Oil production from the Organization of the Petroleum Exporting
Countries (OPEC) slumped 280,000 barrels per day in December, due to
hefty falls in Nigeria and Saudi Arabia, a month before the group’s
pledge to rein in production, data from the latest survey of OPEC and
oil industry officials and analysts by S&P Global Platts showed in
an emailed press release.
“There are some encouraging signs that OPEC will deliver on its promised output cuts,” said
Eklavya Gupte,
senior editor for S&P Global Platts. “But the crucial question is
whether OPEC and non-OPEC can make the compliance stick long enough to
clear out the stock overhang. If both Libya and Nigeria post a swift
output recovery and compliance starts to wane, the deal would unravel. A
close eye will also kept be on the US shale oil industry, as it seeks a
rebound in output amid higher oil prices.”
OPEC’s 13 members saw their collective December output fall to 32.85
million barrels per day from 33.13 million barrels per day in November.
Including Indonesia, which suspended its membership at the
organisation’s last meeting, total December output was 33.57 million
barrels per day, also down 280,000 barrels per day.
The producer group has agreed to cut 1.2 million barrels per day from
its October output level for six months starting from January 1, and
freeze production at around 32.5 million barrels per day, with the total
including Indonesia.
As part of global efforts to curb the crude supply glut, 11 non-OPEC
countries led by Russia have also agreed to cut output by 558,000
barrels per day in the first half of 2017, with Russia shouldering the
majority of that burden, with a 300,000 barrels per day reduction.
The December slide comes after OPEC reached a new production record
in November and is the first fall in seven months as Saudi Arabia
provides an encouraging sign that it is set to lead the cuts by example.
However, the main protagonist responsible for the fall in total
output was Nigeria, which is exempt from the cut agreement, as it
recovers from renewed militancy in the oil rich Niger Delta, while Iraq,
OPEC’s second-biggest producer, saw its exports rise sharply, the press
release read. Nigerian production fell to 1.44 million barrels per day
from 1.68 million barrels per day in November, as planned maintenance
halved loadings of its key export grade Agbami. A shorter export
programme exacerbated the fall, while strikes carried out by ExxonMobil
employees resulted in deferrals of at least four cargoes of grades like
Qua Iboe and Erha, aggravating the decline.
Saudi Arabia saw its production fall to 10.42 million barrels per day
in December, dropping 100,000 barrels per day from the previous month,
as survey panelists said output was finally beginning to come down after
having been unseasonably strong toward the second half of last year.
This was evidenced by a dip in exports as well as refinery turnarounds
and lower direct crude burn, they said. Under the recent deal, Saudi
Arabia has agreed to bring its output down to 10.06 million barrels per
day between January and June, the press release read.
Earlier this month, state-owned Saudi Aramco also informed its term
customers that it is looking to reduce its loadings in February after it
suspended operational tolerance in its crude supply contracts from
January this year.
Iranian output in December was stable at 3.69 million barrels per
day, signaling significant production rises may have stalled as its
mature oil fields urgently need investment and new technology to boost
output.
Iraq, which had been reluctant to join the cuts in the run-up to the
November meeting, saw its December figure climb to 4.63 million barrels
per day, up 70,000 barrels per day from November. Iraq posted a swift
rise in federal government exports from both the Ceyhan Mediterranean
oil terminal in Turkey and from Iraq’s own Persian Gulf terminals,
topping 3.5 million barrels per day, a new monthly record, Platts data
showed.
Oil Minister
Jabbar al-Luaibi has however reaffirmed
to the market that rising oil exports will not affect OPEC’s deal on
production cuts to rebalance the market. He said Iraq has put in place
“a deliberate plan…to reduce output” from the beginning of 2017. Iraq,
like some other OPEC members, is likely to pursue scheduled field
maintenance to temporarily reduce oil production to meet the obligations
of the OPEC and non-OPEC producers’ quota to boost oil prices, said
survey panelists.
Libya, another country exempt from the OPEC deal, saw its output rise
to a two-year high boosted by the restart of the giant Sharara and
Elephant fields in mid-December. Libyan pumped 620,000 barrels perday,
up 40,000 barrels per day from November as production has risen by
almost 400,000 barrels per day in four months after the force majeure
was lifted at three key oil terminals in the east of the country in
September. Libya’s recovery comes at a critical juncture, coinciding
with global efforts to curb the global supply glut after prices went on a
downward spiral since mid-2014.
(New Europe, January 11, 2017)
https://www.neweurope.eu/article/opec-oil-output-falls-december-survey-shows/