OPEC Oil Production

OPEC Fig 1 Stacked chart for monthly oil production of 12 OPEC countries. Gabon, that rejoined OPEC in July 2016 is not shown since I do not have the data tabulated. Gabon is a minnow with 230,000 bpd production. Indonesia, that also rejoined OPEC in 2015 but was suspended in 2016 for opposing the year end production cuts, is also excluded from the chart. The grey band at top shows spare capacity that expands and contracts according to OPEC production policies from time to time. The details of spare capacity are shown in OPEC  Fig 2. The expansion post-2008 shows 4 Mbpd production withheld to support price in the wake of the finance crash. The recent contraction in spare capacity reflects the strategy to grow market share that resulted in the oil price crash of 2014.

OPEC Fig 2 Details of OPEC spare capacity. At the end of 2016, spare capacity was approaching historic lows of 1.99 Mbpd with most countries pumping flat out. Saudi Arabia alone has spare capacity of about 1.6 Mbpd though some industry observers question if Saudi Arabia could actually grow production by that amount at short notice.

OPEC Fig 3 The OPEC countries can be divided into the strong and the weak. The strong countries have seen production growth since 2002. Ecuador is included since it has maintained steady production for the last 12 years. The pending production cuts are meaningful in these countries since we will see growing production replaced by plateau production at a lower level.

OPEC Fig 4 The 5 weak countries are all experiencing production declines for either above ground social reasons or below ground geological reasons or both. The pending production cuts are all but meaningless in these countries since production declines will take the production in these 5 countries below their target production levels in the fullness of time. Libya is not included since its production history is so scarred by recent conflict.

OPEC Fig 5 Saudi Arabia has seen production grow from 7.3 Mbpd in 2002 to 10.6 Mbpd at end 2016. Production capacity has grown by 1.8 Mbpd marking the addition of several new fields such as Haradh and Khurais. NZ = Neutral Zone that is a neutral territory that lies between Saudi Arabia and Kuwait where production from the Wafra heavy oil field is shared equally between the two countries. This expensive production is currently shut in because of the oil price crisis.

OPEC Fig. 6 Most production in Kuwait comes from the supergiant Burgan Field. Kuwait has managed to increase production by 0.9 Mbpd from 1.9 Mbpd in 2002 to 2.8 Mbpd at the end of 2016. Spare capacity is essentially zero.

OPEC Fig 7 Oil production in the United Arab Emirates comes almost exclusively from Abu Dhabi where most production is off shore. UAE production and production growth is on a very similar scale to Kuwait. Production has grown from 2.14 Mbpd in January 2002 to 3.1 Mbpd at the end of 2016.

OPEC Fig 8 On this chart the Iraqi oil production history begins with the US led invasions of 2002 and 2003 that led to major shutdown of oil production. This quickly recovered upon conflict resolution and then began to build from about 2007 onwards. The participation of international oil companies (IOCs) in Iraq has seen production reach record levels, boosted by production from the Kurdistan region. Iraq looked capable of reaching 5 Mbpd with ease but will now see production pegged to 4.351 Mbpd as part of the new OPEC deal.

OPEC Fig 9 Qatar is a giant gas producer and produces significant natural gas liquids (NGL) along with the gas but when it comes to crude oil, it is an OPEC minnow. Note that NGL is accounted separately by the IEA for OPEC countries while it is included with oil and condensate for all other countries. Qatar’s oil production has been in slow decline since 2008, presumably due to natural depletion.

OPEC Fig 10 Post-2008, Iran cut production in line with all OPEC countries but was unable to restore production to the 4 Mbpd plateau and then sanctions took hold in 2011 resulting in the loss of 1 Mbpd production. Note how the IEA restored Iran’s spare capacity in March 2015 in anticipation of sanctions being lifted and how that spare capacity was gradually converted to production in the course of 2016.

OPEC Fig 11 Libya was once one of the most wealthy countries in Africa on a per capita basis built upon oil production that peaked at 1.77 Mbpd in January 2008. The fall in production post-2008 reflects OPEC constraint post-finance crash. Oil production then fell off a cliff in March 2011 as the Arab Spring, civil war and UK / France led bombing took hold. Colonel Gaddafi was killed in October 2011 and production almost made a full recovery thereafter. But, come the summer of 2013 production once again fell off a cliff as the civil war re-ignited and terrorist attacks on oil installations wrecked the country’s oil industry. A major program of repairs has been undertaken and production of 708,000 bpd was reported by The Libya Herald on 8th January 2017. This represents a 428,000 bpd uplift from August 2016 when production stood at 280,000 bpd. The return of Libya to the market will to a large extent undo the OPEC deal.

OPEC Fig 12 Algeria is predominantly a gas producing nation with a secondary oil industry. In keeping with a number of OPEC countries Algeria has a chequered history of allowing IOC’s access and nationalisation of the country’s oil and gas resources. In the early 1990’s Algeria allowed IOCs back to stimulate the exploration and production effort with considerable success. But the authorities have habitually made it very difficult for the IOCs to operate. There was a production peak of 1.4 Mbpd in January 2008 and production has since declined to 1.12 Mbpd in November 2016. This is down to a mix of below ground reservoir and above ground political problems. If nothing changes then Algerian oil production will decline to the new OPEC target of 1.039 Mbpd without any assistance.

OPEC Fig 13 The near term peak in Nigerian oil production was 2.48 Mbpd in July 2005. Production has since shown a ragged descent to 1.62 Mbpd in November 16. Much of Nigeria’s problems are above ground with civil unrest on the Niger delta and on-shore facilities being sabotaged. It is impossible to untangle this reason for production decline from those that may be due to resource depletion. Nigeria is excluded from the 2017 OPEC production pact.

OPEC Fig 14 The near term peak in Angolan oil production was 1.95 Mbpd in February 2010 that compares with 1.67 Mbpd in November 2016. Angola has exclusively offshore production, much of it deep water, and a steep decline analogous to the North Sea is to be expected one day when new discoveries and field developments can no longer keep pace with natural declines. I do not know the cause of the quasi-periodic dips in production that have taken place in June 11, March 14 and October 16. This could be down to engineering or maintenance work.

OPEC Fig 15 Venezuela boasts the world’s largest oil reserves with 301 billion bbls booked by BP in the 2016 Review. But they do not have the production to support this claim. They may have heavy oil resources but they lack the infrastructure, capital and social organisation to develop the resource. Production has been on a bumpy plateau of around 2.5 Mbpd since 2000 where the ups and downs reflect OPEC restraint but also political activity. The steep fall in production marks the 2002 / 03 general strike. And the recent decline reflects the on-going social disintegration of the country.

OPEC Fig 16 OPEC minnow Ecuador presents a picture of ideal stability. The country has produced on a plateau of about 550,000 bpd since the end of 2003. To achieve such stable plateau production suggests that the country is producing well below potential in a drive to produce resources efficiently over a longer time span.