Opinion

OPEC December Crude Output 32.40 MIL B/D, UP 50,000 B/D From November: S&P Global Platts Survey


January 8, 2018 — By Herman Wang, Eklavya Gupte

 
  • 12 members with quotas achieve 135% compliance in December
  • Saudi Arabia output 9.90 mil b/d, Iraq 4.41 mil b/d, Iran 3.82 mil b/d
  • Libya, Nigeria combine for 2.88 mil b/d, above cap of 2.80 mil b/d
  • OPEC output well below ceiling of 32.74 million b/d

Crisis-wracked Venezuela's crude production in December plunged to its lowest in more than 15 years, but with seven out of OPEC's 14 countries pumping greater volumes compared to November, the bloc had a slight uptick in its collective output to 32.40 million b/d, an S&P Global Platts survey showed Monday.

December's figure was a 50,000 b/d rise from November's six-month low and is below OPEC's notional ceiling of 32.74 million b/d, when every country's quota under a production cut agreement that was recently extended through the end of 2018 is added up.

Venezuela's output fell 100,000 b/d in December to 1.70 million b/d, a low not seen since its oil industry was impacted by a major strike from December 2002 to February 2003, according to Platts OPEC survey archives.

Not counting strike-affected months, Venezuela's production was last this low in August 1989, more than 28 years ago.

The country has been suffering from a spiraling economic, political and humanitarian crisis, with state oil company PDVSA short of funds, personnel and equipment and suffering under US sanctions that restrict its financing.

Experts say the prospects of any near-term improvement in Venezuela's crude production remain grim. OPEC kingpin Saudi Arabia maintained its production discipline in December, producing 9.90 million b/d.

The country, which has repeatedly declared its intention to "lead by example" on OPEC's production cut agreement, produced below its quota of 10.056 million b/d in every month of 2017, according to survey data.

Second largest producer Iraq raised production to 4.41 million b/d in December, its highest in three months, the survey found, as it boosted exports from the southern port of Basra to compensate in part for outages in the north stemming from a lack of agreement between the Iraqi federal government and the Kurdistan Regional Government on revenue sharing.

Iran, meanwhile, produced 3.82 million b/d in December, a slight rise from the previous month, the survey found, as the South Yaran field started up in late November.

But the country's outlook is uncertain, with US President Donald Trump, a fierce critic of the Iranian government who has stepped up his rhetoric in recent days during street protests in Iran, facing a January 12 deadline to waive sanctions under the nuclear deal.

Should Trump reimpose sanctions or otherwise cause the nuclear deal to unravel, up to 800,000 b/d of Iranian crude exports could be at risk, according to some analysts.

STRONG QUOTA COMPLIANCE

Compliance among the 12 members with quotas under OPEC's production cut agreement remained robust at 135% in December and 115% for the entirety of 2017, the survey found.

All 14 members will be subject to quotas starting this month, including formerly exempt members Libya and Nigeria, who were assigned a combined 2.8 million cap at OPEC's November 30 meeting.

The two countries would have exceed that cap in December, if it had been in place, with Libyan production rising to 980,000 b/d and Nigerian output rising to 1.90 million b/d, its highest since November 2015, according to survey records, for a combined 2.88 million b/d.

Nigeria, however, has disputed various calculations of its output by the independent secondary sources that OPEC uses to monitor production, including S&P Global Platts, saying they include condensate.

Algeria had a 30,000 b/d rise in December to 1.04 million b/d, as maintenance on its El Merk ended in November, while Angola likewise had a 30,000 b/d output boost to 1.64 million b/d, with crude exports rising in the month.

For the full-year 2017, OPEC averaged 32.33 million b/d in crude production, the Platts survey showed.

Stripping out Equatorial Guinea, which joined OPEC in May; Gabon, which joined in June 2016; and Indonesia, which suspended its membership in November 2016, the 12 remaining OPEC members averaged 32.05 million b/d in 2017, a 60,000 b/d drop from 2016's average of 32.11 million b/d, according to survey records.

But the 2017 figure is a 1.11 million b/d rise from 2015's average of 30.95 million b/d.

A six-country OPEC/non-OPEC monitoring committee will meet January 21 in Oman to discuss compliance with the production cuts and review market conditions, with oil prices having risen recently to two-and-a-half-year highs on geopolitical risks and tightening supply.

Many OPEC watchers have said the production cut deal could unravel if prices rise too high and members seek to capitalize on the greater earning potential and battle for market share with US shale supplies.

The monitoring committee is co-chaired by Saudi energy minister Khalid al-Falih and Russian counterpart Alexander Novak, and also includes ministers from OPEC members Algeria, Kuwait and Venezuela and non-OPEC Oman.

The production cut agreement, which began January 1, 2017, called on OPEC and 10 non-OPEC partners led by Russia to cut about 1.8 million b/d from October 2016 levels, in a bid to stabilize the oil market and boost prices.

The Platts OPEC figures were compiled by surveying OPEC and oil industry officials, traders and analysts, as well as reviewing proprietary shipping data.

S&P GLOBAL PLATTS OPEC SURVEY METHODOLOGY

Since 1988, S&P Global Platts has published a monthly survey tracking OPEC crude oil production by country. The estimates are obtained through a review of proprietary shipping data, news reportage and surveys of knowledgeable sources.

Data reviewed include loading programs, export statistics and tanker tracking via Platts cFlow. Sources interviewed for the survey include national oil company or ministry officials; analysts at international agencies, think tanks, consultancies and banks; and traders.

The sources remain confidential and are interviewed by a team of Platts oil news reporters -- typically led by Herman Wang, Platts OPEC correspondent, and Eklavya Gupte, Platts senior editor for Europe and Africa news.

The survey is typically published between the 5th and 10th of each month, and it measures oil output -- excluding condensates and NGLs.



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