Opec output falls from six-month high

Author Argus

Excerpt from Argus Global Markets’ Opec+ Vienna Special Report: Saudi Arabia accounted for most of the reduction, with Angola also making a substantial cut.

Opec crude output fell slightly from October's revised six-month high of 29.96mn b/d, as Saudi Arabia cut again and Angolan production hit a 13-year-low.

Opec wellhead production

   Nov Oct Target Cut needed* Compliance (%)
Saudi Arabia 9.90 10.10** 10.31 -0.41 228
Uraw 4.63 4.65 4.51 0.12 16
Kuwait 2.71 2.64 2.72 -0.01 116
UAE 3.08 3.10 3.07 0.01 92
Algeria 1.03 1.02 1.02 0.01 84
Nigeria 1.89 1.87 1.77 0.12 -111
Angola 1.30 1.38 1.48 -0.18 485
Congo (Brazzaville) 0.29 0.31 0.32 -0.03 350
Gabon 0.20 0.22 0.18 0.01 -133
Equatorial Guinea 0.16 0.14 0.12 0.04 -825
Ecuador 0.54 0.44 0.52 0.02 -25
Opec 11 25.72 25.87*** 26.03 -0.31 138
Iran 2.15 2.17 NA NA NA
Libya 1.20 1.15 NA NA NA
Venezuela 0.77 0.77 NA NA NA
Total Opec** 29.84 29.96*** NA NA NA

*Negative cut indicates overcompliance
**Iran, Libya and Venezuela are exempt from the deal
Source: Argus Global Markets

Production fell by 120,000 b/d to 29.84mn b/d last month. Compliance among the 11 members that take part in the Opec+ production restraint agreement rose to nearly 140pc, after dipping to an eight-month low in October. Compliance figures are relative to production targets agreed before the ministerial meeting on 6 December.

Saudi Arabia accounted for the lion's share of the November fall, reducing output by 200,000 b/d to 9.9mn b/d. Saudi production had risen past 10mn b/d for the first time since February in October, when it rebounded to an adjusted 10.1mn b/d because of recoveries from drone and missile attacks that briefly crippled Saudi infrastructure and production in mid-September. Analysts said that volatility in Saudi output should be expected in the short term, as the country juggles Opec+ commitments with replenishing the stocks it depleted in September to meet sale obligations to its customers.

Angola saw the second-largest decline, down by 80,000 b/d to 1.3mn b/d. It was the lowest production level since mid-2006. Angola's output has been persistently pressured by underinvestment, compounded by maintenance at the 90,000 b/d Girassol field as of late October.

There were increases from smaller producers and from Libya, which is exempt from quotas in the output agreement. Libya restored 50,000 b/d of production to reach 1.2mn b/d, the highest since April. Ecuador's output rose by 100,000 b/d to 535,000 b/d. Anti-austerity protests in early October had forced state-owned PetroEcuador to impose force majeure on oil exports and briefly slashed crude production to 240,000 b/d.

Let it linger

Internal concerns linger over the production of historically chronic quota busters Iraq and Nigeria, one Opec delegate tells Argus. Iraqi oil minister Thamir Ghadhban laid out plans to bring Iraq into conformity by December after a meeting of the Joint Monitoring Ministerial Committee (JMMC) in Abu Dhabi on 12 September. The Iraqi oil ministry instructed state-owned oil firms on 6 December to reduce output in a concerted effort to improve the country's lagging compliance. Iraqi output fell to a seven-month low of 4.63mn b/d in November, but it was still 120,000 b/d over its production target.

Nigeria has also struggled to meet its quota, despite brief production disruptions caused by internal instability. The 150,000 b/d Nemba Creek Trunk Line was shut in early September, then again on 19 November. Abuja also managed to secure a nearly 90,000 b/d increase to its production quota from June. But rising production from the new 200,000 b/d Egina field has been making it less compliant with even this higher quota. Production rose by 20,000 b/d last month to go 120,000 b/d above its target. Nigerian crude exports will be 1.93mn b/d in December and 1.72mn b/d in January, according to loading schedules. "As November ended, we are completely compliant," Nigerian oil minister Timipre Sylva says. "Our production is at the Opec quota level. We are still very committed to Opec. It is in our best interest to comply."

Saudi Arabia says it needs to see improved compliance from other Opec and non-Opec members, after it single-handedly cut in excess of Opec's entire 800,000 b/d commitment in March-September this year. "Our contribution will continue, only when we see everybody committed to what we have to do," oil minister Prince Abdulaziz bin Salman says.

This blog is an excerpt from the Opec+ Vienna Special Report section of the 06 December 2019 edition of Argus Global Markets, a weekly report containing vital insight into the latest international oil market developments. Click here to view the full special report as a PDF.

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