Preliminary data indicates that global oil supply increased by 0.37 mb/d to
average 95.58 mb/d in November compared with the previous month. Non-OPEC
oil supply is expected to grow by 1.0 mb/d to average 57.51 mb/d in 2015, revised
up by 0.28 mb/d over the previous month’s estimation. The main reasons for this
growth were the upward revisions in the US, the UK, Brazil, Russia and China,
mostly in 3Q15 as well as revision in 4Q15 forecast . It is expected that growth
from OECD Americas, OECD Europe, Other Asia, Latin America, FSU and China
will be partially offset by declines in OECD Asia Pacific, the Middle East and
Africa. Growth in 2015 is expected at potentially higher output levels in 4Q15
from the US, Canada and Russia.
Non-OPEC oil supply in 2016 has been revised
down by 0.25 mb/d to an average of 57.14 mb/d, a contraction of 0.38 mb/d from
2015 levels. Contributing factors include expected steeper production declines in
US shale plays, 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 was revised down by 30 tb/d to grow by 0.16 mb/d and
0.17 mb/d to average 5.99 mb/d and 6.16 mb/d in 2015 and 2016, respectively. In
November, OPEC production increased by 230 tb/d compared to the previous
month to average 31.70 mb/d, according to secondary sources.
Forecast for 2015
Non-OPEC supply
Non-OPEC oil supply growth is expected to be much lower in 2015 than the
tremendous growth of 2.23 mb/d achieved in 2014. Annual growth in 2015 y-o-y ?
based on the latest actual data of historical production and the producing fields’
performances as well as the expected new volumes coming from implemented projects
(either new startups or ramp-ups of old projects) ? w as revised up by 0.28 mb/d to
1.0 mb/d for an average of 57.51 mb/d. This upward revision includes 0.18 mb/d in
OECD Americas, 0.04 mb/d in OECD Europe, 0.01 mb/d in OECD Asia Pacific,
0.03 mb/d in Latin America, 0.01 mb/d in FSU and 0.02 mb/d in China. A minor
downward revision by 0.01 mb/d in Other Asia was also applied in the new estimation.
However, persistently low oil price levels in 2015 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. US tight oil production – the main driver of non-
OPEC supply growth – has been declining since April 2015. This downward trend
should accelerate in coming months, given various factors, mainly low oil prices and
lower drilling activities.
Total OECD oil supply in 2015 is expected to grow by 0.71 mb/d to average
24.90 mb/d. Y-o-y growth in 2015 is expected to come from OECD Americas and
OECD Europe with 0.65 mb/d and 0.10 mb/d, respectively, while OECD Asia Pacific is
forecast to decline by 0.05 mb/d compared to the previous year.
Total oil output from Developing Countries (DCs) will reach an average of 12.33 mb/d
in 2015, an increase of 0.14 mb/d compared to growth of 0.21 mb/d in 2014. This
growth is expected to come from Other Asia with 0.07 mb/d and Latin America with
0.18 mb/d, while oil supply from the Middle East and Africa is estimated to decrease by
0.09 mb/d and 0.02 mb/d y-o-y, respectively.
Total FSU oil supply in 2015 is expected to increase by 0.05 mb/d, while Other
Europe’s supply will remain steady at 0.13 mb/d and China’s supply is expected to
grow by 0.08 mb/d over the previous year, to stand at 4.36 mb/d.
OECD
Total OECD oil supply in 2015 is expected to grow by 0.71 mb/d to average
24.90 mb/d, revised up by 0.23 mb/d from the previous MOMR. Y-o-y growth in 2015 is
expected to come from OECD Americas and OECD Europe with 0.65 mb/d and
0.10 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 25.07 mb/d,
24.87 mb/d, 24.95 mb/d and 24.73 mb/d, respectively.
OECD Americas
OECD Americas’ oil supply in 2015 is estimated to average 20.74 mb/d, showing
growth of 0.65 mb/d y-o-y. Supply in the US and Canada is expected to grow in 2015,
while in Mexico, it is slated to decline.
On a quarterly basis, OECD Americas’ oil supply in 2015 is expected to average
20.94 mb/d, 20.66 mb/d, 20.77 mb/d and 20.58 mb/d, respectively.
US
US oil output was growing at its 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 2015.
Nevertheless, US total oil supply is anticipated to grow by 0.81 mb/d to average
13.77 mb/d in 2015, representing an upward revision of 0.18 mb/d from the previous
MOMR. The average of US crude oil production at 9.35 mb/d in August, based on the
EIA monthly report, indicates a decline of 29 tb/d compared to the average output of
July, and volumes continued to decline in September.
Therefore, it is estimated that US liquids production in 3Q15 declined by 0.09 mb/d over 2Q15 to average 13.87 mb/d.
Shale drillers in the US have slashed spending and cut the number of workers this year
as prices have fallen. For instance, the Chesapeake Energy Corporation, the secondlargest 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.
According to EIA definition; “tight oil” refers to oil found within reservoirs with very low
permeability, including, but not limited to, shale. Permeability is the ability for fluid, such
as oil and gas, to move through a rock formation. In 2014, around 80% of US tight oil
production came from three basins: the Eagle Ford in South Texas (1.37 mb/d or
33.6% of total US tight oil production), the Bakken Shale in North Dakota and Montana
(1.07 mb/d or 26.1% of total US tight oil production) and finally, the Permian in North
Texas (including Delaware, Midland and NW Shelf), which produced 0.83 mb/d in 2014
or 20.2% of total US tight oil production.
Tight oil production in the US represents 89% of all North American tight oil production, with the remaining 11% (0.36 mb/d) coming from Canada. 2015 tight crude production is estimated to grow by 0.44 mb/d to average 4.40 mb/d, while 2016 growth is expected to decline by 170 tb/d, to average 4.23 mb/d. This forecast is based on the current oil price environment, meaning producers have shifted focus to their cash flows. Total US tight liquids (tight crude and unconventional NGLs) production from US shale in 2014 was 5.6 mb/d and is estimated at 6.2 mb/d in 2015, declining to 6.0 mb/d in 2016.
Oil production from the Eagle Ford shale, based on Texas Railroad Commission
(RRC) data, declined by 66 tb/d m-o-m to 1.2 mb/d in August. The total tight crude
production from this shale play in 2014 was 1.37 mb/d, and it is expected to reach
1.49 mb/d in the current year, but will decline to 1.45 mb/d in 2016. Tight crude output
in December 2014 peaked at 1.48 mb/d, while the number of oil rigs declined by 4 rigs
to 62 in November m-o-m, dropping y-o-y by 134 rigs. $18.3 bn is expected to be spent
for drilling and completion at Eagle Ford in 2015. According to the latest drilling
productivity report (DPR) of EIA, new well productivity in this play reached the highest
level, at 795 b/d, in November 2015. The number of drilled but uncompleted (DUC)
wells dropped to 747 in October 2015.
Tight crude production from the Bakken/Three Forks shale formation in North Dakota
decreased by 25 tb/d to average 1.16 mb/d in September. The decline comes as the
number of producing wells fell by 21, although the number of completions rose m-o-m
by eight to 123. The backlog of DUC wells rose by 98 units m-o-m to 1,091, but
declined again in October to 946 uncompleted wells. Crude production in the
Bakken/Three Forks shale peaked at 1.22 mb/d in December 2014, and the number of oil rigs in Williston basin in November decreased by 1 rig to average 63 rigs m-o-m,
while it dropped by 127 rigs a year ago. According to the latest DPR published by EIA,
new well productivity in December 2015 in this shale play was 717 b/d. The total tight
crude production in 2014 was 1.07 mb/d and is expected to reach 1.14 mb/d in the
current year, while in 2016, it will decline to 1.1 mb/d.
Oil production from the Permian shale plays in Delaware, Midland and North West
Shelf declined by 31 tb/d m-o-m to 1.05 mb/d in August. The total tight crude
production in 2014 was 0.84 mb/d and is expected to reach 0.98 mb/d in 2015. Tight
crude output in May 2015 peaked at 1.12 mb/d, while the number of rigs declined by 8
rigs to 221 rigs in November, m-o-m while the yearly decline registered at 339 rigs. An
estimated $18.7 bn will be spent for drilling and completion at the Permian in 2015.
According to the latest EIA DPR, new well productivity at this play reached the highest
level at 412 b/d in December 2015. The number of DUC wells dropped to 747 in
October 2015. One of the biggest drivers of growth in the Permian has been Pioneer
Natural Resources, which has benefitted from one of the largest hedge books in the
industry, valued at $850 million as of September. After the price rally in 2Q15, the
company announced plans to add two rigs per month until the end of the year, but the
price fall since then has meant even the bigger players, which are less constrained
financially, have scaled back their ambitions and drilling plans.
Tight crude production from the Niobrara play, located in Colorado, averaged
0.22 mb/d in 2014. Average output in 2015 is likely to increase to 0.26 mb/d, then
decline to 0.24 mb/d in 2016. The EIA DPR forecasts new well productivity in
December at 667 b/d and declines in production were due to legacy declines stepping
up, with the agency expecting a 20 tb/d decline in November.
A relatively high proportion of condensate has been found in liquids output, and this has forced some companies to move into more oil-rich acreage such as in the eastern liquid-rich Denver-Julesburg (DJ) basin, where the Niobrara and Codell formations are generating greater revenue. Oil production from the Niobrara shale declined by 10 tb/d m-o-m to 0.27 mb/d in August. Tight crude output in May 2015 peaked at 0.30 mb/d, while the number of rigs declined to 23 in November, dropping y-o-y by 22 rigs. An estimated $5.4 bn will be spent on drilling and completion at the Niobrara shale formation in 2015.
Moreover, tight crude production in other regions, including Haynesville, Marcellus and
Utica will increase by around 70 tb/d to average 0.66 mb/d in 2015 and then decrease
to 0.64 mb/d in 2016.
Gulf of Mexico (GOM) production is running higher y-o-y by 0.12 mb/d in the year-to-
August, benefitting from several 2H14 and early 2015 startups. In August, GOM output
was pegged at 1.65 mb/d, higher m-o-m by 63 tb/d. In 3Q15, strong operational
performance registered at the Mars platform (Mars, Ursa and West Delta 143 fields).
August was, however, impacted by the Mad Dog field going offline due to planned
works for 10 days, although the field ramped up to pre-shutdown levels of 37 tb/d within
a day. In September, output was supported by a ramp-up of Delta House FPSO, which
came on stream in April. The field had ramped up to 62 tb/d from seven wells, and the
eighth well was due to come on at the end of October, which would help take output
close to nameplate capacity of 80 tb/d. Peak output is expected a year later after three
additional wells come online, taking output to 0.1 mb/d. October saw maintenance at
the Atlantis field for three days which reduced output by around 50 tb/d for the
three/four days. The Marco Polo platform was also shut for a week in early October but
returned to normal operations as of mid-month. Finally, the end of October saw the
early startup of the Big Bend development with the single well in operation expected to
ramp-up to just under 20 tb/d by mid-November. The operator company has also
accelerated the Dantzler development and now expects first production in early
November. Both will be tie-backs to the Thunder Hawk production facility. Growth of
0.17 mb/d and 0.10 mb/d in 2015 and 2016, respectively, is expected.
US oil rig count
According to Baker Hughes’ latest weekly report on 4 December 2015, the total drilling
rig count in the US dropped by 1,183 rigs (-61.6%) y-o-y, to 737 rigs. More than 96% of
this decline was in onshore fields. With regard to the split, rigs working in oil fields
dropped by 65.4% from the same period a year earlier, while the number of active rigs
working in US gas fields declined by 44.2%. In total, there was a 61.4% decline on
average in the rig count in the tight oil regions. This was more or less in line with the
decline in horizontal drilling at -58.4% y-o-y.
Comparison details of US rig activities from different aspects registered on 2 December
2015 can be seen in Table 5.3, followed by the charts below. Moreover, Graph 5.8
also shows US weekly oil rig count activity compared to crude oil production up to
4 December 2015.
On a quarterly basis, US oil supply in 2015 is expected to average 13.69 mb/d,
13.97 mb/d, 13.87 mb/d and 13.57 mb/d, respectively. US liquids q-o-q changes compared to other non-OPEC supply.
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, unchanged from the last MOMR. Final June data shows conventional output fell
by 0.17 mb/d y-o-y to 1.19 mb/d, the lowest level since August 2012, suggesting
conventional declines have continued. Moreover, output of NGLs declined to
0.69 mb/d. The number of active rigs in Canada in November 2015 fell to just
178 units, lower y-o-y by 243 rigs, with 74 units (41%) working in oil fields and 104 rigs
active in gas fields. Out of the total rig count in November, 115 rigs are active in Alberta
State, mostly for oil sands production.
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 joint venture upgrader production.
Estimates place July Canadian output higher m-o-m by 0.22 mb/d to average 4.29 mb/d. Oil sands output reached successive record highs also in July and August,
as ExxonMobil’s Nabiye and Kearl expansion projects ramped up. The two projects
have already added a combined 0.12 mb/d of extra heavy crude supply, and are
expected to add a further 30 tb/d by year-end, weighing sharply on Canadian heavy
crude prices. While August saw Canadian bitumen output remain flat m-o-m,
production from the Syncrude 0.33 mb/d upgrader likely declined by 0.2 mb/d due to an
unplanned outage. Preliminary September data indicates Canadian oil production fell
by 0.14 mb/d y-o-y to just over 4.0 mb/d. Preliminary September Syncrude output also
fell to just 63 tb/d, lower by 0.21 mb/d y-o-y due to a fire at the facility. This took total
Canadian oil sands production to 2.2 mb/d, higher y-o-y by just 17 tb/d, the slowest
pace of growth since May 2013.
Conventional oil output offshore and onshore, including tight oil, continued falling, down
by over 0.15 mb/d y-o-y across 3Q15, as the onshore rig count fell to just 70 rigs by the
end of September, lower y-o-y by 152. Indeed, September Canadian oil production fell
by 0.14 mb/d y-o-y to just over 0.4 mb/d. The y-o-y declines were driven by falling
conventional production, which dropped by 0.17 mb/d to 1.2 mb/d.
Canadian output in 2Q15 was 4.13 mb/d, which was lower y-o-y by 60 tb/d while
representing a huge decline of 0.47 mb/d compared to 1Q15. This decline was due not
only to the seasonal pattern, but also to a wildfire in Alberta.
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,
where 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. September has seen crude output remain broadly flat m-o-m,
with the y-o-y decline easing to 0.12 mb/d. Mexico’s oil supply in 3Q15 declined by
more than 6%, or 170 tb/d, over the same quarter a year earlier. Mexican liquids output
was also more or less steady m-o-m at 2.61 mb/d in October, with y-o-y declines
easing to 0.12 mb/d, as renewed weakness in production from September 2014
onwards provided a low base. 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 y-o-y, down by
85 tb/d, the steepest decline in over 10 years. The same condition was seen in Cantarell and Ligero Marino. With rigs falling to their lowest levels since June 2003, at
just 35 rigs by November, declines are likely to step up 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 100 tb/d – to average 3.70 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.
OECD Europe in 2015 is estimated to see quarterly supply of 3.69 mb/d, 3.77 mb/d,
3.68 mb/d and 3.68 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. Norwegian October liquids output picked up m-o-m to
1.95 mb/d, led by a 53 tb/d m-o-m increase in NGLs. According to data from the
Norwegian Petroleum Directorate (NPD), preliminary production figures for October
2015 show an average daily production of about 1.95 mb/d of oil, NGLs and
condensate, which is 85 tb/d (about 4.5%) more than in September 2015. The average
daily liquids production in September was: 1.57 mb/d of oil, 0.33 mb/d of NGLs and
0.04 mb/d of condensate. The NPD also mentioned that oil production was about 0.5%
below the figure seen in October of last year.
October saw the return of the 70 tb/d Skarv field, which had been offline for the last
10 days of September. The start of Eni’s 0.1 mb/d Goliat field has been delayed as the
regulator found the FPSO to have eight nonconformities relating to electrical safety.
Overall, 0.28 mb/d of new fields (if Goliat starts by year-end) and less maintenance
should keep y-o-y output growth positive for the second straight year in 2015, although
a high base will keep growth flat in 4Q15 at 1.92 mb/d.
A new field, Edvard Grieg, started producing in the North Sea on Saturday,
28 November. This field is the Lundin operating company's first major development
project on the Norwegian shelf. Expected recoverable resources from the field total
182 mboe, mainly oil. The field's startup is in accordance with the Plan for Development and Operation (PDO).
Development costs have increased somewhat, but the increase is within the uncertainty range of plus/minus 20% in the PDO’s investment estimate. The field is developed with a fixed platform, resting on the seabed. The oil is transported by pipeline (EGOP) to the Grane oil pipeline and on to the Sture terminal north of Bergen. The gas is transported in a separate pipeline (UHGP), which is tied in to the pipeline network on the UK side (SAGE).
On a quarterly basis, Norway’s oil production in 2015 is seen to average 1.93 mb/d,
1.93 mb/d, 1.91 mb/d and 1.92 mb/d, respectively.
The UK’s oil supply is estimated to grow by 90 tb/d to an average of 0.94 mb/d in 2015
y-o-y. Preliminary estimates for 3Q15 show a drop of 0.10 mb/d compared with 2Q15,
but nevertheless higher by 0.20 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. September output rebounded to 1.0 mb/d,
with the Forties loading programme rising by 91 tb/d m-o-m to 0.44 mb/d. 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 tboe/d, was slated to achieve first oil in October.
UK liquids production was pegged at 0.95 mb/d in October, lower m-o-m by 50 tb/d.
This decline was due to an outage at Buzzard on 15 October with production at the
field taking several days to ramp back up after a four-day closure. In November, the
field operated at reduced rates for a number of days due to technical issues, which
would have weighed on output. Buzzard’s recent problems are reflected in the number
of cargo deferrals, with one cargo scheduled for December dropped, while six more
December cargoes have seen postponements. Recent outages have occurred in the
wake of several delays to planned maintenance at the field (originally due in June), with
works now postponed until 2016. The timing and duration of Buzzard’s maintenance is
unconfirmed, but given the significant cutbacks in maintenance capex by major oil
companies, it is likely to occur when there is a large unplanned outage.
On a quarterly basis, UK oil output in 2015 is estimated to average 0.93 mb/d,
1.0 mb/d, 0.95 mb/d and 0.95 mb/d, respectively.
OECD Asia Pacific
OECD Asia Pacific’s oil supply is expected to decline by 50 tb/d in 2015, averaging
0.46 mb/d. On a quarterly basis, total OECD Asia Pacific oil supply in 2015 is expected
to average 0.43 mb/d, 0.45 mb/d, 0.50 mb/d and 0.47 mb/d, respectively.
Australia’s oil supply is slated to decline this year by 50 tb/d to average 0.38 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 12.33 mb/d
in 2015, an increase of 0.14 mb/d compared to growth of 0.21 mb/d in 2014.
On a quarterly basis, total oil supply in DCs in 2015 is estimated to average
12.51 mb/d, 12.38 mb/d, 12.24 mb/d and 12.21 mb/d, respectively.
Other Asia
Other Asia’s oil production is predicted to increase by 70 tb/d in 2015 to average
3.55 mb/d. 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 likely decrease by
20 tb/d and 10 tb/d, respectively. Brunei’s output is expected to remain steady.
India
In India, output over the first three quarters of 2015 has been in line with 2014 levels at
760 tb/d, which is slightly lower compared to 2-3 years ago when production was close
to 770-780 tb/d. Recently, declines in onshore production have been countered by
increases in production from offshore fields. In particular, Cairn, India, managed to
grow output at its two offshore fields, Ravva and Cambay, recently; output at its major
Rajasthan block, however, has been declining. The company plans to use enhanced
recovery methods to boost production back up to 200 tb/d from the current 170-
180 tb/d. On a quarterly basis, Other Asia’s oil supply in 2015 is estimated to stand at 3.60 mb/d, 3.61 mb/d, 3.51 mb/d and 3.50 mb/d, respectively.
Latin America
Latin America’s oil supply is estimated to grow by 0.18 mb/d to average 5.19 mb/d in
2015. Latin America was the second-highest driver of growth in 2014 among all non-
OPEC regions. Brazil is the main driver of growth in 2015 by 0.20 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, 5.18 mb/d and 5.18 mb/d, respectively.
Brazil’s liquids supply is expected to average 3.06 mb/d in 2015, an increase of
0.20 mb/d over the previous year. A record level of liquids output was pegged at
3.17 mb/d in August of the current year. The increase came from the ramp-up of the
0.15 mb/d FPSO Cidade de Itagua? in the Lula field, while 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. Brazilian crude oil and NGL
production in September fell m-o-m by 0.15 mb/d to 2.40 mb/d due to large platforms
shutting down for maintenance, in particular the P-52 platform in the Roncador field.
Pre-salt output reached 0.9 mb/d during the month, although average output across
September declined by more than 30 tb/d. Thus, y-o-y growth eased to just 27 tb/d, the
lowest since January 2014. While October output was flat m-o-m, November could see
production decline by 0.1-0.3 mb/d across the month due to Brazil’s largest workers
union (FUP) starting a strike to protest against asset sales by Petrobras. Even before
the strike, Brazilian output would have struggled to grow strongly as the sharp drop in
maintenance capex will likely lead to a decline in Campos basin output. Biofuel output
in September was steady at 0.53 mb/d.
On a quarterly basis, Brazil’s oil supply in 2015 is estimated to stand at 3.06 mb/d,
3.02 mb/d, 3.09 mb/d and 3.09 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. 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
of 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, 1.24 mb/d and 1.23 mb/d, respectively.
Africa
Africa’s oil supply is projected to average 2.34 mb/d in 2015, a decline of 20 tb/d
y-o-y. 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. While Chad, Congo and Africa Others will
see supply declines, other countries, such as Egypt, Gabon and South Africa, will see
steady production in 2015.
On a quarterly basis, Africa’s oil supply in 2015 is expected to average 2.38 mb/d,
2.37 mb/d, 2.31 mb/d and 2.31 mb/d, respectively.
FSU, other regions
Total FSU oil supply is expected to increase by 50 tb/d in 2015 to an average of
13.60 mb/d. 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,
13.61 mb/d, 13.55 mb/d and 13.55 mb/d, respectively.
Russia
Russian oil supply in 2015 is expected to grow by 90 tb/d to average 10.77 mb/d.
October and November output rose to a post-Soviet record of 10.90 mb/d and
10.88 mb/d, respectively. The increase continues to be led by Gazprom, Bashneft and
PSA operators, as their output is biased towards condensate, while Lukoil’s and
Rosneft’s output continued to fall, with Lukoil’s output down y-o-y by 2.9% and
Rosneft’s by 0.9%. In 2015, the regions seeing the biggest supply additions are
Northern Russia and East Siberia, while West Siberia recorded the biggest losses
overall on a y-o-y basis.
On a quarterly basis, Russia’s 2015 oil supply is expected to average 10.74 mb/d,
10.76 mb/d, 10.79 mb/d and 10.77, mb/d, respectively.
Caspian
Kazakhstan’s oil supply is expected to decrease by 40 tb/d over the previous year to
average 1.59 mb/d in 2015. 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. The latest
guidance from Eni suggests the Kashagan field is on track for a late 2016 startup, so
the contribution to supplies next year is likely to be minimal.
Azeri oil supply is anticipated to decline by 10 tb/d to average 0.86 mb/d in 2015,
indicating steady production during 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 into
decline. Planned maintenance at the Chirag platform for 20 days starting 20-
22 October will also weigh in 4Q15. Year-end sees lower output from Azerbaijan due to
maintenance at the ACG complex for 25 days from 10 November.
Other Europe’s oil supply remained unchanged to average 0.14 mb/d in 2015,
indicating steady production during the year.
China
China’s oil supply is expected to grow by 80 tb/d over the previous year to average
4.36 mb/d in 2015, due to strong output in 2Q15, continuing into 3Q15. Chinese crude
production in October eased m-o-m by 58 tb/d to 4.27 mb/d, the lowest since April. The
y-o-y growth eased to just 36 tb/d, the slowest since February.
On a quarterly basis, China’s oil supply in 2015 is estimated to average 4.33 mb/d,
4.39 mb/d, 4.38 mb/d and 4.36 mb/d, respectively.
Forecast for 2016
Non-OPEC supply
Non-OPEC oil supply in 2016 is expected to contract by 0.38 mb/d over the current
year to average 57.14 mb/d. It has been revised down by 0.25 mb/d from the previous
MOMR. This revision is due to downward revisions in some countries’ production
forecasts as mentioned in the table below, mostly due to the expected higher declines.
The weak growth trend estimated in some countries for 2015 is expected to persist,
leading to a contraction in 2016, which is supported by declines from the OECD at
-0.25 mb/d and FSU at -0.19 mb/d.
On a regional basis, OECD Americas will decline by 0.18 mb/d, OECD Europe by
0.07 mb/d, the Middle East at 0.02 mb/d, Africa by 0.03 mb/d and FSU by 0.19 mb/d in
2016. The other regions – Other Asia, Latin America and China – are expected to be
the main contributors of non-OPEC incremental growth with 0.06 mb/d, 0.03 mb/d and
0.01 mb/d, respectively. Oil production in OECD Asia Pacific is forecast to be stagnant
in 2016.
On a quarterly basis, non-OPEC oil supply in 2016 is projected to stand at 57.05 mb/d,
56.92 mb/d, 56.98 mb/d and 57.60 mb/d, respectively.
The forecast for non-OPEC supply in 2016 is associated with a high level of risk.
OECD
Total OECD oil supply in 2016 is expected to decline by 0.25 mb/d to average
24.65 mb/d, an upward revision in absolute supply by 10 tb/d, while the growth was
revised down by 0.21 mb/d from the last MOMR. The y-o-y decline in the OECD in
2016 is expected to come from OECD Americas by 180 tb/d and OECD Europe by
70 tb/d, while OECD Asia Pacific is expected to remain unchanged compared to the
previous year.
On a quarterly basis, total OECD supply in 2016 is estimated to average 24.60 mb/d,
24.54 mb/d, 24.54mb/d and 24.91 mb/d, respectively.
OECD Americas
OECD Americas’ oil supply in 2016 is estimated to average 20.56 mb/d, showing a
decline of 180 tb/d y-o-y and representing a decline of 0.83 mb/d from the expected
growth in 2015. 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
20.43 mb/d, 20.47 mb/d, 20.53 mb/d and 20.79 mb/d, respectively.
US
US total oil supply is anticipated to decline by 0.17 mb/d to average 13.60 mb/d in
2016, representing a decline of 0.98 mb/d from the expected growth of 0.81 mb/d in
2015.
According to US field development in onshore fields both conventional and tight oil as
well as new project startups in GOM in 2016, assuming the latest output trend in 3Q15,
US total liquids production is expected to decline by 0.17 mb/d 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 0.44 mb/d in 2015 to contract by 0.17 mb/d in 2016, affected by the low oil price environment. Out of total new planned
oil production capacity from six new projects expected to come on stream in 2016 in
GOM, only 100 tb/d are expected to be added to GOM’s output in the next year.
Production of NGLs from unconventional sources of tight formations and conventional
crude oil particularly in Alaska are also expected to decline by 30 tb/d and 70 tb/d in
2016, respectively.
A total of 19 permits were issued in GOM in October 2015, up from 13 in September,
but down from 21 a year ago; eight permits were issued for new wells, including three
deepwater, four midwater and one ultra-deepwater. Five permits were issued for side
tracks while six were issued for bypasses and eight for new wells. A total of 154 new
permits have been issued y-t-d, down 42% versus 2014, driven by sharply lower
bypass and new well permits.
Only 58 new well permits have been issued y-t-d, compared with 105 as of this time
last year. While the number of ultra-deepwater and midwater new well permits has
been largely resilient over the past year, only 18 deepwater and 12 shallow-water new
well permits have been issued y-t-d, down 18% and 76%, respectively, from a year
ago. Meanwhile, the number of new oil and gas exploration plans filed in GOM was
steady month-to-month, with operators filing five plans to drill a total of 22 wells, versus
five plans to drill 14 wells in September. No development plans were filed to drill in
October, and development of the Lower Tertiary appears to remain a long ways off as
the industry has filed few development plans y-t-d.
On a quarterly basis, total US supply in 2016 is estimated to average 13.46 mb/d,
13.57 mb/d, 13.60 mb/d and 13.77 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 decline of 20 tb/d from the initial forecast. This is partially due to higher
expected declines in conventional output and uncertainties over the materialization of
new projects. Around 0.2 mb/d ? mostly from project 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 ? are expected to
come on stream 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 130 tb/d to
average 2.47 mb/d, compared to the expected heavy decline of 0.21 mb/d in 2015.
On a quarterly basis, total Mexican oil supply in 2016 is estimated to average
2.52 mb/d, 2.45 mb/d, 2.46 mb/d and 2.53 mb/d, respectively.
OECD Europe
Total OECD Europe oil supply is expected to decline by 70 tb/d to average 3.63 mb/d
in 2016, a decrease of 60 tb/d from the initial forecast. This is mainly due to the
downward revision in Norway and the UK’s future output. OECD Europe is estimated to
see quarterly oil supply in 2016 of 3.71 mb/d, 3.61 mb/d, 3.54 mb/d and 3.68 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. Around 0.24 mb/d is expected to be added at the peak to Norway’s
2016 production mostly through project ramp-ups, for example from Gudrun, Aasgard
LP, Valemo, the infill drilling project of Troll, Goliat, Knarr and other small schemes.
There are only two projects scheduled to start in 2016 (totalling 51 tb/d), including the
Edward Grieg field, which started production in late November 2015. Field
maintenance will likely be heavier than in 2015, when it saw some of the lowest levels
on record. Moreover, lower maintenance capex is likely to result in higher base
declines. Also, production will be suspended at Njord Future Projects’ fields in 2Q16,
and are due to resume in 2019, with the Njord A facility to be towed ashore in the
summer. Norway sees 2015 oil investment falling y-o-y by 11.3%, 2016 falling by 8.1%
and 2017 falling by 5.5% (NOK terms). While output in 1H16 will benefit from late 2015
startups—namely Goliat and Edvard Grieg, negligible new additions along with reduced
infill drilling will probably lead to output declines in 2H16, which will likely accelerate in
2017.
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 decline by 50 tb/d compared to higherthan- expected growth in 2015, averaging 0.91 mb/d, revised down by 50 tb/d due to abase change in 2015. 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, supporting output growth next year. However, a higher base, heavier maintenance next year and accelerating decline rates will keep production declining in 2016.
On a quarterly basis, total UK oil supply in 2016 is estimated to average 0.94 mb/d,
0.88 mb/d, 0.86 mb/d and 0.95 mb/d, respectively.
OECD Asia Pacific
OECD Asia Pacific’s oil supply is expected to be stagnant in 2016 with an average of
0.46 mb/d, a downward revision of 20 tb/d from the last MOMR. Australia’s oil supply
will grow by 20 tb/d to average 0.41 mb/d.
On a quarterly basis, total OECD Asia Pacific oil supply in 2016 is estimated to average
0.45 mb/d, 0.47 mb/d, 0.47 mb/d and 0.45 mb/d, respectively.
Developing Countries
Total DCs’ oil output will grow by 40 tb/d to average 12.38 mb/d in 2016, unchanged
from the last MOMR.
On a quarterly basis, total DCs’ oil supply in 2016 is estimated to average 12.25 mb/d,
12.32 mb/d, 12.42 mb/d and 12.52 mb/d, respectively.
Other Asia’s oil production is predicted to increase by 60 tb/d in 2016 to average
3.62 mb/d, with growth revised down by 10 tb/d from the last MOMR. Oil output in
Malaysia, Indonesia and Asia others is expected to increase, while production in
Vietnam and Brunei is forecast to decline. Oil production in India and Thailand is slated
to be stagnant during 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 3.66 mb/d, respectively.
Latin America’s oil supply is estimated to grow by 30 tb/d to average 5.22 mb/d in
2016, a downward revision of 10 tb/d from the last MOMR. Latin America has been the
second-highest 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 forecast to be 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
5.13 mb/d, 5.16 mb/d, 5.23 mb/d and 5.35 mb/d, respectively.
The pace of growth in Brazil is expected to slow substantially in 2016 by 0.11 mb/d to
average 3.17 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 region are already registering steep declines. For example, the Marlin
field, which produced 0.24 mb/d in 2014, has declined by more than 30% in 2015,
which was 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. To illustrate the challenges facing Petrobras, in its 3Q15 earnings call
earlier today, the company signaled further reductions to upstream activity that are
likely to result in delays to projects scheduled to startup next year. The company
indicated it is reducing its fleet of drill ships and platforms as contracts expire and is
cutting its 2016 well drilling programme. The company indicated it may have to adjust
its 2020 production outlook, which is currently set at 2.8 mb/d following a 1.4 mb/d cut
already made at the end of June.
At present, three projects are due to startup next year with a combined capacity of
0.38 mb/d — two in 1Q16 and one in 3Q16. The wording of the announcement is
vague but suggests more than one project may be delayed. If several startups are
delayed into 2017, then it will have significant consequences for Brazilian production
next year, particularly as only one project came on stream this year (the 0.15 mb/d FPSO Cidade de Itaguai in Iracema Norte in August), compared to four in 2014 (total
0.66 mb/d). Any delays to new projects will come at a time when decline rates at
existing fields step-up due to sharp reductions in maintenance capex. If some or all of
the three planned startups do not come online as planned, then Brazil may struggle to
record any growth at all.
Brazil’s biofuel production is expected to grow by only 20 tb/d in 2016, although
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 3.07 mb/d,
3.11 mb/d, 3.22 mb/d and 3.29 mb/d, respectively.
Middle East oil supply is estimated to decrease by 20 tb/d in 2016 from the previous
year to average 1.23 mb/d, revised down by 10 tb/d from the last MOMR due to a
better production performance and the expected growth of 10 tb/d for the next year in
Oman. There is no expectation for growth or decline in oil supply in Bahrain and Syria,
while oil output in Yemen is expected to decline by 30 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,
1.24 mb/d, 1.23 mb/d and 1.22 mb/d, respectively.
Africa’s oil supply is projected to decline by 30 tb/d to average 2.31 mb/d in 2016
y-o-y, unchanged from last month’s prediction. Oil production in Congo and Africa
others 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 2.32 mb/d,
2.32 mb/d, 2.31 mb/d and 2.29 mb/d, respectively.
FSU and other regions
Total FSU oil supply is expected to decline by 0.19 mb/d in 2016 to average
13.41 mb/d, revised down by 30 tb/d from the last MOMR. 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 13.53 mb/d,
13.36 mb/d, 13.32 mb/d and 13.42 mb/d, respectively.
Russian oil supply is expected to decrease by 0.06 mb/d to average 10.70 mb/d in
2016. On a quarterly basis, total oil supply from Russia in 2016 is seen to average
10.75 mb/d, 10.67 mb/d, 10.66 mb/d and 10.73 mb/d, respectively.
Caspian
Oil production in Kazakhstan is forecast to decline by 60 tb/d to average 1.53 mb/d in
2016, a downward revision of 30 tb/d from last month’s prediction. Different sources
have said that the giant Kashagan project is 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, unchanged since the last MOMR. Lower prices are likely to accelerate declines
in Azeri production in 2016 compared to 2015.
FSU others’ oil production, mainly in Turkmenistan, will decline by 30 tb/d in 2016 to
average 0.36 mb/d.
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 10 tb/d over the previous year to average
4.37 mb/d in 2016. Expected growth was revised down by 10 tb/d from the last MOMR.
With sharp capex cutbacks, particularly by Sinopec and PetroChina, output is set to
decline in these two companies’ operations in 2016.
On a quarterly basis, total oil supply from China in 2016 is seen to average 4.35 mb/d,
4.36 mb/d, 4.37 mb/d and 4.42 mb/d, respectively.
OPEC NGLs and non-conventional oils
Output of OPEC natural gas liquids (NGLs) and non-conventional liquids is estimated
to average 5.99 mb/d in 2015, representing growth of 0.16 mb/d over the previous year
and revised down by 30 tb/d compared to the last estimations. In 2016, production of
OPEC NGLs and non-conventional liquids is projected to average 6.16 mb/d, an
increase of 0.17 mb/d over 2015, unchanged in growth from the last month’s forecast.
OPEC crude oil production
According to secondary sources, total OPEC crude oil production in November
increased by 0.23 mb/d over the previous month to average 31.70 mb/d. Crude oil
output increased mostly in Iraq, by around 248 tb/d, to average 4.3 mb/d. According to
secondary sources, November OPEC crude oil production, not including Iraq, stood at
27.39 mb/d, a decrease of 17 tb/d over the previous month.
0
World oil supply
Preliminary data indicates that global oil supply increased by 0.37 mb/d to average
95.58 mb/d in November, compared to the previous month. The increase was due to
growth of 0.14 mb/d in non-OPEC supply and 0.23 mb/d in OPEC crude production.
According to Baker Hughes, the rotary rig count in North America declined by 37 rigs
while it increased by 16 rigs in the Middle East in November 2015, m-o-m. The number
of world’s active rotary drilling rigs decreased by 39 rigs to 2,047 rigs m-o-m, in
November 2015, while it dropped by 1,623 rigs from last November.
Since 2008, the share of OPEC crude in global supply has declined. However, the first
11 months of 2015 show an average of 32.9%, higher by 0.4 pp than the previous year.
This share reached at 33.2% in November 2015. Estimates are based on preliminary
data for non-OPEC supply and OPEC NGLs, while OPEC crude production is reported
according to secondary sources.
