Opec’s output at lowest level in six months

Business Sunday 10/December/2017 13:11 PM
By: Times News Service
Opec’s output at lowest level in six months

Muscat: Opec oil output in November dived to 32.35 million barrels per day, its lowest in six months led by declines in eight of the 14 member countries, an S&P Global Platts survey of Opec and oil industry officials and analysts showed.
November output slid 220,000 barrels per day (bpd) from the previous month due to steady falls in Angola, Saudi Arabia, Iraq, Venezuela, Libya and the UAE. The only two countries to have a production rise were Nigeria and Algeria.
The Opec output level was 430,000 bpd above its declared ceiling of about 31.92 million bpd when Equatorial Guinea, which joined in May, is added in and Indonesia, which suspended its membership in December, is subtracted.
Last week Opec and non-Opec countries agreed to a nine-month extension of their production cut agreement through the end of 2018, with an option to review the deal in June.
Opec kingpin Saudi Arabia led by example again, reducing its production by 50,000 bpd to a four-month low of 9.97 million bpd, as it reduced its domestic burning of crude to a four-month low and curbed exports.
The Kingdom had previously indicated a sharp dip in its November and December crude export allocations. Contributors to the survey said that in place of burning crude for power generation, Saudi Arabia had increased its refining volumes as it pushes up oil product exports.
Saudi oil minister Khalid Al Falih indicated last week that his country was likely to continue curbing its output, but warned he will come down hard on non-compliant countries.
"I will be breathing down the necks of the other 24 countries,” Falih said on the sidelines of Opec meeting in Vienna. “2018 will very much mirror what we have done in 2017.”
Angolan output
The biggest decline was in Africa’s second largest producer. Angolan output fell 100,000 bpd to 1.61 million bpd in November, the lowest since October 2016.
Exports and production of grades such as Plutonio, Hungo and Girassol were down. Some panellists also said output was down due to some minor FPSO maintenance.
Iraqi output slumped further as output from the disputed Kirkuk fields of Bai Hasan and Avana Dome remained shut-in, reducing pipeline exports to the Turkish coast to less than half the pipeline’s capacity.
Iraq produced an average of 4.35 million bpd of crude in October, a fall of 30,000 bpd from the previous month, despite a steady rise in exports from its southern terminals. Panelists said refinery runs and direct crude burns were also lower month-on-month.
Nigeria, Algeria
Nigeria and Algeria were the only two countries that bucked the trend, posting rises in production.
Nigerian oil output rebounded by 60,000 bpd to 1.84 million bpd, boosted by a longer loading program as output of key export grades like Agbami, Escravos and Amenam Blend rose on the month.
Opec also called on Libya and Nigeria, which were exempt from the cuts, not to exceed a combined output of 2.8 million bpd from January next year.
Nigeria’s oil minister Emmanuel Kachikwu acknowledged that Opec had asked his country and Libya to maintain “production discipline.”
“Without any definitive obligation, we are going to try as much as we can to keep to our 2017 highest production level,” he said after the meeting, adding that Nigerian crude oil output had reached a high of 1.85 million bpd last year.
Meanwhile, Libyan oil output fell 30,000 bpd to 950,000 bpd as, despite a slight rise in exports, total production fell due to outages at the Wintershall-operated As-Sarah field caused by protests.
Venezuelan production fell to 1.80 million bpd in November, the survey found, as it reduced exports and kept refinery runs low.
Exports to its key crude buyers like India, China and the US were all down sharply, the survey found, while Venezuela’s imports of diluents to blend with its heavy crude also remained low.
Venezuela's oil production has fallen 270,000 bpd since November last year on the country’s economic and social woes.
Its quota under the production cut deal is 1.972 million bpd, making it the most compliant -- if unwillingly so -- member of the coalition.
The year ahead
Opec output has slumped 470,000 bpd since reaching a 2017 high of 32.82 million bpd in July.
As a result, compliance with the agreed output cuts has also stayed largely steady over the past few months.
Total compliance among the 12 countries with quotas under the output cut agreement is 108 per cent, according to an average of January through November production.
The UAE and Iraq, the two countries that had complied least with the agreement, have more recently come into line.
But Opec and its non-Opec allies in production cuts have reiterated that their job is not yet done, as they decided to extend the 1.8 million bpd cuts to the end of next year.