Analysis - Problems dent Opec output
London, 9 July (Argus) — Opec production fell marginally in June, as a result of scattered output problems.
Lower than expected production from BP's 200,000 b/d Greater Plutonio field dented Angolan output. And Iraqi production fell after shipments of medium sour Kirkuk crude to the Turkish port of Ceyhan halted for around 10 days in June because of a pipeline leak.
Production hitches were only partly offset by higher Nigerian output. A government amnesty and a rebel ceasefire that has held since last year have let firms restore some production in the Niger delta that was previously shut in.
Output by the 11 Opec members excluding Iraq was slightly lower in June. But it still averaged 26.73mn b/d in the first half of this year, 640,000 b/d higher than a year earlier and nearly 1.9mn b/d above the organisation's 24.845mn b/d target.
Asia-Pacific demand has helped absorb the extra supply. Global oil demand may rise by 2.2mn b/d this year, while non-Opec crude and Opec natural gas liquids (NGLs) supply is forecast to rise by 1.7mn b/d, according to Argus Fundamentals. This will leave the call on Opec crude at 29.3mn b/d. Total Opec output in January-June was 29.18mn b/d.
Opec has plentiful spare capacity, mostly in Saudi Arabia. Iran's Opec governor Mohammad Ali Khatibi says the economic crisis has boosted Opec spare capacity to 4mn-6mn b/d. “This will be having a psychological effect on the oil price,” he says.
But Opec is likely to have to stay disciplined over output levels for the rest of this year at least. The IMF has revised global economic growth forecasts higher for 2010, particularly in the crude-thirsty developing markets of Asia-Pacific (see p5). But the forecast revision mostly reflects effects from the first half of this year. And concerns over the potential for a double-dip recession remain, especially with more countries pushing fiscal austerity measures.
For now, Opec remains cautious over production levels. The organisation says global oil demand will rise by 950,000 b/d this year and that non-Opec supply and the supply of Opec NGLs and non-conventional oil will rise by just over 1.1mn b/d. As a result, demand for Opec crude will be 28.77mn b/d, or more than 400,000 b/d less than the organisation produced in the first half of this year.
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Opec wellhead production mn b/d |
|
Jun |
May |
Target |
Target |
Comp. |
|
|
|
|
cut* |
%‡ |
Saudi Arabia |
8.27 |
8.25 |
8.051 |
1.318 |
83 |
Iran |
3.7 |
3.72 |
3.336 |
0.562 |
35 |
Kuwait |
2.3 |
2.3 |
2.222 |
0.374 |
79 |
UAE |
2.27 |
2.3 |
2.223 |
0.379 |
88 |
Qatar |
0.8 |
0.82 |
0.731 |
0.122 |
43 |
Algeria |
1.3 |
1.3 |
1.203 |
0.2 |
52 |
Libya |
1.56 |
1.56 |
1.469 |
0.252 |
64 |
Nigeria |
2.15 |
2.05† |
1.673 |
0.319 |
-50 |
Venezuela |
2.21 |
2.21 |
1.986 |
0.364 |
38 |
Angola |
1.75 |
1.83 |
1.517 |
0.244 |
5 |
Ecuador |
0.48 |
0.48 |
0.434 |
0.067 |
31 |
Opec 11 |
26.79 |
26.82† |
24.845 |
4.2 |
54 |
Iraq |
2.42 |
2.47 |
na |
na |
na |
Opec 12 |
29.21 |
29.29† |
na |
na |
na |
*based on September 2008 baseline production in Opec MOMR †revised ‡compliance with cut |
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