the UK, the current climate remains unattractive to investors, given the low oil prices, the steep decline rates, the high decommissioning costs and the general unfavorable fiscal regime.
Non-OPEC oil supply growth will decelerate sharply in 2015, from the tremendous growth of 2.24 mb/d achieved in 2014, to grow by only 0.72 mb/d to average 57.24 mb/d. This represents a decline of 0.19 mb/d from the previous report. US shale producers will not be able to raise the capital they need to sustain their production and this will cause such a sharp decline in US oil output in 2016. It is true that the US oil and gas industry has made progress in improving efficiencies and lowering costs, but crude prices below $45/b are having an impact. Canadian producers are also struggling to tolerate the low oil prices. It is expected that around seven major projects in the oil sands will be delayed or put on hold until prices recover. However, enough projects are continuing to realize growth in 2016, albeit at a very modest level.
Nevertheless, higher-than-expected oil production from non-OPEC producers outside North America was seen during 2Q15 and 3Q15. Production in the North Sea, China, Asia, Latin America and Russia and even recently in Oman, indicates there is still room for growth in other prospective regions. China is considering opening up further conventional oil and natural gas exploration acreage to the private sector, following a recent licensing round in areas that previously failed to attract much interest. China collects a 6% resource tax on oil and gas output, but the government may allow local officials to start to set their own rates since the oil price fall has hit their coffers hard.
Non-OPEC supply growth is expected to experience a decrease of 0.89 mb/d in 2H15. Uncertainties in relation to non-OPEC production in the near-to-short term, such as the US tight oil decline rate, Brazil’s financial issues, Middle East geopolitics and IOCs’ downward spending revisions, all indicate further downward risk for the remainder of 2015.
Another indication of uncertainty in the production growth outlook of non-OPEC oil producers in the coming months will be the number of active rigs around the world, particularly in regions where the oil production breakeven point is much higher than the current oil price – from unconventional sources or deep offshore and the North Sea.
OECD
Total OECD oil supply in 2015 is expected to grow by 0.48 mb/d to average 24.68 mb/d, a downward revision of 0.18 mb/d from the previous MOMR. Output in 2Q15 and 3Q15 was revised down by 0.12 mb/d to average 24.77 mb/d and 0.16 mb/d to average 24.46 mb/d, respectively. Y-o-y growth in 2015 is expected to come from OECD Americas and OECD Europe with 0.47 mb/d and 0.06 mb/d, respectively, while OECD Asia Pacific is forecast to decline by 0.05 mb/d compared to last year. On a quarterly basis, total OECD supply in 2015 is estimated to average 25.04 mb/d, 24.77 mb/d, 24.46 mb/d and 24.44 mb/d, respectively.
OECD Americas
OECD Americas’ oil supply in 2015 is estimated to average 20.56 mb/d, showing growth of 0.47 mb/d y-o-y and representing a downward revision of 0.2 mb/d from the previous month’s report. Supply in the US and Canada is expected to grow in 2015, while Mexico will decline. On a quarterly basis, OECD Americas’ oil supply in 2015 is expected to average 20.92 mb/d, 20.56 mb/d, 20.41 mb/d and 20.36 mb/d, respectively.
US
Until this year, US oil output was growing at the fastest rate on record, adding around 1 mb/d of new supply each year, thanks to the introduction of new drilling techniques that have released oil and gas from shale formations. However, recent data shows that US output has already begun to decline after reaching a peak of 9.6 mb/d in April, although production in some big shale patches, including North Dakota, has held steady, based on actual data. Hence, US total oil supply is anticipated to grow by 0.63 mb/d to average 13.60 mb/d in 2015, representing a downward revision of 0.15 mb/d from the previous month’s report. US actual liquids production was registered at 13.83 mb/d in July, indicating a decline of 0.03 mb/d m-o-m. At the same time, US total crude oil production increased by 0.09 mb/d to average 9.36 mb/d following two months of decline in May and June. In Texas, the two main tight oil plays, Permian and Eagle Ford, showed declines of 12 tb/d m-o-m to average 3.45 mb/d in July. Oil production from the Gulf of Mexico increased by 147 tb/d to average 1.58 mb/d, while output in North Dakota, mainly from Bakken in the Williston Basin was steady at around 1.2 mb/d in July. While the latest EIA monthly data for July showed a 94 tb/d m-o-m increase in crude output, the fact is this was entirely due to rising GoM production, following the completion of heavy maintenance work across May and June.
Oil production from Alaska was also more or less stagnant at an average of 0.45 mb/d. In a more longer-term development, Royal Dutch Shell announced that it was giving up on efforts to produce oil and gas in Alaska’s Arctic waters. The company has spent more than $7 billion exploring for oil in Alaska's Arctic, going through a years- long regulatory gauntlet and attracting criticism from environmental groups. Shell pushed forward in the hope of finding a big new source of future revenue and establishing expertise and a presence in the Arctic, which geologists estimate holds a quarter of the world’s undiscovered conventional oil and gas. The company also held the hopes of the state of Alaska, which has seen oil production and revenues decline sharply in recent years, as well as the US oil industry in general, which looked to Alaska's offshore Arctic as the next source of oil big enough to keep the country among the top three oil producers. But Shell, drilling to 6,800 feet about 80 miles offshore in the Chukchi Sea off Alaska's northwest coast and supported by a 28-vessel flotilla, was not able to find much.
The average of US crude oil production in August and September, based on the EIA weekly report, indicates a decline of about 0.33 mb/d compared to the average output (weekly data) of June and July. Therefore, it is expected that US liquids production in 3Q15 will decline by 0.36 mb/d over 2Q15 to average 13.51 mb/d and then fall by another 0.15 mb/d in 4Q15 to 13.36 mb/d. Four out of seven major US shale plays are expected to see a decline of 80 tb/d with production settling at 5.20 mb/d in October compared to September, according to the EIA data. The data focuses on the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian and Utica sites, which altogether accounted for 95% of the US oil production increases. The monthly drop will again be led by Eagle Ford, where output is expected to fall by 62 tb/d in October to settle at 1.42 mb/d. Production from the Bakken site in October is forecast to fall by 21 tb/d to 1.18 mb/d. However, production in the Permian basin has continued to grow, with output expected to increase by 23 tb/d to reach 2.02 mb/d in October. Overall, based on the downward trend observed since May, total US production is forecast to continue declining in coming months.
US liquids q-o-q changes compared to other non-OPEC supply can be seen in the graph below.
On a quarterly basis, US oil supply in 2015 is expected to average 13.66 mb/d, 13.87 mb/d, 13.51 mb/d and 13.36 mb/d, respectively.
Canada and Mexico
Oil supply in Canada is expected to grow by 0.05 mb/d in 2015 to average 4.36 mb/d y-o-y, a downward revision of 40 tb/d from the previous month. Final June data shows conventional output fell in June by 0.17 mb/d y-o-y to 1.19 mb/d, the lowest level since August 2012. Moreover, output of NGLs declined to 0.69 mb/d. The onshore rig count fell to just 70 rigs in September, lower y-o-y by 152, suggesting conventional declines have continued.
Preliminary estimates place July Canadian output lower m-o-m by 70 tb/d to average 4.23 mb/d. In June, output from Canada’s oil sands increased by 0.43 mb/d to settle at 2.41 mb/d, driven by a 90 tb/d y-o-y increase in Syncrude's joint-venture upgrader production. While August saw Canadian output remain flat m-o-m, production from Syncrude's 0.33 mb/d upgrader likely declined by 0.2 mb/d in September, due to an unplanned outage. This has been further compounded by reduced rates at Nexen’s Long Lake upgrader. It was forced to cut output by the Alberta Energy Regulator, following a safety inspection which revealed unsafe pipelines.
Canadian output in 2Q15 was lower y-o-y by 60 tb/d at 4.13 mb/d. Canadian oil output in 2Q15 unexpectedly saw a huge decline by 0.47 mb/d compared to 1Q15, which was not only due to the seasonal pattern, but also as a result of a wildfire in Alberta.
It is worth mentioning that 8 projects out of 13 have started up in Canada so far in 2015. The implemented projects are:
-Thick wood – Sunshine A1 April 2015
-Cold Lake Nabiye April 2015
-Foster Creek F January 2015
-Foster Creek G April 2015
-Rush Lake May 2015
-South White Rose extension project (offshore) Late June 2015
-Kearl Mining project with peak capacity 220 tb/d Mid-June 2015
-Surmont 2, in situ/SAGD project, capacity 118 tb/d September 2015
The other five major oil sands projects have been delayed or put on hold until prices recover. But enough projects are continuing to realize growth in 2016, albeit at a very modest level. In mid?June, Imperial Oil announced the start?up of the 110 tb/d expansion at its Kearl mining project, ahead of the original schedule that was slated for year?end. If capacity is reached, the Kearl project is expected to produce 220 tb/d. In September, ConocoPhillips delivered first oil at its Surmont 2 in situ facility, the largest SAGD project undertaken to date. Production is expected to ramp up through 2017, adding approximately 118 tb/d to gross capacity.
Canada’s overall rig count at the end of September decreased by 24 units to reach a total of 182. The number of active rigs in Alberta, the main state for oil sands production, also decreased by nine rigs to 120 units. Nevertheless, Alberta’s rigs were down by around 53% y-o-y, and Canada’s overall rig count fell by 205 rigs.
On a quarterly basis, Canada’s oil supply in 2015 is expected to average 4.60 mb/d, 4.13 mb/d, 4.29 mb/d and 4.42 mb/d, respectively.
Mexico’s liquids production in 2015 is expected to decline significantly by 0.21 mb/d to average 2.60 mb/d. Liquids output in 3Q15 increased by 10 tb/d to average 2.60 mb/d, but preliminary data shows that crude output increased by 40 tb/d to average 2.26 mb/d in the same quarter, although output in August and September declined slightly compared to July. Mexico’s oil supply in 3Q15 declined by more than 6% (170 tb/d) over the same quarter a year earlier. Mexico also produced 0.33 mb/d of NGLs in 3Q15.
Output from the Ku-Maloob-Zaap cluster (KMZ) fell below 0.77 mb/d, the lowest level since November 2008 and likely due to unplanned maintenance works. Y-o-y the figure was down by 85 tb/d, the steepest decline in over 10 years. Cantarell’s decline was back to 0.1 mb/d in August, while the y-o-y fall at Ligero Marino doubled m-o-m to 43 tb/d. Moreover, Pemex conducted works at the 49 tb/d light crude producing Samaria field in the second half of August, which offset the recovery in Chuc (where output returned to y-o-y growth for the first time in six months) and Ixtal’s output after the fire at the Abkatun oil platform in April. September has seen crude output remain broadly flat m-o-m, with the y-o-y decline easing to 0.12 mb/d, although KMZ’s production has recovered back to 0.84 mb/d.
Mexican state oil company Pemex has received final approval from the country's energy ministry for its plans to seek farm-out partners for several oil fields. In late September, the CNH, Mexico's upstream regulator, assessed Pemex's requests to farm out stakes in 12 oil fields, which would be divided into seven contracts, and determined that the plans were in the national interest. The farm-outs would be Pemex's first since a 2013 constitutional reform ended its 76-year oil and gas monopoly. Pemex had originally planned to farm-out stakes in 10 upstream projects by the end of 2015, as part of the country's first post-reform bid round, which was launched last year.
The first auction, for 14 shallow-water exploration blocks, took place in July 2015 and saw just two blocks awarded. The most recent one, for five other shallow water blocks with certified reserves, was held in late September and saw three blocks taken up. The farm-out auction is now generally expected sometime next year. On a quarterly basis, Mexico’s oil supply in 2015 is seen to average 2.65 mb/d, 2.55 mb/d, 2.60 mb/d and 2.58 mb/d, respectively.
OECD Europe
Total OECD Europe oil supply, which grew by 20 tb/d to average 3.60 mb/d in 2014, is expected to grow again this year – by 60 tb/d – to average 3.66 mb/d. This is due to the exploitation of new projects that have started up as well as from several field rampups in Norway and the UK. Moreover, supply growth in 2015 was revised up by 10 tb/d due to an upward revision in 3Q15 by 80 tb/d from the previous MOMR.
OECD Europe in 2015 is estimated to see quarterly supply of 3.69 mb/d, 3.77 mb/d, 3.58 mb/d and 3.61 mb/d, respectively.
Norway’s oil supply is expected to increase by 30 tb/d from the previous year to average 1.92 mb/d in 2015, unchanged from the previous MOMR. According to data from the Norwegian Petroleum Directorate (NPD), preliminary production figures for August show an average daily production of about 1.92 mb/d of oil, NGLs and condensate. Average daily liquid production in August entailed 1.56 mb/d of oil, 0.32 mb/d of NGL and 0.04 mb/d of condensate. Oil production was 4% above the level seen in August last year. NPD also mentioned that oil production was about 13.5% above its forecast for the month.
On a quarterly basis, Norway’s oil production in 2015 is seen to average 1.93 mb/d, 1.93 mb/d, 1.90 mb/d and 1.93 mb/d, respectively.
The UK’s oil supply is estimated to grow by 50 tb/d to an average of 0.91 mb/d in 2015 y-o-y, unchanged from the previous MOMR. UK liquids production in August was pegged at 0.82 mb/d, a decrease of 0.1 m/d m-o-m, and partially due to reduced condensate output from the Britannia gas field and the fact the Elgin-Franklin field was shut for 10 days in early August. Preliminary estimates for 3Q15 show a drop of 0.13 mb/d compared to 2Q15, but nevertheless higher by 0.17 mb/d than in the same quarter last year. With lower maintenance at Buzzard than during last year, output remained higher y-o-y (+0.35 mb/d) for the fifth consecutive month. It is expected that September should see output rebound, with the Forties loading programme rising by 91 tb/d m-o-m to 0.44 mb/d. Output will also be supported by the return of the 8 tb/d Tern field in mid-August, which had been out of commission for maintenance since June. Meanwhile, planned works at Buzzard have been postponed from October to November, pushing October output to a two-year high. The Cladhan field—expected to produce around 17 boe/d—is slated to achieve first oil in October.
On a quarterly basis, UK oil output in 2015 is estimated to average 0.93 mb/d, 1.00 mb/d, 0.87 mb/d and 0.87 mb/d, respectively.
OECD Asia Pacific
OECD Asia Pacific’s oil supply is expected to decline by 50 tb/d in 2015, averaging 0.45 mb/d and unchanged from the previous month.
On a quarterly basis, total OECD Asia Pacific oil supply in 2015 is expected to average 0.43 mb/d, 0.45 mb/d, 0.48 mb/d and 0.46 mb/d, respectively.
Australia’s oil supply is slated to decline this year by 50 tb/d to average 0.37 mb/d. Crude oil and condensate output, according to national data, is likely to have increased by 10 tb/d in July to 0.35 mb/d, but output of NGLs was reported steady at 61 tb/d. Therefore, total liquids supply in July was pegged at 0.41 mb/d. According to the latest information from Australian Petroleum Statistics in July, crude oil and condensate production from six basins is declining. Total annual output of these six basins during 2010-14 declined from 161 mb to 120 mb.
Developing countries
Total oil output from developing countries (DCs) will reach an average of 12.31 mb/d in 2015, an increase of 0.12 mb/d compared to growth of 0.21 mb/d in 2014 and an upward revision of 10 tb/d from the previous MOMR.
On a quarterly basis, total oil supply in DCs is estimated to average 12.55 mb/d, 12.40 mb/d, 12.16 mb/d and 12.12 mb/d, respectively.
Other Asia
Other Asia’s oil production is predicted to increase by 80 tb/d in 2015 to average 3.56 mb/d, an upward revision of 20 tb/d from the previous MOMR. Oil output in Malaysia, Thailand, Vietnam and Asia others is expected to grow by 0.11 mb/d, while production in India and Indonesia will decrease by 20 tb/d and 10 tb/d, respectively. Brunei’s output is expected to remain steady.
On a quarterly basis, Other Asia’s oil supply in 2015 is estimated to stand at 3.62 mb/d, 3.61 mb/d, 3.53 mb/d and 3.50 mb/d, respectively.
Latin America
Latin America’s oil supply is estimated to grow by 0.15 mb/d to average 5.15 mb/d in 2015, an upward revision of 10 tb/d from the previous MOMR. Latin America was the second-highest driver of growth in 2014 among all the non-OPEC regions. Brazil is the main driver of growth in 2015 by 0.18 mb/d, along with a small increase in Colombia, while oil production in other Latin American countries is expected to decline by 30 tb/d.
On a quarterly basis, Latin America’s oil supply in 2015 is expected to stand at 5.23 mb/d, 5.16 mb/d, 5.11 mb/d and 5.11 mb/d, respectively.
Brazil’s liquids supply is expected to average 3.04 mb/d in 2015, an increase of 0.18 mb/d over the previous year and unchanged from the previous MOMR. Brazilian crude oil and NGLs production in August rose m-o-m by 70 tb/d to 2.57 mb/d. Biofuels output in August was also steady at 0.53 mb/d. A record level of liquids output was pegged at 3.12 mb/d. The increase came from the ramp-up of the 0.15 mb/d FPSO Cidade de Itagua? in the Lula field, whilst the return of platforms from maintenance also helped. In the year-to-August, production growth has averaged 0.27 mb/d, compared to 0.24 mb/d for all of 2014.
On a quarterly basis, Brazil’s oil supply in 2015 is estimated to stand at 3.06 mb/d, 3.02 mb/d, 3.05 mb/d and 3.04 mb/d, respectively.
Middle East
Middle East oil supply is estimated to decrease by 0.09 mb/d in 2015 from the previous year to average 1.25 mb/d, unchanged from the previous MOMR. The Middle East supply forecast is associated with a very high level of risk, mainly due to political factors, which could dramatically change the outlook in either direction. Oman’s oil production is expected to grow by 30 tb/d to average 0.98 mb/d, while Bahrain and Yemen are expected to see declines by 20 tb/d and 0.10 mb/d to average 0.21 mb/d and 0.04 mb/d, respectively in 2015.
On a quarterly basis, Middle East oil supply in 2015 is seen to average 1.30 mb/d, 1.25 mb/d, 1.23 mb/d and 1.22 mb/d, respectively.
Africa
Africa’s oil supply is projected to average 2.34 mb/d in 2015, a decline of 30 tb/d y-o-y and a downward revision of 30 tb/d from the previous MOMR. In 2015, oil production from Equatorial Guinea and the Sudans is expected to grow by 10 tb/d each to average 0.29 mb/d each. While Chad, Congo and Africa Others will see supply declines, other countries such as Egypt, Gabon and South Africa will show steady production in 2015.
On a quarterly basis, Africa’s oil supply in 2015 is expected to average 2.40 mb/d, 2.38 mb/d, 2.29 mb/d and 2.29 mb/d, respectively.
FSU, other regions
Total FSU oil supply is expected to increase by 40 tb/d in 2015 to an average of 13.59 mb/d, an upward revision of 10 tb/d from the previous month’s estimation. In 2015, oil production in Russia will increase, while output in Kazakhstan, Azerbaijan and FSU others is expected to decrease.
On a quarterly basis, total FSU oil supply in 2015 is seen to average 13.68 mb/d, 13.59 mb/d, 13.54 mb/d and 13.55 mb/d, respectively.
Russia
Russian oil supply in 2015 is expected to grow by 70 tb/d to average 10.75 mb/d. September output rose to a post-Soviet record of 10.83 mb/d, up 60 tb/d m-o-m. Total production of crude and condensate increased by 60 tb/d to average 10.15 mb/d. The increase continues to be led by Gazprom, Bashneft and PSA operators, as their output is biased towards condensate.
On a quarterly basis, Russia’s 2015 supply is expected to average 10.74 mb/d, 10.76 mb/d, 10.76 mb/d and 10.74, mb/d, respectively.
Caspian
Kazakhstan’s oil supply is expected to decrease by 20 tb/d over the previous year to average 1.60 mb/d in 2015, a downward revision of 10 tb/d from the previous MOMR. Kazakhstan’s August output declined m-o-m by a steep 86 tb/d to 1.51 mb/d, the lowest level since October 2014. This was due to a 0.1 mb/d decline in Tengiz output. Preliminary supply data for 3Q15 indicates a decline by 50 tb/d to 1.55 mb/d. Lower investment in mature onshore fields such as Uzen and Emba is weighing on the country’s operations. Indeed, evidence suggests some smaller Kazakh producers have already shut in wells due to poor economics.
Azeri oil supply is anticipated to decline by 10 tb/d to average 0.86 mb/d in 2015, unchanged from the previous MOMR and indicating steady production in the year. Azerbaijan’s August output fell by 20 tb/d m-o-m to 0.84 mb/d, as the country’s largest field, BP’s ACG complex, entered decline. Planned maintenance at the Chirag platform for 20 days starting 20-22 October, will also weigh in 4Q15.
China
China’s supply is expected to grow by 60 tb/d over the previous year to average 4.35 mb/d in 2015, unchanged from the previous month due to strong output in 2Q15, continued in 3Q15. Oil output increased by 10 tb/d m-o-m to average 4.37 mb/d in August, although China’s output recorded a high in June at 4.45 mb/d. The increase has been led entirely by CNOOC’s new field startups, with the company’s output up by 19% y-o-y in 1H15.
On a quarterly basis, China’s supply in 2015 is estimated to average 4.33 mb/d, 4.39 mb/d, 4.34 mb/d and 4.34 mb/d, respectively.
Forecast for 2016
Non-OPEC supply
Non-OPEC oil supply in 2016 is expected to contract by 0.13 mb/d over the current year to average 57.11 mb/d. This expectation was revised down by 0.29 mb/d from the previous MOMR due to the carry-over of the downward revisions of US and Canada output in 2015 to the next year. The revision is also due to minor downward revisions in some countries’ production forecasts, due to cancellation or postponement of future projects. The weak growth trend estimated for 2015 is expected to persist, leading to a contraction in 2016. The forecast contraction is supported by declines from the OECD at -0.04 mb/d and the FSU at -0.16 mb/d.
On a regional basis, OECD Americas, OECD Europe, the Middle East and Africa are each expected to decline in 2016 by 0.03 mb/d, while and FSU’s production will decline by 0.16 mb/d. The other regions – OECD Asia Pacific, Other Asia, Latin America and China – are expected to be the main contributors of non-OPEC incremental growth with 0.02 mb/d, 0.06 mb/d, 0.04 mb/d and 0.02 mb/d, respectively.
On a quarterly basis, non-OPEC oil supply in 2016 is projected to stand at 56.99 mb/d, 56.87 mb/d, 56.94 mb/d and 57.64 mb/d, respectively.
The forecast for non-OPEC supply in 2016 is associated with a high level of risk. According to a Barclays report, global upstream spending is now expected to decline by 20% in 2015, followed by another 3-8% decline in 2016 according to preliminary estimates, which would be the first time since 1986/87 that consecutive annual declines in spending were recorded. Barclays notes that previously, after almost every year that saw a decline, spending increased by more than 10% the following year. This seems no longer to be the case. Barclays believes North American spending is expected to decline by 35% in 2015, with 2016 down by a preliminary 10-15%.
With regard to international spending, Barclays estimates a decline in 2015 of 14%, and preliminary 2016 down by 0-5%. From a regional perspective, Middle East spending (+6%) is expected to be the only area of growth, while Latin America is expected to decline by 9% and all other regions (Russia/Asia/Africa/Europe) are slated to fall by 15-20%.
Offshore spending is expected to decline 20-25% in 2016, driven by day rate reductions, contract cancellations and delayed deliveries for rigs. IOCs represent around 30% of contracted offshore rigs and Barclays expects IOC spending internationally will be down by 18% in 2015 and likely down by a similar amount in 2016.
Revisions to the 2016 forecast
Oil supply growth forecasts in the OECD region were revised down by 0.34 mb/d to -0.04 mb/d in 2016, compared to a month ago. The US was revised down by 0.28 mb/d to -0.06 mb/d due to expected accelerated declines in 2H15 which are carried over to 2016. DCs’ growth forecasts have also been changed, but in the reverse direction – revised up by 30 tb/d to 0.04 mb/d. Actually, DCs’ expected growth will offset the OECD’s declines in 2016. As a result, 2016 oil supply will contract due to FSU oil supply declines by 0.16 mb/d, which will be partially compensated by China and higher processing gains to reach -0.13 mb/d. On a quarterly basis, all quarters were revised down by 0.46 mb/d, 0.40 mb/d, 0.48 mb/d and 0.56 mb/d, respectively.
OECD
Total OECD oil supply in 2016 is expected to decline by 0.04 mb/d to average 24.64 mb/d, revised down in absolute supply by 0.52 mb/d as well as in growth by 0.34 mb/d from the previous MOMR. The y-o-y decline in the OECD in 2016 is expected to come from OECD Americas by 30 tb/d and OECD Europe by 30 tb/d, while OECD Asia Pacific is expected to grow by 20 tb/d compared to the previous year.
On a quarterly basis, total OECD supply in 2016 is estimated to average 24.56 mb/d, 24.53 mb/d, 24.53mb/d and 24.94 mb/d, respectively.
OECD Americas
OECD Americas oil supply in 2016 is estimated to average 20.53 mb/d, showing a decline of 30 tb/d y-o-y and representing a downward revision of 0.33 mb/d from the previous month’s report. The US and Mexico are both expected to see declines, while Canada’s supply is forecast to grow by 0.12 mb/d.
On a quarterly basis, OECD Americas oil supply in 2016 is expected to average 20.41 mb/d, 20.45 mb/d, 20.50 mb/d and 20.76 mb/d, respectively.
US
US total oil supply is anticipated to decline by 60 tb/d to average 13.54 mb/d in 2016, representing a downward revision of 0.28 mb/d from the previous MOMR. US liquids production for 2016, based on 2015 output assumptions, is shown in the following table and graph. Moreover, according to US field development and new projects’ startups in 2016, around 0.47 mb/d of added volume is expected to come on-stream in the next year.
The breakdown indicates that the main component of US oil output – tight crude – will decline from the last estimated growth of around 0.30 mb/d in 2015 to contract by 0.10 mb/d in 2016, affected by the low oil price environment. It is also expected that out of total new planned oil production capacity from six new projects expected to come on-stream in 2016 in the Gulf of Mexico, only 90 tb/d will be added to GoM’s output in the next year. Production of NGLs from unconventional sources of tight formations and also conventional NGLs are expected to grow by 30 tb/d and 20 tb/d, respectively.
On a quarterly basis, total US supply in 2016 is estimated to average 13.40 mb/d, 13.50 mb/d, 13.53 mb/d and 13.71 mb/d, respectively.
Canada and Mexico
Oil supply in Canada is expected to grow by 0.12 mb/d in 2016 to average 4.48 mb/d y-o-y, a downward revision of 50 tb/d from the previous month and partially due to higher expected declines in conventional output and uncertainties over the materialization of new projects. It is expected that around 0.2 mb/d from mostly projects’ ramp-ups, new oil sands production from the 28 tb/d Mackay River phase 1 and some other small projects such as Foster Creek phase G, Edam East and West, Vawm and Jackfish that will come onstream in 2016.
On a quarterly basis, total Canadian oil supply on 2016 is estimated to average 4.45 mb/d, 4.44 mb/d, 4.47 mb/d and 4.57 mb/d, respectively.
Mexican oil production in 2016 is expected to decline at a slower pace of 90 tb/d to average 2.50 mb/d, an upward revision of 10 tb/d from the previous MOMR.
On a quarterly basis, total Mexican oil supply in 2016 is estimated to average 2.55 mb/d, 2.50 mb/d, 2.50 mb/d and 2.47 mb/d, respectively.
OECD Europe
Total OECD Europe oil supply is expected to decline by 30 tb/d to average 3.64 mb/d in 2016, a downward revision of 10 tb/d from the previous MOMR and mainly due to the downward revision in Other OECD Europe’s future output. OECD Europe is estimated to see quarterly oil supply in 2016 of 3.69 mb/d, 3.60 mb/d, 3.54 mb/d and 3.72 mb/d, respectively.
Norway’s oil supply is expected to grow by 20 tb/d from the previous year to average 1.94 mb/d in 2016, unchanged from the previous MOMR. It is expected that around 0.24 mb/d will be added to Norway’s 2016 production through mostly project ramp- ups, for example from Gudrun, Aasgard LP, Valemo, the infill drilling project of Troll, Goliat, Knarr and other small projects, plus the new project of Edward Grieg, adding 40 tb/d.
On a quarterly basis, total Norwegian oil supply in 2016 is estimated to average 1.96 mb/d, 1.93 mb/d, 1.90 mb/d and 1.96 mb/d, respectively. The UK’s oil production in 2016 is expected to remain flat to average 0.91 mb/d, unchanged from the previous MOMR. It is expected that around 0.15 mb/d of new volume will be added from oil field ramp-ups as well as from new small production sites such as Cygnus, Alder, Stella, Cayley, Shaw, Barra, Morrone, Ythan and Aviat as they come on-stream.
On a quarterly basis, total UK oil supply in 2016 is estimated to average 0.92 mb/d, 0.87 mb/d, 0.86 mb/d and 0.99 mb/d, respectively.
OECD Asia Pacific
OECD Asia Pacific’s oil supply is expected to grow by 20 tb/d in 2016 to average 0.47 mb/d, unchanged from the previous month’s forecast. Australia’s oil supply will grow by 40 tb/d to average 0.41 mb/d.
On a quarterly basis, total OECD Asia Pacific oil supply in 2016 is estimated to average 0.46 mb/d, 0.48 mb/d, 0.48 mb/d and 0.46 mb/d, respectively.
Developing countries
Total DCs’ oil output will grow by 40 tb/d to average 12.34 mb/d in 2016, indicating an upward revision of 30 tb/d, mainly due to the upward revision in African countries’ production in the year.
On a quarterly basis, total DCs’ oil supply in 2016 is estimated to average 12.21 mb/d, 12.28 mb/d, 12.38 mb/d and 12.50 mb/d, respectively.
Other Asia
Other Asia’s oil production is predicted to increase by 60 tb/d in 2016 to average 3.63 mb/d with growth revised up by 10 tb/d from the previous MOMR. Oil output in Malaysia, Indonesia and Asia others is expected to increase, while production in Vietnam and Brunei will decline. Oil production in India and Thailand will be stagnant in the year.
On a quarterly basis, Other Asia’s oil supply in 2016 is expected to stand at 3.56 mb/d, 3.60 mb/d, 3.65 mb/d and 3.69 mb/d, respectively.
Latin America
Latin America’s oil supply is estimated to grow by 40 tb/d to average 5.19 mb/d in 2016, unchanged from the previous MOMR. Latin America has been the secondhighest driver of growth in recent years among all non-OPEC regions, but due to few Brazilian projects coming online in 2016, remarkable growth is not foreseen. Despite this, Brazil is still the main driver of growth in this region in 2016, while oil production in other Latin American countries is expected to decline.
On a quarterly basis, Latin America’s oil supply in 2016 is expected to stand at 5.10 mb/d, 5.13 mb/d, 5.21 mb/d and 5.32 mb/d, respectively.
The pace of growth in Brazil is expected to slow substantially in 2016 to 0.11 mb/d to average 3.15 mb/d as the pullback in investment in the mature Campos basin by Petrobras weighs along with an already high base. In fact, some of the largest fields in the Campos are already registering steep declines. For example, the Marlin field, which produced 0.24 mb/d in 2014, has declined by more than 30% this year (partly maintenance-related).
Nineteen new production units will be installed in the Santos Basin pre-salt area by the end of 2018. Between January 2013 and March 2014 alone, Petrobras made 49 new discoveries, including 15 in pre-salt. Petrobras’ strong results in pre-salt exploration are due to its in-depth knowledge and technological excellence in ultra-deep water exploration.
Brazil’s biofuel production is expected to grow by only 20 tb/d in 2016, although the average production in 2015 will reach 0.58 mb/d, indicating 40 tb/d growth.
On a quarterly basis, oil supply in Brazil in 2016 is expected to stand at 3.05 mb/d, 3.09mb/d, 3.20 mb/d and 3.27 mb/d, respectively.
Middle East
Middle East oil supply is estimated to decrease by 0.03 mb/d in 2016 from the previous year to average 1.23 mb/d, unchanged from the previous MOMR. There is no expectation for growth or decline in oil supply in Bahrain, Oman and Syria, while oil output in Yemen is expected to decline to a negligible level of 10 tb/d in 2016. Moreover, the Middle East supply forecast is associated with a very high level of risk, mainly due to political factors, which could dramatically change the outlook in either direction.
On a quarterly basis, Middle East oil supply in 2016 is seen to average 1.24 mb/d, 1.23 mb/d, 1.22 mb/d and 1.22 mb/d, respectively.
Africa
Africa’s oil supply is projected to decline by 30 tb/d to average 2.30 mb/d in 2016 y-o-y, an upward revision of 20 tb/d from the previous MOMR. Oil production in Congo and Africa other is expected to grow, while others are forecast to decline, with the exception of South Africa, which should remain steady. On a quarterly basis, Africa’s oil supply in 2016 is forecast to average 2.31 mb/d, 2.31 mb/d, 2.30 mb/d and 2.28 mb/d, respectively.
FSU and other regions
Total FSU oil supply is expected to decline by 0.16 mb/d in 2016 to average 13.43 mb/d, an upward revision of 60 tb/d from the previous month’s estimation and mainly due to an upward revision to Russian output in 2016. Oil production in Russia, Kazakhstan, Azerbaijan and FSU others will decrease in 2016.
On a quarterly basis, total FSU oil supply in 2016 is seen to average 13.55 mb/d, 13.39 mb/d, 13.34 mb/d and 13.46 mb/d, respectively.
Russian oil supply is expected to decrease by 0.06 mb/d to average 10.69 mb/d in 2016, with growth revised up by 50 tb/d from the previous MOMR. On a quarterly basis, total oil supply from Russia in 2016 is seen to average 10.73 mb/d, 10.65 mb/d, 10.64 mb/d and 10.73 mb/d, respectively.
Oil production in Kazakhstan will decline by 30 tb/d to average 1.57 mb/d in 2016, an upward revision of 10 tb/d from the previous month’s forecast. Different sources have said that the giant Kashagan project was unlikely to start production before mid- 2017.
Azerbaijan’s oil production is predicted to decline by 40 tb/d to average 0.82 mb/d in 2016 without any changes in the forecast over the previous MOMR. Lower prices are likely to accelerate declines in Azeri production in 2016 compared to 2015.
Other Europe’s oil supply is estimated to remain flat from 2012 to average 0.14 mb/d and continue at this level in 2016. China
China’s oil supply is expected to grow by 20 tb/d over the previous year to average 4.36 mb/d in 2016. Expected growth was revised down by 40 tb/d from the previous month. With sharp capex cutbacks, particularly by Sinopec and PetroChina, output is set to decline in 2016.
On a quarterly basis, total oil supply from China in 2016 is seen to average 4.34 mb/d, 4.35 mb/d, 4.36 mb/d and 4.41 mb/d, respectively.
OPEC NGLs and non-conventional oils
Output of OPEC natural gas liquids (NGLs) and non-conventional liquids is estimated to average 6.01 mb/d in 2015, representing growth of 0.19 mb/d over the previous year. In 2016, production of OPEC NGLs and non-conventional liquids is projected to average 6.18 mb/d, an increase of 0.17 mb/d over 2015. There are no changes in the 2015 estimation and 2016 predictions for OPEC NGLs and non-conventional liquids compared to the previous MOMR.
OPEC crude oil production
According to secondary sources, total OPEC crude oil production increased by 0.11 mb/d to average 31.57 mb/d in September. Crude oil output increased mostly in Iraq, Nigeria and UAE, while production in Saudi Arabia showed the largest drop of 48 tb/d. According to secondary sources, September OPEC crude oil production, not including Iraq, stood at 27.43 mb/d, an increase by 29 tb/d over the previous month.
World oil supply
Preliminary data indicates that global oil supply decreased by 0.34 mb/d to average 94.16 mb/d in September compared to the previous month. The decline was due to a drop in non-OPEC supply by 0.44 mb/d. The share of OPEC crude oil at 33.5% of total global production increased by 0.2% in September, compared to a month earlier. Estimates are based on preliminary data for non-OPEC supply and OPEC NGLS, while OPEC crude production is reported according to secondary sources.
Non-OPEC oil supply in 2016 is now forecast at an average of 57.11 mb/d, a contraction of 0.13 mb/d from 2015 levels. This is 0.29 mb/d lower than the previous MOMR’s forecast and is based on an expected steeper production decline in US shale plays, and legacy wells outnumbering newly drilled wells, as well as the negative effects of capex cuts in different regions of the world. Production of OPEC NGLs is forecast to grow by 0.19 mb/d and 0.17 mb/d to average 6.01 mb/d and 6.18 mb/d in 2015 and 2016, respectively. In September, OPEC production increased by 109 tb/d to average 31.57 mb/d, according to secondary sources. As a result, preliminary data indicates that global oil supply decreased by 0.34 mb/d in September to average 94.16 mb/d.
Forecast for 2015
Non-OPEC supply
US tight oil production – the main driver of non-OPEC supply growth – has been declining since May 2015. This downward trend should accelerate in 2H15 and 1H16, given various factors including persistently low oil prices, highly leveraged balance sheets, and increasingly costly debt, coupled with a more cautious approach by equity investors who will limit the availability of cash to allow producers to sustain operations.
Hence, the number of newly-drilled wells is decreasing and the number of active drilling rigs has declined by around half. Furthermore, the high decline rates for tight oil wells pose a serious problem for legacy wells as, within three to five years, these wells produce less than 20% of their initial production capacity. The US and Canada combined saw the highest output of all non-OPEC countries with growth of 2 mb/d in 2014, which mostly came from unconventional sources of shale and tight plays, as well as oil sands. However, persistently low oil price levels have caused the US shale oil sector to shrink. Shale drillers in the US have slashed spending and cut the number of workers this year as prices have fallen. The Chesapeake Energy Corporation, the second-largest producer of natural gas and the eleventh largest producer of combined oil and natural gas liquids in the US, has cut 15% of its workforce.
Chevron is cutting 1,500 jobs worldwide as part of its drive to reduce internal costs at multiple operating units and in the corporate sector. Statoil has also implemented further cost reductions in the current year. The company previously estimated 2015 capital expenditure at $18 billion, down around 10% from the previous estimate of $20 billion. But the target has now been reduced further to $17.5 billion. Oilfield service companies, such as Schlumberger and Halliburton, have also seen job cuts as crude prices began plummeting last year. However, other majors and the large US independents have tried to hold on to their employees on the grounds that it is difficult to rehire skilled workers once the market turns and companies get ready to ramp up operations again.
Outside North America, for instance in the UK, the current climate remains unattractive to investors, given the low oil prices, the steep decline rates, the high decommissioning costs and the general unfavorable fiscal regime.
Non-OPEC oil supply growth will decelerate sharply in 2015, from the tremendous growth of 2.24 mb/d achieved in 2014, to grow by only 0.72 mb/d to average 57.24 mb/d. This represents a decline of 0.19 mb/d from the previous report. US shale producers will not be able to raise the capital they need to sustain their production and this will cause such a sharp decline in US oil output in 2016. It is true that the US oil and gas industry has made progress in improving efficiencies and lowering costs, but crude prices below $45/b are having an impact. Canadian producers are also struggling to tolerate the low oil prices. It is expected that around seven major projects in the oil sands will be delayed or put on hold until prices recover. However, enough projects are continuing to realize growth in 2016, albeit at a very modest level.
Nevertheless, higher-than-expected oil production from non-OPEC producers outside North America was seen during 2Q15 and 3Q15. Production in the North Sea, China, Asia, Latin America and Russia and even recently in Oman, indicates there is still room for growth in other prospective regions. China is considering opening up further conventional oil and natural gas exploration acreage to the private sector, following a recent licensing round in areas that previously failed to attract much interest. China collects a 6% resource tax on oil and gas output, but the government may allow local officials to start to set their own rates since the oil price fall has hit their coffers hard.
Non-OPEC supply growth is expected to experience a decrease of 0.89 mb/d in 2H15. Uncertainties in relation to non-OPEC production in the near-to-short term, such as the US tight oil decline rate, Brazil’s financial issues, Middle East geopolitics and IOCs’ downward spending revisions, all indicate further downward risk for the remainder of 2015.
Another indication of uncertainty in the production growth outlook of non-OPEC oil producers in the coming months will be the number of active rigs around the world, particularly in regions where the oil production breakeven point is much higher than the current oil price – from unconventional sources or deep offshore and the North Sea.
OECD
Total OECD oil supply in 2015 is expected to grow by 0.48 mb/d to average 24.68 mb/d, a downward revision of 0.18 mb/d from the previous MOMR. Output in 2Q15 and 3Q15 was revised down by 0.12 mb/d to average 24.77 mb/d and 0.16 mb/d to average 24.46 mb/d, respectively. Y-o-y growth in 2015 is expected to come from OECD Americas and OECD Europe with 0.47 mb/d and 0.06 mb/d, respectively, while OECD Asia Pacific is forecast to decline by 0.05 mb/d compared to last year. On a quarterly basis, total OECD supply in 2015 is estimated to average 25.04 mb/d, 24.77 mb/d, 24.46 mb/d and 24.44 mb/d, respectively.
OECD Americas
OECD Americas’ oil supply in 2015 is estimated to average 20.56 mb/d, showing growth of 0.47 mb/d y-o-y and representing a downward revision of 0.2 mb/d from the previous month’s report. Supply in the US and Canada is expected to grow in 2015, while Mexico will decline. On a quarterly basis, OECD Americas’ oil supply in 2015 is expected to average 20.92 mb/d, 20.56 mb/d, 20.41 mb/d and 20.36 mb/d, respectively.
US
Until this year, US oil output was growing at the fastest rate on record, adding around 1 mb/d of new supply each year, thanks to the introduction of new drilling techniques that have released oil and gas from shale formations. However, recent data shows that US output has already begun to decline after reaching a peak of 9.6 mb/d in April, although production in some big shale patches, including North Dakota, has held steady, based on actual data. Hence, US total oil supply is anticipated to grow by 0.63 mb/d to average 13.60 mb/d in 2015, representing a downward revision of 0.15 mb/d from the previous month’s report. US actual liquids production was registered at 13.83 mb/d in July, indicating a decline of 0.03 mb/d m-o-m. At the same time, US total crude oil production increased by 0.09 mb/d to average 9.36 mb/d following two months of decline in May and June. In Texas, the two main tight oil plays, Permian and Eagle Ford, showed declines of 12 tb/d m-o-m to average 3.45 mb/d in July. Oil production from the Gulf of Mexico increased by 147 tb/d to average 1.58 mb/d, while output in North Dakota, mainly from Bakken in the Williston Basin was steady at around 1.2 mb/d in July. While the latest EIA monthly data for July showed a 94 tb/d m-o-m increase in crude output, the fact is this was entirely due to rising GoM production, following the completion of heavy maintenance work across May and June.
Oil production from Alaska was also more or less stagnant at an average of 0.45 mb/d. In a more longer-term development, Royal Dutch Shell announced that it was giving up on efforts to produce oil and gas in Alaska’s Arctic waters. The company has spent more than $7 billion exploring for oil in Alaska's Arctic, going through a years- long regulatory gauntlet and attracting criticism from environmental groups. Shell pushed forward in the hope of finding a big new source of future revenue and establishing expertise and a presence in the Arctic, which geologists estimate holds a quarter of the world’s undiscovered conventional oil and gas. The company also held the hopes of the state of Alaska, which has seen oil production and revenues decline sharply in recent years, as well as the US oil industry in general, which looked to Alaska's offshore Arctic as the next source of oil big enough to keep the country among the top three oil producers. But Shell, drilling to 6,800 feet about 80 miles offshore in the Chukchi Sea off Alaska's northwest coast and supported by a 28-vessel flotilla, was not able to find much.
The average of US crude oil production in August and September, based on the EIA weekly report, indicates a decline of about 0.33 mb/d compared to the average output (weekly data) of June and July. Therefore, it is expected that US liquids production in 3Q15 will decline by 0.36 mb/d over 2Q15 to average 13.51 mb/d and then fall by another 0.15 mb/d in 4Q15 to 13.36 mb/d. Four out of seven major US shale plays are expected to see a decline of 80 tb/d with production settling at 5.20 mb/d in October compared to September, according to the EIA data. The data focuses on the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian and Utica sites, which altogether accounted for 95% of the US oil production increases. The monthly drop will again be led by Eagle Ford, where output is expected to fall by 62 tb/d in October to settle at 1.42 mb/d. Production from the Bakken site in October is forecast to fall by 21 tb/d to 1.18 mb/d. However, production in the Permian basin has continued to grow, with output expected to increase by 23 tb/d to reach 2.02 mb/d in October. Overall, based on the downward trend observed since May, total US production is forecast to continue declining in coming months.
US liquids q-o-q changes compared to other non-OPEC supply can be seen in the graph below.
On a quarterly basis, US oil supply in 2015 is expected to average 13.66 mb/d, 13.87 mb/d, 13.51 mb/d and 13.36 mb/d, respectively.
Canada and Mexico
Oil supply in Canada is expected to grow by 0.05 mb/d in 2015 to average 4.36 mb/d y-o-y, a downward revision of 40 tb/d from the previous month. Final June data shows conventional output fell in June by 0.17 mb/d y-o-y to 1.19 mb/d, the lowest level since August 2012. Moreover, output of NGLs declined to 0.69 mb/d. The onshore rig count fell to just 70 rigs in September, lower y-o-y by 152, suggesting conventional declines have continued.
Preliminary estimates place July Canadian output lower m-o-m by 70 tb/d to average 4.23 mb/d. In June, output from Canada’s oil sands increased by 0.43 mb/d to settle at 2.41 mb/d, driven by a 90 tb/d y-o-y increase in Syncrude's joint-venture upgrader production. While August saw Canadian output remain flat m-o-m, production from Syncrude's 0.33 mb/d upgrader likely declined by 0.2 mb/d in September, due to an unplanned outage. This has been further compounded by reduced rates at Nexen’s Long Lake upgrader. It was forced to cut output by the Alberta Energy Regulator, following a safety inspection which revealed unsafe pipelines.
Canadian output in 2Q15 was lower y-o-y by 60 tb/d at 4.13 mb/d. Canadian oil output in 2Q15 unexpectedly saw a huge decline by 0.47 mb/d compared to 1Q15, which was not only due to the seasonal pattern, but also as a result of a wildfire in Alberta.
It is worth mentioning that 8 projects out of 13 have started up in Canada so far in 2015. The implemented projects are:
-Thick wood – Sunshine A1 April 2015
-Cold Lake Nabiye April 2015
-Foster Creek F January 2015
-Foster Creek G April 2015
-Rush Lake May 2015
-South White Rose extension project (offshore) Late June 2015
-Kearl Mining project with peak capacity 220 tb/d Mid-June 2015
-Surmont 2, in situ/SAGD project, capacity 118 tb/d September 2015
The other five major oil sands projects have been delayed or put on hold until prices recover. But enough projects are continuing to realize growth in 2016, albeit at a very modest level. In mid?June, Imperial Oil announced the start?up of the 110 tb/d expansion at its Kearl mining project, ahead of the original schedule that was slated for year?end. If capacity is reached, the Kearl project is expected to produce 220 tb/d. In September, ConocoPhillips delivered first oil at its Surmont 2 in situ facility, the largest SAGD project undertaken to date. Production is expected to ramp up through 2017, adding approximately 118 tb/d to gross capacity.
Canada’s overall rig count at the end of September decreased by 24 units to reach a total of 182. The number of active rigs in Alberta, the main state for oil sands production, also decreased by nine rigs to 120 units. Nevertheless, Alberta’s rigs were down by around 53% y-o-y, and Canada’s overall rig count fell by 205 rigs.
On a quarterly basis, Canada’s oil supply in 2015 is expected to average 4.60 mb/d, 4.13 mb/d, 4.29 mb/d and 4.42 mb/d, respectively.
Mexico’s liquids production in 2015 is expected to decline significantly by 0.21 mb/d to average 2.60 mb/d. Liquids output in 3Q15 increased by 10 tb/d to average 2.60 mb/d, but preliminary data shows that crude output increased by 40 tb/d to average 2.26 mb/d in the same quarter, although output in August and September declined slightly compared to July. Mexico’s oil supply in 3Q15 declined by more than 6% (170 tb/d) over the same quarter a year earlier. Mexico also produced 0.33 mb/d of NGLs in 3Q15.
Output from the Ku-Maloob-Zaap cluster (KMZ) fell below 0.77 mb/d, the lowest level since November 2008 and likely due to unplanned maintenance works. Y-o-y the figure was down by 85 tb/d, the steepest decline in over 10 years. Cantarell’s decline was back to 0.1 mb/d in August, while the y-o-y fall at Ligero Marino doubled m-o-m to 43 tb/d. Moreover, Pemex conducted works at the 49 tb/d light crude producing Samaria field in the second half of August, which offset the recovery in Chuc (where output returned to y-o-y growth for the first time in six months) and Ixtal’s output after the fire at the Abkatun oil platform in April. September has seen crude output remain broadly flat m-o-m, with the y-o-y decline easing to 0.12 mb/d, although KMZ’s production has recovered back to 0.84 mb/d.
Mexican state oil company Pemex has received final approval from the country's energy ministry for its plans to seek farm-out partners for several oil fields. In late September, the CNH, Mexico's upstream regulator, assessed Pemex's requests to farm out stakes in 12 oil fields, which would be divided into seven contracts, and determined that the plans were in the national interest. The farm-outs would be Pemex's first since a 2013 constitutional reform ended its 76-year oil and gas monopoly. Pemex had originally planned to farm-out stakes in 10 upstream projects by the end of 2015, as part of the country's first post-reform bid round, which was launched last year.
The first auction, for 14 shallow-water exploration blocks, took place in July 2015 and saw just two blocks awarded. The most recent one, for five other shallow water blocks with certified reserves, was held in late September and saw three blocks taken up. The farm-out auction is now generally expected sometime next year. On a quarterly basis, Mexico’s oil supply in 2015 is seen to average 2.65 mb/d, 2.55 mb/d, 2.60 mb/d and 2.58 mb/d, respectively.
OECD Europe
Total OECD Europe oil supply, which grew by 20 tb/d to average 3.60 mb/d in 2014, is expected to grow again this year – by 60 tb/d – to average 3.66 mb/d. This is due to the exploitation of new projects that have started up as well as from several field rampups in Norway and the UK. Moreover, supply growth in 2015 was revised up by 10 tb/d due to an upward revision in 3Q15 by 80 tb/d from the previous MOMR.
OECD Europe in 2015 is estimated to see quarterly supply of 3.69 mb/d, 3.77 mb/d, 3.58 mb/d and 3.61 mb/d, respectively.
Norway’s oil supply is expected to increase by 30 tb/d from the previous year to average 1.92 mb/d in 2015, unchanged from the previous MOMR. According to data from the Norwegian Petroleum Directorate (NPD), preliminary production figures for August show an average daily production of about 1.92 mb/d of oil, NGLs and condensate. Average daily liquid production in August entailed 1.56 mb/d of oil, 0.32 mb/d of NGL and 0.04 mb/d of condensate. Oil production was 4% above the level seen in August last year. NPD also mentioned that oil production was about 13.5% above its forecast for the month.
On a quarterly basis, Norway’s oil production in 2015 is seen to average 1.93 mb/d, 1.93 mb/d, 1.90 mb/d and 1.93 mb/d, respectively.
The UK’s oil supply is estimated to grow by 50 tb/d to an average of 0.91 mb/d in 2015 y-o-y, unchanged from the previous MOMR. UK liquids production in August was pegged at 0.82 mb/d, a decrease of 0.1 m/d m-o-m, and partially due to reduced condensate output from the Britannia gas field and the fact the Elgin-Franklin field was shut for 10 days in early August. Preliminary estimates for 3Q15 show a drop of 0.13 mb/d compared to 2Q15, but nevertheless higher by 0.17 mb/d than in the same quarter last year. With lower maintenance at Buzzard than during last year, output remained higher y-o-y (+0.35 mb/d) for the fifth consecutive month. It is expected that September should see output rebound, with the Forties loading programme rising by 91 tb/d m-o-m to 0.44 mb/d. Output will also be supported by the return of the 8 tb/d Tern field in mid-August, which had been out of commission for maintenance since June. Meanwhile, planned works at Buzzard have been postponed from October to November, pushing October output to a two-year high. The Cladhan field—expected to produce around 17 boe/d—is slated to achieve first oil in October.
On a quarterly basis, UK oil output in 2015 is estimated to average 0.93 mb/d, 1.00 mb/d, 0.87 mb/d and 0.87 mb/d, respectively.
OECD Asia Pacific
OECD Asia Pacific’s oil supply is expected to decline by 50 tb/d in 2015, averaging 0.45 mb/d and unchanged from the previous month.
On a quarterly basis, total OECD Asia Pacific oil supply in 2015 is expected to average 0.43 mb/d, 0.45 mb/d, 0.48 mb/d and 0.46 mb/d, respectively.
Australia’s oil supply is slated to decline this year by 50 tb/d to average 0.37 mb/d. Crude oil and condensate output, according to national data, is likely to have increased by 10 tb/d in July to 0.35 mb/d, but output of NGLs was reported steady at 61 tb/d. Therefore, total liquids supply in July was pegged at 0.41 mb/d. According to the latest information from Australian Petroleum Statistics in July, crude oil and condensate production from six basins is declining. Total annual output of these six basins during 2010-14 declined from 161 mb to 120 mb.
Developing countries
Total oil output from developing countries (DCs) will reach an average of 12.31 mb/d in 2015, an increase of 0.12 mb/d compared to growth of 0.21 mb/d in 2014 and an upward revision of 10 tb/d from the previous MOMR.
On a quarterly basis, total oil supply in DCs is estimated to average 12.55 mb/d, 12.40 mb/d, 12.16 mb/d and 12.12 mb/d, respectively.
Other Asia
Other Asia’s oil production is predicted to increase by 80 tb/d in 2015 to average 3.56 mb/d, an upward revision of 20 tb/d from the previous MOMR. Oil output in Malaysia, Thailand, Vietnam and Asia others is expected to grow by 0.11 mb/d, while production in India and Indonesia will decrease by 20 tb/d and 10 tb/d, respectively. Brunei’s output is expected to remain steady.
On a quarterly basis, Other Asia’s oil supply in 2015 is estimated to stand at 3.62 mb/d, 3.61 mb/d, 3.53 mb/d and 3.50 mb/d, respectively.
Latin America
Latin America’s oil supply is estimated to grow by 0.15 mb/d to average 5.15 mb/d in 2015, an upward revision of 10 tb/d from the previous MOMR. Latin America was the second-highest driver of growth in 2014 among all the non-OPEC regions. Brazil is the main driver of growth in 2015 by 0.18 mb/d, along with a small increase in Colombia, while oil production in other Latin American countries is expected to decline by 30 tb/d.
On a quarterly basis, Latin America’s oil supply in 2015 is expected to stand at 5.23 mb/d, 5.16 mb/d, 5.11 mb/d and 5.11 mb/d, respectively.
Brazil’s liquids supply is expected to average 3.04 mb/d in 2015, an increase of 0.18 mb/d over the previous year and unchanged from the previous MOMR. Brazilian crude oil and NGLs production in August rose m-o-m by 70 tb/d to 2.57 mb/d. Biofuels output in August was also steady at 0.53 mb/d. A record level of liquids output was pegged at 3.12 mb/d. The increase came from the ramp-up of the 0.15 mb/d FPSO Cidade de Itagua? in the Lula field, whilst the return of platforms from maintenance also helped. In the year-to-August, production growth has averaged 0.27 mb/d, compared to 0.24 mb/d for all of 2014.
On a quarterly basis, Brazil’s oil supply in 2015 is estimated to stand at 3.06 mb/d, 3.02 mb/d, 3.05 mb/d and 3.04 mb/d, respectively.
Middle East
Middle East oil supply is estimated to decrease by 0.09 mb/d in 2015 from the previous year to average 1.25 mb/d, unchanged from the previous MOMR. The Middle East supply forecast is associated with a very high level of risk, mainly due to political factors, which could dramatically change the outlook in either direction. Oman’s oil production is expected to grow by 30 tb/d to average 0.98 mb/d, while Bahrain and Yemen are expected to see declines by 20 tb/d and 0.10 mb/d to average 0.21 mb/d and 0.04 mb/d, respectively in 2015.
On a quarterly basis, Middle East oil supply in 2015 is seen to average 1.30 mb/d, 1.25 mb/d, 1.23 mb/d and 1.22 mb/d, respectively.
Africa
Africa’s oil supply is projected to average 2.34 mb/d in 2015, a decline of 30 tb/d y-o-y and a downward revision of 30 tb/d from the previous MOMR. In 2015, oil production from Equatorial Guinea and the Sudans is expected to grow by 10 tb/d each to average 0.29 mb/d each. While Chad, Congo and Africa Others will see supply declines, other countries such as Egypt, Gabon and South Africa will show steady production in 2015.
On a quarterly basis, Africa’s oil supply in 2015 is expected to average 2.40 mb/d, 2.38 mb/d, 2.29 mb/d and 2.29 mb/d, respectively.
FSU, other regions
Total FSU oil supply is expected to increase by 40 tb/d in 2015 to an average of 13.59 mb/d, an upward revision of 10 tb/d from the previous month’s estimation. In 2015, oil production in Russia will increase, while output in Kazakhstan, Azerbaijan and FSU others is expected to decrease.
On a quarterly basis, total FSU oil supply in 2015 is seen to average 13.68 mb/d, 13.59 mb/d, 13.54 mb/d and 13.55 mb/d, respectively.
Russia
Russian oil supply in 2015 is expected to grow by 70 tb/d to average 10.75 mb/d. September output rose to a post-Soviet record of 10.83 mb/d, up 60 tb/d m-o-m. Total production of crude and condensate increased by 60 tb/d to average 10.15 mb/d. The increase continues to be led by Gazprom, Bashneft and PSA operators, as their output is biased towards condensate.
On a quarterly basis, Russia’s 2015 supply is expected to average 10.74 mb/d, 10.76 mb/d, 10.76 mb/d and 10.74, mb/d, respectively.
Caspian
Kazakhstan’s oil supply is expected to decrease by 20 tb/d over the previous year to average 1.60 mb/d in 2015, a downward revision of 10 tb/d from the previous MOMR. Kazakhstan’s August output declined m-o-m by a steep 86 tb/d to 1.51 mb/d, the lowest level since October 2014. This was due to a 0.1 mb/d decline in Tengiz output. Preliminary supply data for 3Q15 indicates a decline by 50 tb/d to 1.55 mb/d. Lower investment in mature onshore fields such as Uzen and Emba is weighing on the country’s operations. Indeed, evidence suggests some smaller Kazakh producers have already shut in wells due to poor economics.
Azeri oil supply is anticipated to decline by 10 tb/d to average 0.86 mb/d in 2015, unchanged from the previous MOMR and indicating steady production in the year. Azerbaijan’s August output fell by 20 tb/d m-o-m to 0.84 mb/d, as the country’s largest field, BP’s ACG complex, entered decline. Planned maintenance at the Chirag platform for 20 days starting 20-22 October, will also weigh in 4Q15.
China
China’s supply is expected to grow by 60 tb/d over the previous year to average 4.35 mb/d in 2015, unchanged from the previous month due to strong output in 2Q15, continued in 3Q15. Oil output increased by 10 tb/d m-o-m to average 4.37 mb/d in August, although China’s output recorded a high in June at 4.45 mb/d. The increase has been led entirely by CNOOC’s new field startups, with the company’s output up by 19% y-o-y in 1H15.
On a quarterly basis, China’s supply in 2015 is estimated to average 4.33 mb/d, 4.39 mb/d, 4.34 mb/d and 4.34 mb/d, respectively.
Forecast for 2016
Non-OPEC supply
Non-OPEC oil supply in 2016 is expected to contract by 0.13 mb/d over the current year to average 57.11 mb/d. This expectation was revised down by 0.29 mb/d from the previous MOMR due to the carry-over of the downward revisions of US and Canada output in 2015 to the next year. The revision is also due to minor downward revisions in some countries’ production forecasts, due to cancellation or postponement of future projects. The weak growth trend estimated for 2015 is expected to persist, leading to a contraction in 2016. The forecast contraction is supported by declines from the OECD at -0.04 mb/d and the FSU at -0.16 mb/d.
On a regional basis, OECD Americas, OECD Europe, the Middle East and Africa are each expected to decline in 2016 by 0.03 mb/d, while and FSU’s production will decline by 0.16 mb/d. The other regions – OECD Asia Pacific, Other Asia, Latin America and China – are expected to be the main contributors of non-OPEC incremental growth with 0.02 mb/d, 0.06 mb/d, 0.04 mb/d and 0.02 mb/d, respectively.
On a quarterly basis, non-OPEC oil supply in 2016 is projected to stand at 56.99 mb/d, 56.87 mb/d, 56.94 mb/d and 57.64 mb/d, respectively.
The forecast for non-OPEC supply in 2016 is associated with a high level of risk. According to a Barclays report, global upstream spending is now expected to decline by 20% in 2015, followed by another 3-8% decline in 2016 according to preliminary estimates, which would be the first time since 1986/87 that consecutive annual declines in spending were recorded. Barclays notes that previously, after almost every year that saw a decline, spending increased by more than 10% the following year. This seems no longer to be the case. Barclays believes North American spending is expected to decline by 35% in 2015, with 2016 down by a preliminary 10-15%.
With regard to international spending, Barclays estimates a decline in 2015 of 14%, and preliminary 2016 down by 0-5%. From a regional perspective, Middle East spending (+6%) is expected to be the only area of growth, while Latin America is expected to decline by 9% and all other regions (Russia/Asia/Africa/Europe) are slated to fall by 15-20%.
Offshore spending is expected to decline 20-25% in 2016, driven by day rate reductions, contract cancellations and delayed deliveries for rigs. IOCs represent around 30% of contracted offshore rigs and Barclays expects IOC spending internationally will be down by 18% in 2015 and likely down by a similar amount in 2016.
Revisions to the 2016 forecast
Oil supply growth forecasts in the OECD region were revised down by 0.34 mb/d to -0.04 mb/d in 2016, compared to a month ago. The US was revised down by 0.28 mb/d to -0.06 mb/d due to expected accelerated declines in 2H15 which are carried over to 2016. DCs’ growth forecasts have also been changed, but in the reverse direction – revised up by 30 tb/d to 0.04 mb/d. Actually, DCs’ expected growth will offset the OECD’s declines in 2016. As a result, 2016 oil supply will contract due to FSU oil supply declines by 0.16 mb/d, which will be partially compensated by China and higher processing gains to reach -0.13 mb/d. On a quarterly basis, all quarters were revised down by 0.46 mb/d, 0.40 mb/d, 0.48 mb/d and 0.56 mb/d, respectively.
OECD
Total OECD oil supply in 2016 is expected to decline by 0.04 mb/d to average 24.64 mb/d, revised down in absolute supply by 0.52 mb/d as well as in growth by 0.34 mb/d from the previous MOMR. The y-o-y decline in the OECD in 2016 is expected to come from OECD Americas by 30 tb/d and OECD Europe by 30 tb/d, while OECD Asia Pacific is expected to grow by 20 tb/d compared to the previous year.
On a quarterly basis, total OECD supply in 2016 is estimated to average 24.56 mb/d, 24.53 mb/d, 24.53mb/d and 24.94 mb/d, respectively.
OECD Americas
OECD Americas oil supply in 2016 is estimated to average 20.53 mb/d, showing a decline of 30 tb/d y-o-y and representing a downward revision of 0.33 mb/d from the previous month’s report. The US and Mexico are both expected to see declines, while Canada’s supply is forecast to grow by 0.12 mb/d.
On a quarterly basis, OECD Americas oil supply in 2016 is expected to average 20.41 mb/d, 20.45 mb/d, 20.50 mb/d and 20.76 mb/d, respectively.
US
US total oil supply is anticipated to decline by 60 tb/d to average 13.54 mb/d in 2016, representing a downward revision of 0.28 mb/d from the previous MOMR. US liquids production for 2016, based on 2015 output assumptions, is shown in the following table and graph. Moreover, according to US field development and new projects’ startups in 2016, around 0.47 mb/d of added volume is expected to come on-stream in the next year.
The breakdown indicates that the main component of US oil output – tight crude – will decline from the last estimated growth of around 0.30 mb/d in 2015 to contract by 0.10 mb/d in 2016, affected by the low oil price environment. It is also expected that out of total new planned oil production capacity from six new projects expected to come on-stream in 2016 in the Gulf of Mexico, only 90 tb/d will be added to GoM’s output in the next year. Production of NGLs from unconventional sources of tight formations and also conventional NGLs are expected to grow by 30 tb/d and 20 tb/d, respectively.
On a quarterly basis, total US supply in 2016 is estimated to average 13.40 mb/d, 13.50 mb/d, 13.53 mb/d and 13.71 mb/d, respectively.
Canada and Mexico
Oil supply in Canada is expected to grow by 0.12 mb/d in 2016 to average 4.48 mb/d y-o-y, a downward revision of 50 tb/d from the previous month and partially due to higher expected declines in conventional output and uncertainties over the materialization of new projects. It is expected that around 0.2 mb/d from mostly projects’ ramp-ups, new oil sands production from the 28 tb/d Mackay River phase 1 and some other small projects such as Foster Creek phase G, Edam East and West, Vawm and Jackfish that will come onstream in 2016.
On a quarterly basis, total Canadian oil supply on 2016 is estimated to average 4.45 mb/d, 4.44 mb/d, 4.47 mb/d and 4.57 mb/d, respectively.
Mexican oil production in 2016 is expected to decline at a slower pace of 90 tb/d to average 2.50 mb/d, an upward revision of 10 tb/d from the previous MOMR.
On a quarterly basis, total Mexican oil supply in 2016 is estimated to average 2.55 mb/d, 2.50 mb/d, 2.50 mb/d and 2.47 mb/d, respectively.
OECD Europe
Total OECD Europe oil supply is expected to decline by 30 tb/d to average 3.64 mb/d in 2016, a downward revision of 10 tb/d from the previous MOMR and mainly due to the downward revision in Other OECD Europe’s future output. OECD Europe is estimated to see quarterly oil supply in 2016 of 3.69 mb/d, 3.60 mb/d, 3.54 mb/d and 3.72 mb/d, respectively.
Norway’s oil supply is expected to grow by 20 tb/d from the previous year to average 1.94 mb/d in 2016, unchanged from the previous MOMR. It is expected that around 0.24 mb/d will be added to Norway’s 2016 production through mostly project ramp- ups, for example from Gudrun, Aasgard LP, Valemo, the infill drilling project of Troll, Goliat, Knarr and other small projects, plus the new project of Edward Grieg, adding 40 tb/d.
On a quarterly basis, total Norwegian oil supply in 2016 is estimated to average 1.96 mb/d, 1.93 mb/d, 1.90 mb/d and 1.96 mb/d, respectively. The UK’s oil production in 2016 is expected to remain flat to average 0.91 mb/d, unchanged from the previous MOMR. It is expected that around 0.15 mb/d of new volume will be added from oil field ramp-ups as well as from new small production sites such as Cygnus, Alder, Stella, Cayley, Shaw, Barra, Morrone, Ythan and Aviat as they come on-stream.
On a quarterly basis, total UK oil supply in 2016 is estimated to average 0.92 mb/d, 0.87 mb/d, 0.86 mb/d and 0.99 mb/d, respectively.
OECD Asia Pacific
OECD Asia Pacific’s oil supply is expected to grow by 20 tb/d in 2016 to average 0.47 mb/d, unchanged from the previous month’s forecast. Australia’s oil supply will grow by 40 tb/d to average 0.41 mb/d.
On a quarterly basis, total OECD Asia Pacific oil supply in 2016 is estimated to average 0.46 mb/d, 0.48 mb/d, 0.48 mb/d and 0.46 mb/d, respectively.
Developing countries
Total DCs’ oil output will grow by 40 tb/d to average 12.34 mb/d in 2016, indicating an upward revision of 30 tb/d, mainly due to the upward revision in African countries’ production in the year.
On a quarterly basis, total DCs’ oil supply in 2016 is estimated to average 12.21 mb/d, 12.28 mb/d, 12.38 mb/d and 12.50 mb/d, respectively.
Other Asia
Other Asia’s oil production is predicted to increase by 60 tb/d in 2016 to average 3.63 mb/d with growth revised up by 10 tb/d from the previous MOMR. Oil output in Malaysia, Indonesia and Asia others is expected to increase, while production in Vietnam and Brunei will decline. Oil production in India and Thailand will be stagnant in the year.
On a quarterly basis, Other Asia’s oil supply in 2016 is expected to stand at 3.56 mb/d, 3.60 mb/d, 3.65 mb/d and 3.69 mb/d, respectively.
Latin America
Latin America’s oil supply is estimated to grow by 40 tb/d to average 5.19 mb/d in 2016, unchanged from the previous MOMR. Latin America has been the secondhighest driver of growth in recent years among all non-OPEC regions, but due to few Brazilian projects coming online in 2016, remarkable growth is not foreseen. Despite this, Brazil is still the main driver of growth in this region in 2016, while oil production in other Latin American countries is expected to decline.
On a quarterly basis, Latin America’s oil supply in 2016 is expected to stand at 5.10 mb/d, 5.13 mb/d, 5.21 mb/d and 5.32 mb/d, respectively.
The pace of growth in Brazil is expected to slow substantially in 2016 to 0.11 mb/d to average 3.15 mb/d as the pullback in investment in the mature Campos basin by Petrobras weighs along with an already high base. In fact, some of the largest fields in the Campos are already registering steep declines. For example, the Marlin field, which produced 0.24 mb/d in 2014, has declined by more than 30% this year (partly maintenance-related).
Nineteen new production units will be installed in the Santos Basin pre-salt area by the end of 2018. Between January 2013 and March 2014 alone, Petrobras made 49 new discoveries, including 15 in pre-salt. Petrobras’ strong results in pre-salt exploration are due to its in-depth knowledge and technological excellence in ultra-deep water exploration.
Brazil’s biofuel production is expected to grow by only 20 tb/d in 2016, although the average production in 2015 will reach 0.58 mb/d, indicating 40 tb/d growth.
On a quarterly basis, oil supply in Brazil in 2016 is expected to stand at 3.05 mb/d, 3.09mb/d, 3.20 mb/d and 3.27 mb/d, respectively.
Middle East
Middle East oil supply is estimated to decrease by 0.03 mb/d in 2016 from the previous year to average 1.23 mb/d, unchanged from the previous MOMR. There is no expectation for growth or decline in oil supply in Bahrain, Oman and Syria, while oil output in Yemen is expected to decline to a negligible level of 10 tb/d in 2016. Moreover, the Middle East supply forecast is associated with a very high level of risk, mainly due to political factors, which could dramatically change the outlook in either direction.
On a quarterly basis, Middle East oil supply in 2016 is seen to average 1.24 mb/d, 1.23 mb/d, 1.22 mb/d and 1.22 mb/d, respectively.
Africa
Africa’s oil supply is projected to decline by 30 tb/d to average 2.30 mb/d in 2016 y-o-y, an upward revision of 20 tb/d from the previous MOMR. Oil production in Congo and Africa other is expected to grow, while others are forecast to decline, with the exception of South Africa, which should remain steady. On a quarterly basis, Africa’s oil supply in 2016 is forecast to average 2.31 mb/d, 2.31 mb/d, 2.30 mb/d and 2.28 mb/d, respectively.
FSU and other regions
Total FSU oil supply is expected to decline by 0.16 mb/d in 2016 to average 13.43 mb/d, an upward revision of 60 tb/d from the previous month’s estimation and mainly due to an upward revision to Russian output in 2016. Oil production in Russia, Kazakhstan, Azerbaijan and FSU others will decrease in 2016.
On a quarterly basis, total FSU oil supply in 2016 is seen to average 13.55 mb/d, 13.39 mb/d, 13.34 mb/d and 13.46 mb/d, respectively.
Russian oil supply is expected to decrease by 0.06 mb/d to average 10.69 mb/d in 2016, with growth revised up by 50 tb/d from the previous MOMR. On a quarterly basis, total oil supply from Russia in 2016 is seen to average 10.73 mb/d, 10.65 mb/d, 10.64 mb/d and 10.73 mb/d, respectively.
Oil production in Kazakhstan will decline by 30 tb/d to average 1.57 mb/d in 2016, an upward revision of 10 tb/d from the previous month’s forecast. Different sources have said that the giant Kashagan project was unlikely to start production before mid- 2017.
Azerbaijan’s oil production is predicted to decline by 40 tb/d to average 0.82 mb/d in 2016 without any changes in the forecast over the previous MOMR. Lower prices are likely to accelerate declines in Azeri production in 2016 compared to 2015.
Other Europe’s oil supply is estimated to remain flat from 2012 to average 0.14 mb/d and continue at this level in 2016. China
China’s oil supply is expected to grow by 20 tb/d over the previous year to average 4.36 mb/d in 2016. Expected growth was revised down by 40 tb/d from the previous month. With sharp capex cutbacks, particularly by Sinopec and PetroChina, output is set to decline in 2016.
On a quarterly basis, total oil supply from China in 2016 is seen to average 4.34 mb/d, 4.35 mb/d, 4.36 mb/d and 4.41 mb/d, respectively.
OPEC NGLs and non-conventional oils
Output of OPEC natural gas liquids (NGLs) and non-conventional liquids is estimated to average 6.01 mb/d in 2015, representing growth of 0.19 mb/d over the previous year. In 2016, production of OPEC NGLs and non-conventional liquids is projected to average 6.18 mb/d, an increase of 0.17 mb/d over 2015. There are no changes in the 2015 estimation and 2016 predictions for OPEC NGLs and non-conventional liquids compared to the previous MOMR.
OPEC crude oil production
According to secondary sources, total OPEC crude oil production increased by 0.11 mb/d to average 31.57 mb/d in September. Crude oil output increased mostly in Iraq, Nigeria and UAE, while production in Saudi Arabia showed the largest drop of 48 tb/d. According to secondary sources, September OPEC crude oil production, not including Iraq, stood at 27.43 mb/d, an increase by 29 tb/d over the previous month.
World oil supply
Preliminary data indicates that global oil supply decreased by 0.34 mb/d to average 94.16 mb/d in September compared to the previous month. The decline was due to a drop in non-OPEC supply by 0.44 mb/d. The share of OPEC crude oil at 33.5% of total global production increased by 0.2% in September, compared to a month earlier. Estimates are based on preliminary data for non-OPEC supply and OPEC NGLS, while OPEC crude production is reported according to secondary sources.
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