Market Report Series Oil 2017

Transcription

1 Market Report Series Oil 2017 Neil Atkinson, Head Oil Industry & Markets Division, IEA International Institute for Strategic Studies, Bahrain, 17 September 2017

2 Oil demand continues to grow but at a slower pace 2.0 Global oil demand growth 1.5 mb/d China India Rest of the world Global oil demand crosses 100 mb/d mark in Transport accounts for one-half of global growth, petrochemicals - one-third. Almost half of global oil demand growth comes from China and India

3 Global oil supply rebounds then slows markedly Global oil supply capacity growth mb/d Non-OPEC OPEC Following record slide in global upstream spending over 2015/16, only modest recovery seen in 2017 Unless significant new projects sanctioned quickly, growth all but stalls by 2020.

4 US leads global production capacity growth of 5.6 mb/d 2.0 Changes in global capacity mb/d Non-OPEC OPEC Capacity growth highly concentrated: 3 main non-opec countries account for 60% of global growth

5 US LTO production rebounds but price sensitive mb/d 8.0 US LTO production $80/bbl Base case $50/bbl LTO set to expand by 1.4 mb/d by 2022 in our base case. At $80/bbl, output could expand by 3.0 mb/d over the same period

6 Crude flows West to East in even bigger volumes 8 East of Suez crude oil balance 6 4 mb/d With massive growth in Asian demand, East of Suez crude deficit widens as Middle East exports are not sufficient to meet demand. Exports growth from Brazil and Canada each is higher than from the Middle East.

7 World oil market grows tighter from Call on OPEC crude and stock change mb/d Call on OPEC + stock change OPEC Crude Capacity Call on OPEC rises and spare capacity shrinks without further upstream investment. Less than 2% in 2022 versus 3.7% in 2008 when prices rose sharply.

8 Conclusions Demand continues to grow steadily -- up 7.3 mb/d by driven by China and India, which will account for almost half of growth over the period Global production capacity will also grow -- up 5.6 mb/d -- led by the United States, Brazil and Canada Asian demand growth draws extra Middle East oil but also needs supply from other areas. Trade routes will shift and lengthen Global investment remains weak in 2017 after two-year record plunge and OPEC spare capacity contracts to less than 2% in a 14-year low A tighter market & security of supply concerns could lead to increased volatility and higher prices by 2020

9 Oil & Gas Investment Neil Atkinson, Head Oil Industry & Markets Division, IEA International Institute for Strategic Studies, Bahrain, 17 September 2017 IEA OECD/IEA 2017

10 Global energy investment fell 12% in 2016, a second consecutive year of decline Global energy investment 2016 USD (2016) billion % Networks Renewabl e -25% Coal Oil & gas +9% -25% 0 Thermal Electricity Oil, gas & coal Energy efficiency Renewables in transport and heat Total energy investment was $1.7 trillion in Electricity sector investment overtook oil and gas for the first time, while energy efficiency was the biggest growth sector.

11 Global upstream investment rebounds modestly in % Global oil and gas upstream capital spending USD billion (nominal) % 38% 38% 37% -26% +6% 39% 42% 42% 27% 27% 44% 45% 28% 29% 25% 28% 18% 19% 20% 21% 20% 26% 25% 21% 19% 17% 12% 14% 14% 14% 16% 12% 10% 13% US independents Global Cost Index (Right Majors axis) Other Shale private Cost Index (Right NOCs axis) Ramp up of activities leads to cost inflation in US tight oil but elsewhere upstream costs decline further. NOC share in total investment reaches another record high.

12 A two-speed world oil market Change in Upstream investment, 2017 vs % 40% +53 % 20% 0% -20% -9% -4% +4% Africa Latin America Middle East Russia +6% US Shale After two years of unprecedented decline, global upstream investment is expected to stabilize in 2017, but downside risks remain

13 Oil and gas projects moving to shorter timelines and smaller sizes Average size of conventional resources sanctioned and time to market Time to market (years) Other offshore Global Average Onshore Deepwater offshore Average size of resources (Million barrels) A shift in company strategies and technology developments leads to shorter project cycles across all the oil and gas industry

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15 Oil Market Update Neil Atkinson, Head, Oil Industry & Markets Division International Institute for Strategic Studies, Bahrain, 17 September 2017 IEA OECD/IEA 2017

16 Strong oil demand growth in 2Q17 Global Oil Demand Growth, y-o-y Q2015 1Q2016 1Q2017 1Q2018 Japan China India US Total In 2017 growth revised upwards to 1.6 mb/d, followed by 1.4 mb/d in 2018

17 Non-OPEC supply growth remains on track mb/d Total Non-OPEC Supply, y-o-y Change Q14 1Q15 1Q16 1Q17 1Q18 Other North America Total Non-OPEC oil supplies set to expand by 0.7 mb/d in 2017 and 1.5 mb/d in 2018.

18 OPEC quota discipline solid in 2017 cut mb/d Compliance Improves 100% 50% Jan Feb Mar Apr May Jun Jul Aug 0% Saudi Kuwait UAE Angola Iraq Others* OPEC-12 For January-August period OPEC achieved 86% compliance rate

19 OECD stock surplus falling mb 400 OECD stocks vs 5-year average Jan 16 Jul 16 Jan 17 Jul 17 Oil Products Crude + NGL + Feedstocks In January stocks = 300 mb above the average and now = 190 mb

20 Oil market is re-balancing gradually mb/d Demand/Supply Balance until 4Q17 mb/d Q14 2Q15 2Q16 2Q Total Stock Ch. & Misc Demand Supply* Note: For scenario purposes, OPEC/non OPEC cuts remain constant until end After sharp fall in 2Q17, stocks will fall gradually in 2H17

21 Conclusions Oil demand is growing strongly in 2017 and 2018 Non-Opec production growth is strong in 2017, led by the US, and accelerates in 2018 OPEC quota compliance has been solid at 86% OECD stocks are falling versus 5-year average Oil market gradually re-balancing OECD/IEA 2017

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