Wednesday, 09 August 2017 06:01
Libya's continued dramatic recovery from civil strife pushed OPEC's July output to yet another 2017 high, with the bloc producing 32.82mn bpd, according to the latest S&P Global Platts OPEC survey
Libya, exempted from OPEC production cuts that began January 1, averaged 990,000 bpd in July, up 180,000 bpd from June. Fellow exempt member Nigeria averaged 1.81mn bpd, a 30,000 bpd increase on the month, according to the survey. Not including Libya and Nigeria, compliance among OPEC's 12 members with quotas under the production cut agreement remains robust at 114 per cent, down slightly from 116 percent in June, based on an average of January through July output. That illustrates the challenge OPEC faces in rebalancing the market through its output deal, which also involves 10 non-OPEC producers, as the two exempt countries' recoveries, tenuous though they may be, threaten to undo a large portion of the group's collective cuts.
The combined output of Libya and Nigeria in July was 590,000 bpd above October levels, the month on which OPEC based its production cuts and quotas. Most of Libya's key oil fields have now been brought back online, contributing to output growth in recent months, though some technical issues persist. In late August, Libya's two main rival centers of power tentatively agreed a ceasefire, raising hopes that production could reach state-owned National Oil Company's 1.25mn bpd target by the end of 2017. Nigerian output has continued its upward trend despite the ongoing force majeure on exports of key crude grade Bonny Light due to pipeline issues.
Output of another key Nigerian crude, Forcados, continued to ramp up last month, and tanker tracking data also showed a steady rise in exports month-on-month. Sabotage attacks on the key pipelines in Niger Delta in July, however, showed that the Nigeria's forward prospects continue to be riddled with uncertainty because of political tensions. OPEC officials have, at least publicly, dismissed the notion that Libya and Nigeria are undercutting their efforts, saying they are happy for the two countries.
Saudi energy minister Khalid al-Falih in St Petersburg last month said there was room in the market to absorb 800,000-1mn bpd of growth from the OPEC/non-OPEC bloc, including Libya and Nigeria. He pointed out that demand growth forecasts for 2018 range between 1.4mn and 1.6mn bpd, while the US Energy Information Administration has projected US production to increase 600,000 bpd.