Saudi Arabia Continues Production Dip, Weighing on Producer Group's Output
LONDON, Feb. 7, 2013
LONDON, Feb. 7, 2013 /PRNewswire/ -- Crude oil production from the Organization of the Petroleum Exporting Countries (OPEC) fell to 30.45 million barrels per day (b/d) in January from 30.65 million b/d in December, led by a further drop in volumes from Saudi Arabia, a just-released Platts survey of OPEC and oil industry officials and analysts showed.
Saudi Arabia reduced output to 9.25 million b/d in January from 9.45 million b/d in December. The January level was the lowest since an estimated 9.05 million b/d in May 2011.
Lower Saudi output in recent months largely reflected the seasonal reduction in direct burning of crude oil for electricity. The January estimate is down some 750,000 b/d from the recent production peak last August.
"This report is yet another affirmation that Saudi Arabia is willing to narrow what had looked like a big gap between supply and demand almost completely from its own production," said John Kingston, Platts global director of news. "All data a few months ago was pointing to a gap that looked large; now, it's a lot smaller. And the biggest factor in closing that gap has been a reduction from Saudi Arabia."
In mid-January, Ibrahim al-Muhanna, an adviser to Saudi oil minister Ali Naimi, rebutted any suggestion that the kingdom had cut output in order to boost oil prices. Muhanna said Saudi production was being driven primarily by customer needs, including seasonally variable domestic demand which had weakened over the previous quarter from the summer peak.
Other smaller output reductions came from Algeria, Kuwait, Qatar and Libya, the latter affected by a strike at the Zueitina terminal which damped exports. Combined, the total volume of output decreases were 300,000 b/d. However, this was partly offset by production increases totaling 100,000 b/d from Angola, Iraq and Nigeria.
In Angola, production from BP's PSVM (Plutao; Saturno; Venus; Marte) ultra-deep offshore fields put in operation late last year is beginning to show up in exports.
Iraqi output was slightly higher at around 3 million b/d on the back of an increase in overall exports despite rough weather in the Persian Gulf. But exports from the north to Ceyhan in Turkey fell in January to the lowest level in five years, survey respondents noted, as repeated sabotage by insurgents reduced flows through the export pipeline to the Turkish Mediterranean. In addition, the long-running dispute between Baghdad and the Kurdistan Regional Government intensified, with the result that no oil produced in Iraqi Kurdistan is being exported via the pipeline.
In Nigeria, where Eni lifted a two-month force majeure on Brass River exports, output was approximately 70,000 b/d higher.
The January production total leaves OPEC output 450,000 b/d greater than the oil-producing organization's notional 30 million b/d output ceiling, in place since January 2012.
Secretary General Abdalla el-Badri, speaking to reporters on January 29 in London, indicated that OPEC was reluctant to be overly forceful in bringing output closer to the official ceiling in view of the fragility of the global economic recovery.
About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals and metals information and a premier source of benchmark prices for the physical and futures markets. Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in more than 150 countries benefit from Platts' coverage of the carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, and shipping markets. A division of The McGraw-Hill Companies (NYSE: MHP), Platts is headquartered in New York with approximately 900 employees in 15 offices worldwide. Additional information is available at http://www.platts.com .
About The McGraw-Hill Companies: The McGraw-Hill Companies (NYSE: MHP), a financial intelligence and education company, signed an agreement to sell its McGraw-Hill Education business to investment funds affiliated with Apollo Global Management, LLC in November 2012. Following the sale closing, expected in early 2013, the Company will be renamed McGraw Hill Financial (subject to shareholder approval) and will be a powerhouse in benchmarks, content and analytics for the global capital and commodity markets. The Company's leading brands will include: Standard & Poor's, S&P Capital IQ, S&P Dow Jones Indices, Platts, Crisil, J.D. Power and Associates, McGraw-Hill Construction and Aviation Week. The Company will have approximately 17,000 employees in more than 30 countries. Additional information is available at www.mcgraw-hill.com.