En Español



Very usefull links



PW
Bookstore





Institutional
links


OPEC
\





 




PW
Business Partners

 


IRAQ OIL THE FORUM

 


Blogspots

FxHQ Forex News

The Global Barrel

Tiempo Cultural

Gustavo Coronel

Iran Watch.org

Le Blog des
Energies Nouvelles

News Links

AP

AFP

Aljazeera

Dow Jones

Reuters


Bloomberg

Views and News
from
Norway

 

 


Lagniappe

 

Julian Lee: OPEC's futile freeze


All countries except Saudi Arabia have no plans to increase production


Next month's gathering of oil ministers from OPEC and non-member countries is fixating traders. But the real re-balancing in the market is already underway -- and much of it is taking the form of involuntary production cuts from OPEC members.

Speculation that the meeting in Doha will lead to a production freeze has been a boon for oil, helping to drive a 40% rise in Brent since the idea was first mooted just over a month ago, to more than $42 a barrel.

Freeze Talk Lifts Prices

Brent has risen to more than $40 a barrel amid speculation about an output freeze

Source: Bloomberg

But a freeze would be empty gesture. None of the countries that intend to take part, with the possible exception of Saudi Arabia, was expected to raise production in any case.

Most OPEC countries are already producing at capacity, while output in Russia, the biggest producer outside OPEC, is expected to fall over the course of 2016 as ageing West Siberian deposits aren't replaced.

Iran, the only country expected to raise output significantly this year, has said it will only freeze output once it has reached 4 million barrels per day. It is currently producing about 3 million barrels after sanctions on its oil exports were eased in January.

Saudi Arabia might be expected to raise production in the summer, when peak seasonal electricity demand will boost the amount of crude oil burned in power stations by as much as 600,000 barrels per day from the current level. However, the kingdom had 314 million barrels in storage at the end of January -- enough to maintain sales throughout the summer without boosting output.

Crude Cushion

Saudi stockpile is big enough to meet summer demand without raising production, or cutting exports

Source: JODI

Global oil production has fallen by 1.37 million barrels per day over the past six months, with OPEC production accounting for nearly half of that decline.

Rebalancing Begins

Change in production from August 2015 to February 2016 World oil supply has fallen by 1.37 million barrels per day in the past 6 months

Source: DOE, Bloomberg

Nigeria revised its official January production number downwards by 192,000 barrels a day in its latest submission to OPEC. It then lost another 300,000 barrels per day in mid-February, following the closure by Shell of the Forcados export system after damage to a pipeline. Meanwhile, the government is sending more troops to protect Niger Delta oil facilities in the face of rising discontent that could see more disruptions to come.

The Kurdistan Region of Iraq was forced to halt exports for almost a month after its pipeline to the Mediterranean coast was shut for reasons that remain unclear. More importantly, no sooner was the flow restored than the Iraqi government in Baghdad suspended around 150,000 barrels per day of exports through the line from Kirkuk and other northern fields it still controls. Unless that decision is reversed -- which Baghdad says will require a new agreement with the Kurdistan Regional Government -- Iraq's output will fall by a similar amount, as there is nowhere else for that oil to go.

The Kurds are also suffering falling output from their own fields. Genel Energy downgraded the reserves at its Taq Taq field by nearly 50 percent and has seen production there fall from 135,000 barrels per day to 85,000 barrels a day over 2015, with further declines expected this year and next.

OPEC founder-member Venezuela, a prime campaigner for the output freeze, has also been hit hard as falling prices forced state-owned Petroleos de Venezuela to cut capital spending. Official production data show output down 165,000 barrels per day, or 6 percent, since OPEC commenced its current war on high-cost oil in November 2014.

Venezuela Woes

Venezuela's oil output has fallen 6% since OPEC began its war on high-cost oil, according to official data

Source: OPEC

With new production from the deep waters off Angola and Nigeria delayed as a result of the fall in prices, the involuntary output declines from OPEC countries are likely to gather pace. That will make the planned output freeze redundant.

Julian Lee  is a Bloomberg First Word oil strategist. Former Senior energy analyst at the Centre for Global Energy Studies. His opinions are his own and aren't intended as investment advice. Petroleumworld does not necessarily share these views.

Editor's Note: This commentary was originally published by Bloomberg, on March 20, 2016. Petroleumworld reprint this article in the interest of our readers.

Editor's Note: All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld.

Use Notice:This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.

All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by theoriginator.

Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law.

If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. Internet web links to http://www.petroleumworld.com are appreciated

Copyright© 1999-2009 Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.Internet web links to http://www.petroleumworld.com are appreciated

Petroleumworld welcomes your feedback and comments,
share your thoughts on this article, your feed. back is important to us!

Petroleumworld News 03/21/2016

 

We invite all our readers to share with us
their views and comments about this article.

Follow us in : twitter / Facebook


Send this story to a friend

Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8 +/ 800x600 pixels



 


TOP

Editor & Publisher:Elio Ohep F./Contact Email: editor@petroleumworld.com

Contact:
editor@petroleumworld.com/ phone: Office (58 212) 635 7252,
or Cel (58 412) 996 3730 / (58 414) 276 3041 / (58  412) 952 5301


CopyRight © 1999-2010, Elio Ohep F.- All Rights Reserved. Legal Information

- CCS Office Tele
phone/Teléfonos Oficina: (58 212) 635 7252

PW in Top 100 Energy Sites


Technorati Profile


CopyRight © 1999-2016 Elio Ohep F. - All Rights Reserved.
This material may not be published, broadcast, posted online, rewritten or redistributed by any type of means, except with permission of the author/s

The information in this web site is proprietary and is protected under United States and International Copyright and Trademark laws. No part of this web site may be reproduced or transmitted in any form by any means whatsoever, except with permission of the author/s..

Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law. If you wish to use copyrighted material from this site for purposes of your own that go beyond
'fair use', you must obtain permission from the copyright owner.
Any use of this site or its material, in any form, without the express prior written consent of the author, is prohibited by law and is subject to legal action. Legal Information

Top 100+

Technorati Profile
Fair use notice of copyrighted material:

This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from Petroleumworld or
the copyright owner of the material.