… 60% in Saudi Arabia
19 September 2018, Sweetcrude, Lagos — The International Energy Agency, IEA, has said members of the Organization of the Petroleum Exporting Countries, OPEC, are sitting on about 2.7 million barrels per day, mb/d, of spare production capacity, and that 60% of this is in Saudi Arabia.
“Based on our August estimates of production, OPEC countries are sitting on about 2.7 mb/d of spare production capacity, 60% of which is in Saudi Arabia,” the IEA said in its recent-released Oil Market Report, OMR.
But, it stated that the point about spare capacity was that, having been idle, it was unclear exactly how much, beyond what is widely thought to be “easy” to bring online, will be available to coincide with further falls in Venezuelan exports and a maximisation of Iranian sanctions.
Said the IEA: “It is not just a question of volume; refiners used to processing Venezuelan or Iranian crude will compete to find similar quality barrels to maintain optimal refinery operations. Alternative supplies of lighter crude might not be ideal for this reason. Even before we factor in any further fall in exports from Venezuela or Iran, record global refinery runs are expected to result in a crude stock draw of 0.5 mb/d in 4Q18. Any draw will be from a basis of relative tightness: in the OECD, stocks at end-July were 50 million barrels below the five-year average”.
“If we are looking for additional barrels from elsewhere to help compensate for further export declines from Venezuela and Iran, the picture is mixed. Brazil was supposed to be one of the big production success stories of 2018, but various problems have stymied growth to the extent that output will rise by only 30 kb/d this year versus a first estimate of 260 kb/d”.
On the upside, the report said the United States continues to show outstanding performance with total liquids output expected to grow by 1.7 mb/d this year and another 1.2 mb/d in 2019.