Cuts from OPEC, violence in Iraq, more biofuel

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
OPEC's ministers, meeting in Doha on 19th October, decided to cut their production by 1.2 mn bpd from 1st November. The reduction is based on an output total of 27.5 mn bpd, which represents the production of the ten quota-observing countries in the weeks immediately preceding the Doha meeting. The Kuwaiti Oil Minister subsequently observed that the OPEC-10 were unlikely to be at their 26.3 mn bpd target before the second half of November. Venezuela said its 138,000 bpd cut would be concentrated on foreign joint-ventures operating in the Orinoco heavy oil belt. Crude oil prices fell in the wake of OPEC's announcement, prompting the Saudis to speculate that the group might cut production by a further 500,000 bpd at its meeting in the Nigerian capital, Abuja, on 14th December.     

OPEC nears production capacity

At first sight, OPEC appears to have a great deal of spare production capacity: over 5 mn bpd in all. On further examination, it is clear that most of this consists either of heavy crude oil for which there is little or no market under present conditions, or of capacity that is shut-in by violence and civil unrest. OPEC's effective spare production capacity is probably less than 1 mn bpd, which may account for its recent decision not to increase output during the second and third quarters of the year. It also makes it unlikely that OPEC will have much additional oil to offer already tight markets as demand undergoes its normal seasonal rise at the end of the year.     

OPEC quotas unchanged, violence continues and countries go green

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
OPEC maintained its output ceiling at 28 mn bpd at its meeting on 8th March in Vienna, agreeing to review quotas again on 1st June in Venezuela. Venezuela's oil minister said $60/ bbl was a sustainable price for WTI and that OPEC should react when prices fell below that level, having already asked his fellow ministers to cut the OPEC ceiling by 500,000 bpd. Iraq announced that it was standing by plans to raise production capacity to 3 mn bpd by the end of 2006 despite the widespread chaos and violence. It has not been able to produce more than 2 mn bpd on a sustained basis since the US-led invasion three years ago. Production has been close to 1.8 mn bpd in recent weeks. Exports via Basrah are being restricted by a lack of tugs, pipeline leakages, poor equipment and power cuts. The export route to Ceyhan has been closed by repeated acts of sabotage and is unlikely to reopen for at least eight months according to the country's oil ministry.     

More price records, more unrest and more refineries

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices continued to set new records despite a decision by OPEC to raise production by 0.5 mn bpd to 27.5 mn bpd from 16th March. On 1st April, WTI futures in New York set a new closing high of $57.27 a barrel, having traded earlier in the day at $57.70. IPE Brent remained just below its previous record, touching $56.15. Crude oil's strength pushed the official prices of some Asian crudes to record levels, including Malaysia's benchmark Tapis grade, which was set at $58.89 a barrel. Product prices rose to new highs as well. In New York, May heating oil reached $1.6638/gall and May gasoline settled at $1.7310 on 1st April, while, in Europe, gasoline rose to an all-time high of $558/t. The market's view on OPEC's decision was that the rise in output was too little, too late. Even a statement by the cartel's President, Shaikh Ahmad Fahd Al Sabah, that OPEC would consider a further rise of 0.5 mn bpd for May did nothing to calm fears.     

OPEC abandons quotas, more violence in Nigeria and British give away gas

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
OPEC ministers meeting in Vienna on 11th September agreed to leave the production ceiling unchanged at 28 mn bpd. The cartel, however, is to move away from formal quotas to a system of adjusting total production to world demand. The change recognizes the fact that many OPEC countries cannot produce their full quota allowances. The new policy is described by OPEC as trying "to ensure that supply and demand (remain) in balance with prices at reasonable levels". "Reasonable levels" were not defined in the communiqué, but most ministers agreed they should be in the region to $60-65/bbl. The oil markets were sceptical and prices fell below $60, reaching a seven-month low at the start of October. Nigeria announced a production cut of 120,000 bpd, though this may be a recognition of the difficulty of producing oil there at present. During September, the country was plagued by further violence in the Niger Delta, including attacks on oil workers, kidnappings and sabotage to oil installations. Oil workers went on strike for two days, threatening further walk-outs. By late September, nearly 875,000 bpd of production was estimated shut-in as a result of the current unrest. Shell said it had suspended plans to repair damaged facilities in the Niger Delta because of the continuing high level of violence.     

Doubts cloud Nigeria's production outlook

Following a series of production setbacks, Nigeria has announced that its output capacity will rise by 0.5 mn bpd between now and the end of the year to 3.0 mn bpd. Production has been hit by unrest in the oil-producing Delta region, sabotage to pipelines, strikes and the theft of substantial volumes of crude oil. The government has recently declared that the security situation has improved and that some 140,000 bpd of production at Chevron's Escravos field-shut in by unrest since March 2003-will be restored before the end of the year. A further 125,000 bpd is due to be added when Shell's deep-water Bonga field is commissioned later this year. Nigeria may nevertheless struggle to hit this year's capacity target and future ones as well.     

Violence in Iraq and Nigeria, OPEC cuts output, admits Angola

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Iraq ended 2006 with its crude oil exports at zero, its oil industry in need of "urgent attention", according to a report delivered to the US President and Congress, and its domestic security situation spiralling out of control. The execution of former President Saddam Hussain on 30th December failed to pacify the country, as the government appears to have hoped, as more than 2,000 Iraqi civilians died during the month of December and US military casualties passed the 3,000 mark. Crude oil exports ceased as bad weather closed the Persian Gulf terminals of Basrah and Khor al-Amaya. Exports via Ceyhan were already at a standstill, following recent attacks on the pipeline from Kirkuk. The country's main refinery, at Baiji was closed for part of December following threats to workers there and an attack on its main supply pipeline from Kirkuk. The government tried to relieve the resulting shortage of refined products by arranging to import some 6,300 bpd of fuel from Iran. The black-market prices of some refined products were reported by the Arabic newspaper, al-Hayat to have reached record levels. The Oil Ministry estimated that Iraq's oil exports were 1.6 mn bpd during 2006. Iraq has agreed to supply Jordan with 10,000 bpd of crude oil at a discount of around $18/bbl.     

Indonesia still struggling to produce more

Indonesia's production of crude oil and NGL continues to decline. From an output of 1.01 mn bpd in 2006, it is now reported to be producing only 945,000 bpd. The country's upstream regulatory body, BPMigas, has set a target of 1.10 mn bpd for 2009, but it is not clear how this is to be achieved. Last year, the country fell below its official target of 1.05 mn bpd by just over 4%.     

Another hurricane, high prices and more chaos in Iraq

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Another hurricane, this time called Rita, battered the US Gulf Coast, sending oil prices up worldwide, though not to the heights seen when its predecessor, Katrina, arrived. As before, a large swathe of US refinery capacity was temporarily put out of action: this time mainly in Texas. For around a week in late September, when Rita arrived, nearly 4.1 mn bpd of crude distillation capacity was taken off-line. At the same time, some 0.9 mn bpd was still unusable as a result of the depredations of Katrina in late August, leaving the US briefly minus nearly one third of its refinery capacity. The situation improved as some capacity was brought slowly back on-line, but by the beginning of October around 3.0 mn bpd was still not back in operation. The main price effects of Katrina were on gasoline, prompting demands in the Congress and elsewhere for investigations into overcharging by refiners and retailers ( see 'Focus'). A record weekly increase in the first week of September propelled the average price of regular gasoline across the US to $3.07/gall. Rita's principal effect was on heating oil, which went up in the last week of September by nearly 20% to $2.51/gall in the US Gulf. US crude oil prices remained below their immediate post-Katrina record highs ( see 'The Month in Brief', September 2005 ) despite the loss of the entire 1.5 mn bpd production in the Gulf of Mexico following Rita's arrival.     

UAE's production plans may prove over-ambitious

Following a period of fairly stable production levels of around 2.5 mn bpd, the UAE plans to raise its output of crude oil to 3.5mn bpd within four years. This is a daunting, but probably achievable target. There are, however, further plans to increase output - to 5.0 mn bpd - which may prove somewhat less easy to fulfil.     

More price records, OPEC produces more and Iraq exports less

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices surged to new highs as Norwegian oil workers threatened to strike. WTI futures settled at a record $60.54/bbl on 27th June while, on the same day, heating oil broke through all previous records on Nymex to reach $1.6761/gall. August IPE Brent remained just below the $60 mark, but the October and November contracts both closed above $60/bbl for the first time, with November the higher of the two at $60.58/bbl. These new price levels proved unsustainable as many traders cashed-in their profits to close-out the second quarter. The record prices appeared not to indicate any actual shortage of crude oil. US imports touched 10.97 mn bpd in the week-ending 24th June: the second-highest on record. As if accepting this as proof that it was producing sufficient crude oil, OPEC shelved plans to discuss a possible 0.5 mn bpd increase in quotas to 28.5 mn bpd. The cartel had earlier decided that it would raise its output ceiling from 27.5 mn bpd to 28.0 mn bpd with effect from 1st July, at its meeting in Vienna on 15th June.     

Violence in Iraq, sabotage in Nigeria and strikes in Europe

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
An upsurge of violence in Iraq threatened a recovery in output that began earlier this year. Production in the northern fields hit a post-invasion high of 620,000 bpd in March, rising by 180,000 bpd in one month. Fighting in the south, however, cut production there by more than 100,000 bpd as government troops tried to subdue Shi'ite militias in and around Basrah. Oil installations damaged in the south included a pipeline and a pumping station. The Iraqi government nevertheless announced that oil production would reach 2.9 mn bpd by the year's end, requiring an increase of nearly 500,000 bpd over April 2008 levels. Foreign help is to be sought via a series of technical service agreements and - later this year - an upstream licensing round. Japan's Ministry of Economy, Trade and Industry says it wants a bigger role for Japanese oil companies in both the upstream and downstream sectors in Iraq. Kurdistan says it is negotiating with Baghdad to export oil produced from new oil fields there. The central government does not recognize production agreements drawn up by the Kurdistan Regional Government. The EU - desperate for gas to fill its Nabucco pipeline - has approached Iraq for up to 1 bn cfd.     

Non-OPEC production near to decline

Last year, the world produced some 82.2 mn bpd of crude oil and natural gas liquids (NGL), of which 48.2 mn bpd, or 59%, came from countries outside OPEC. Most of these non-OPEC countries are now mature oil-producers, in long term decline ( see Box ). A few have still to reach peak output, but non-OPEC production as a whole is within a few years of its peak, after which any net increase in world oil supplies will have to come entirely from OPEC.  

  NON-OPEC PRODUCERS     

14.

Hurricane in US, chaos in Iraq and even more price records     

《Oil and Energy Trends》2005,30(9):6-7

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
A hurricane named Katrina devastated oil installations along the US Gulf Coast as well as the city of New Orleans, sending oil prices to new record levels. Nearly 1.4 mn bpd of offshore oil production was shut-in, along with 8.3 bn cfd of the Gulf's natural gas. More production was closed down onshore along with nearly 2.4 mn bpd of refining capacity. Crude and product prices shot up worldwide. The 30th August saw October WTI close at a record $69.81/bbl, having traded earlier in the day up to $70.85/bbl. On 31st August, Nymex gasoline closed at a new high of $2.6145/gall as the Gulf Coast's refineries remained off-line. Gulf spot prices rose above $3/gall. The following day, October heating oil set a new record by closing at $2.1985/gall. Records fell outside the US, with Tapis at $70.97 on 31st August. The previous day saw IPE October Brent settle at a record $67.57, whilst the November and December contracts both saw trades above $69.00/bbl. Natural gas prices also moved into record territory in the US, topping $12 per mn BTU on Nymex during the morning of 30th August.     

15.

More price records, Iraq's exports rise and the US probes mogas prices     

《Oil and Energy Trends》2007,32(10):6-7

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
More oil price records were set as refiners worried about supply and inventory levels and other buyers took advantage of a falling US dollar to stock-up on oil and other commodities. October WTI briefly touched $84.10/bbl on 20th September. The US benchmark gained more than most crudes on fears of disruption to oil production in the US Gulf with the arrival of Hurricane Humberto. Some 1.3 mn bpd of production was temporarily shut-in as a precaution, though in the end there was no damage to offshore installations. North Sea crudes rose sharply the following week, pushing IPE Brent into record territory on 28th September, when the London benchmark rose above $81.00/bbl . The new records came despite a decision by OPEC on 11th September to increase its output by 500,000 bpd between August and November. The November target is 27.25 mn bpd, compared with February 2007's level of 25.80bpd. Iraq and Angola are outside the quota system, though Angola is set to join it in the near future.     

16.

Iraq exports more, Ecuador exports less and OPEC remains undecided     

《Oil and Energy Trends》2007,32(12):6-6

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Crude oil exports from Iraq rose to a post-invasion high of 1.8 mn bpd amid signs of a fall in attacks on oil installations and a lessening of organized violence inside the country. October's total was boosted by a 113,000 bpd increase in exports via Ceyhan, compared with the previous month, to 283,000 bpd. Iraq is nevertheless unable to guarantee an uninterrupted flow of oil through Ceyhan and has withdrawn an offer to supply crude from there on three-month term contracts. The export pipeline was again sabotaged in late November. Iraq has begun the construction of a 200,000 bpd crude pipeline to Abadan in Iran in order to boost exports from the south of the country. Reports persist about large scale smuggling of crude oil out of Iraq.     

17.

Asia's appetite for new refineries undimmed     

《Oil and Energy Trends》2007,32(6):13-14

Asia continues to plan new oil refineries at a faster rate than any other region ( see 'Focus', May 2006 ). The largest increases are taking place in India and China ( see 'Looking Ahead', December 2006 ), but considerable expansion is planned elsewhere across Asia. Up to 3.2 mn bpd of new crude distillation capacity is being planned in other parts of the Asia/Pacific region ( see Table C ), of which nearly 1.1 mn bpd is slated for Indonesia.  

  Table C   Asia/Pacific: Proposed new Refineries     

18.

Even more price records, new refineries and a technical hitch at the IPE     

《Oil and Energy Trends》2005,30(5):6-7

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
In a final burst before retreating, oil prices once again entered record territory. WTI went to $58.28 a barrel, while Brent shot up to $57.65. In Asia, meanwhile, Malaysia's benchmark Tapis grade climbed above $61.00. The scramble to buy crude oil finally began to show up in stock levels, however, and US inventory figures showing an 8% year-on-year rise at the start of April suggested that fears of a crude oil shortage were overplayed. Prices fell sharply leaving Brent and WTI just above $51.00 a barrel. An announcement by OPEC's president, Ahmad Fahad Al Sabah, that the cartel would produce an additional 500,000 bpd in May helped to relax fears further. Product prices remained relatively more robust on a combination of high demand in the US and Asia and unscheduled refinery maintenance in the US.     

19.

Kuwait's oil production plans in confusion     

《Oil and Energy Trends》2006,31(7):3-6

Kuwait is debating ambitious plans to increase its oil production by over 60% between now and 2020, to 3.7 mn bpd. The fate of the proposals, however, is far from clear. There has been widespread criticism of various aspects of the whole scheme, including what, if any, role should be played by foreign oil companies, and even whether Kuwait possesses the reserves to enable it to reach its ambitious target. Many of the criticisms were aired in the emirate's elections in June and the arguments look set to continue, delaying plans which are already, in some cases, several years old.     

20.

Saudi Oil Giant Active in China     

《中国油气》2008,15(4):50-51

Saudi Aramco, the national oil company of Saudi Arabia, is the largest oil corporation in the world in terms of proven crude oil reserves and production. Its business covers a wide range, including oil and gas exploration, oil refining and distribution, as well as international shipping. Mohammed A1-Madi, regional vice-president and chief representative of Saudi Petroleum Ltd. Beijing Representative Office, a wholly owned subsidiary of Saudi Aramco, talked about the company＇s achievements in China, in a recent interview with the Chinese news media.     

Hurricane in US, chaos in Iraq and even more price records

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
A hurricane named Katrina devastated oil installations along the US Gulf Coast as well as the city of New Orleans, sending oil prices to new record levels. Nearly 1.4 mn bpd of offshore oil production was shut-in, along with 8.3 bn cfd of the Gulf's natural gas. More production was closed down onshore along with nearly 2.4 mn bpd of refining capacity. Crude and product prices shot up worldwide. The 30th August saw October WTI close at a record $69.81/bbl, having traded earlier in the day up to $70.85/bbl. On 31st August, Nymex gasoline closed at a new high of $2.6145/gall as the Gulf Coast's refineries remained off-line. Gulf spot prices rose above $3/gall. The following day, October heating oil set a new record by closing at $2.1985/gall. Records fell outside the US, with Tapis at $70.97 on 31st August. The previous day saw IPE October Brent settle at a record $67.57, whilst the November and December contracts both saw trades above $69.00/bbl. Natural gas prices also moved into record territory in the US, topping $12 per mn BTU on Nymex during the morning of 30th August.     

More price records, Iraq's exports rise and the US probes mogas prices

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
More oil price records were set as refiners worried about supply and inventory levels and other buyers took advantage of a falling US dollar to stock-up on oil and other commodities. October WTI briefly touched $84.10/bbl on 20th September. The US benchmark gained more than most crudes on fears of disruption to oil production in the US Gulf with the arrival of Hurricane Humberto. Some 1.3 mn bpd of production was temporarily shut-in as a precaution, though in the end there was no damage to offshore installations. North Sea crudes rose sharply the following week, pushing IPE Brent into record territory on 28th September, when the London benchmark rose above $81.00/bbl . The new records came despite a decision by OPEC on 11th September to increase its output by 500,000 bpd between August and November. The November target is 27.25 mn bpd, compared with February 2007's level of 25.80bpd. Iraq and Angola are outside the quota system, though Angola is set to join it in the near future.     

Iraq exports more, Ecuador exports less and OPEC remains undecided

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Crude oil exports from Iraq rose to a post-invasion high of 1.8 mn bpd amid signs of a fall in attacks on oil installations and a lessening of organized violence inside the country. October's total was boosted by a 113,000 bpd increase in exports via Ceyhan, compared with the previous month, to 283,000 bpd. Iraq is nevertheless unable to guarantee an uninterrupted flow of oil through Ceyhan and has withdrawn an offer to supply crude from there on three-month term contracts. The export pipeline was again sabotaged in late November. Iraq has begun the construction of a 200,000 bpd crude pipeline to Abadan in Iran in order to boost exports from the south of the country. Reports persist about large scale smuggling of crude oil out of Iraq.     

Asia's appetite for new refineries undimmed

Asia continues to plan new oil refineries at a faster rate than any other region ( see 'Focus', May 2006 ). The largest increases are taking place in India and China ( see 'Looking Ahead', December 2006 ), but considerable expansion is planned elsewhere across Asia. Up to 3.2 mn bpd of new crude distillation capacity is being planned in other parts of the Asia/Pacific region ( see Table C ), of which nearly 1.1 mn bpd is slated for Indonesia.  

  Table C   Asia/Pacific: Proposed new Refineries     

18.

Even more price records, new refineries and a technical hitch at the IPE     

《Oil and Energy Trends》2005,30(5):6-7

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
In a final burst before retreating, oil prices once again entered record territory. WTI went to $58.28 a barrel, while Brent shot up to $57.65. In Asia, meanwhile, Malaysia's benchmark Tapis grade climbed above $61.00. The scramble to buy crude oil finally began to show up in stock levels, however, and US inventory figures showing an 8% year-on-year rise at the start of April suggested that fears of a crude oil shortage were overplayed. Prices fell sharply leaving Brent and WTI just above $51.00 a barrel. An announcement by OPEC's president, Ahmad Fahad Al Sabah, that the cartel would produce an additional 500,000 bpd in May helped to relax fears further. Product prices remained relatively more robust on a combination of high demand in the US and Asia and unscheduled refinery maintenance in the US.     

19.

Kuwait's oil production plans in confusion     

《Oil and Energy Trends》2006,31(7):3-6

Kuwait is debating ambitious plans to increase its oil production by over 60% between now and 2020, to 3.7 mn bpd. The fate of the proposals, however, is far from clear. There has been widespread criticism of various aspects of the whole scheme, including what, if any, role should be played by foreign oil companies, and even whether Kuwait possesses the reserves to enable it to reach its ambitious target. Many of the criticisms were aired in the emirate's elections in June and the arguments look set to continue, delaying plans which are already, in some cases, several years old.     

20.

Saudi Oil Giant Active in China     

《中国油气》2008,15(4):50-51

Saudi Aramco, the national oil company of Saudi Arabia, is the largest oil corporation in the world in terms of proven crude oil reserves and production. Its business covers a wide range, including oil and gas exploration, oil refining and distribution, as well as international shipping. Mohammed A1-Madi, regional vice-president and chief representative of Saudi Petroleum Ltd. Beijing Representative Office, a wholly owned subsidiary of Saudi Aramco, talked about the company＇s achievements in China, in a recent interview with the Chinese news media.     

Even more price records, new refineries and a technical hitch at the IPE

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
In a final burst before retreating, oil prices once again entered record territory. WTI went to $58.28 a barrel, while Brent shot up to $57.65. In Asia, meanwhile, Malaysia's benchmark Tapis grade climbed above $61.00. The scramble to buy crude oil finally began to show up in stock levels, however, and US inventory figures showing an 8% year-on-year rise at the start of April suggested that fears of a crude oil shortage were overplayed. Prices fell sharply leaving Brent and WTI just above $51.00 a barrel. An announcement by OPEC's president, Ahmad Fahad Al Sabah, that the cartel would produce an additional 500,000 bpd in May helped to relax fears further. Product prices remained relatively more robust on a combination of high demand in the US and Asia and unscheduled refinery maintenance in the US.     

Kuwait's oil production plans in confusion

Kuwait is debating ambitious plans to increase its oil production by over 60% between now and 2020, to 3.7 mn bpd. The fate of the proposals, however, is far from clear. There has been widespread criticism of various aspects of the whole scheme, including what, if any, role should be played by foreign oil companies, and even whether Kuwait possesses the reserves to enable it to reach its ambitious target. Many of the criticisms were aired in the emirate's elections in June and the arguments look set to continue, delaying plans which are already, in some cases, several years old.     

Saudi Oil Giant Active in China

Saudi Aramco, the national oil company of Saudi Arabia, is the largest oil corporation in the world in terms of proven crude oil reserves and production. Its business covers a wide range, including oil and gas exploration, oil refining and distribution, as well as international shipping. Mohammed A1-Madi, regional vice-president and chief representative of Saudi Petroleum Ltd. Beijing Representative Office, a wholly owned subsidiary of Saudi Aramco, talked about the company＇s achievements in China, in a recent interview with the Chinese news media.