OPEC crude oil production capacity

  • OPEC crude oil production spare capacity stood at just over 5 million barrels per day (Mbpd) in December 2013 according to the International Energy Agency (IEA).
  • OPEC total production capacity stands at 35 Mbpd, a plateau level first reached in 2009. Only Saudi Arabia has significant, tangible spare capacity that can be called upon to iron out the swings in global oil supply. In the supply crisis of July 2008, Saudi spare capacity stood at 1.1 Mbpd, in November 2013 it was 2.7 Mbpd.
  • In 2005 and again in 2008, OPEC spare capacity dipped towards 2 Mbpd, a symptom of scarcity, that lead to the enormous run up in oil price last decade.
  • The picture today is clouded by sanctions in Iran and turmoil in Iraq and Libya.
  • With OPEC production capacity on a plateau, it is growth in N American shale oil and Canadian tar sands production that is meeting growing global demand and keeping prices in cheque.

Figure 1 OPEC spare production capacity according the IEA Oil Market Reports. Spare capacity is higher than the supply crisis years of the mid-2000s, but is still wafer thin compared to anticipated growth in crude oil demand. Data to November 2013.

Figure 2 OPEC oil production + spare capacity has been on a plateau of around 35 Mbpd since 2009. It is not clear that OPEC countries have the appetite for the massive investment required to build capacity from these levels.

Reports for a selection of individual OPEC countries with interesting recent histories are given below.

Figure 3 Saudi Arabia has built new capacity since 2008 with the development of the Khurais and Manifa oil fields that combined add 2.1 Mbpd new production capacity. These were the last two giant  undeveloped oil fields in Saudi Arabia.

Figure 4 Iraq had successfully built production from 2.5 to > 3 Mbpd by early 2013. Bur recent violence, that seems to be spreading, and disagreements with the IOCs over Kurdistan has seen production fall back sharply.

Figure 5 sanctions have not had such a dramatic effect on Iranian production as many believe. With the ending of sanctions, Iranian production will increase by < 1 Mbpd.

Figure 6 A new round of civil unrest in Libya has seen production fall dramatically. The IEA has taken the view that this is temporary, offsetting lost production with a gain in spare capacity.

Figure 7 Angola total capacity is falling. I am unsure how many new fields Angola has to develop. But with deepwater offshore oil it seems likely that Angola may one day soon go the same way as the North Sea with 10% per annum annual declines.

In conclusion, with turmoil in two countries and sanctions in a third Figure 2 serves to illustrate the masterly control that OPEC has over supply and maintaining stable prices > $100 per barrel that are required to fund the Saudi State.

A note on data

All data comes from the monthly IEA oil market report. The US EIA also used to report on OPEC spare capacity, but that service has been suspended in wake of budget cuts leaving the IEA as the sole source. The Oil Market Reports come as pdfs and data need to be manually transcribed to XL. I am indebted to Rembrandt Koppelaar for providing tabulated data from 2002 to 2008.

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6 Responses to OPEC crude oil production capacity

  1. Ralph W says:

    Beyond SA, Iran and Kuwait the world is pumping flat out. And I am not sure about Saudi Arabia…
    Production capacity is an entirely political concept. Only OPEC countries pretend to be limiting pumping for anything other than geological or above above ground reasons, and to say that Libya could pump more if it wasn’t in the middle of armed insurrection is a bit like saying it could pump more if the moon was made of green cheese.

    OPEC oil reserve figures have been political fiction for decades, and so have capacity numbers. Even official OPEC production numbers are clearly fiction in the cases of Iran and Venezuela.

    A country’s production capacity varies from day to day. New fields are opened up, old fields are redrilled. Depletion and decline , like rust, never sleeps.

    Oil prices have been remarkably stable since 2010, which makes me think that some country is tweaking the level of oil reaching the market, and SA is the only country with pockets deep enough. However, the last of the SA big new fields comes on line this year, and after that depletion will rule there as almost everywhere else.

    • BAU says:

      I get the idea current price stability is not just supply driven, but also due to demand issues? Brent might be in the spot where a higher price than current kills demand on the conumer side?

      • Euan Mearns says:

        We are at an interesting place in the oil markets. Oil price low enough to not wreck the global economy and high enough just in no more to allow oil companies to keep producing. But new storm clouds are gathering. The IOCs (Exxon et al) are making less money and axing expensive projects. This can only lead to OECD production of conventional oil declining. At some stage the world will have to get by using less oil (that would be peak oil) or prices will have to go up another level ($150) to enable the development of expensive resources and to maintain production from the growing stock of post-mature off shore fields.

  2. Roger Andrews says:

    Euan: What is “Saudi + 1/2 NZ”? I assume it isn’t Saudi Arabia plus half of New Zealand.

    • Euan Mearns says:

      Roger, there is an area of territory called the Neutral Zone (NZ) between Saudi Arabia and Kuwait that is administered equally by the two. It is desert, wouldn’t matter if it weren’t for the Wafrah oil field. The production is shared equally between SA and Kuwait. NZ production runs at 520,000 bpd – who would care?

  3. Alfred says:

    “keeping prices in check” – thanks

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