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OPEC MOMR Apr.05Vienna, 15/4/05
Even with the high expected demand for OPEC crude, Member Country production should be more than adequate to meet projected requirements, according to the OPEC Monthly Oil Market Report for April. "In both the medium and long term, OPEC is committed to expand capacity to meet the oil demand needs of consumers," the report said.
On a quarterly basis, OPEC spare production capacity is currently estimated to average 8.8% in the first quarter, rising to 9.1% and 10.9% in the second and the third quarters respectively, given OPEC production at the current March level. In the fourth quarter, demand for OPEC crude is expected to reach 30.4 mb/d, resulting in spare capacity averaging 9.5% or twice the level seen in the same period last year.
The report added that based on public information of the projects under development, as well as ongoing and firm project announcements that have been made to date, capacity additions between 2006 and 2010 are expected to total another 3.5 to 4 mb/d. It said that some of the key projects expected in this period include Elephant (Libya); Erha, Akpo and Agbami (Nigeria); Haradh (Phase 3), Abu Hadriya/Khursahniya/Fadhili, Shaybah (Saudi Arabia); Cepu (Indonesia); Upper and Lower Zakum (UAE); and Darkhovin (Iran), a small number of which are subject to timing issues. These figures exclude additional projects, such as those being considered in Saudi Arabia, Project Kuwait and syncrude expansions in Venezuela, Qatar, Iran, Nigeria, all of which are at the early stages of planning. Moreover, the report pointed out that “this is higher than the expected cumulative additional crude required from OPEC and shows the increased level of activity among OPEC Members would meet the expected demand in the future, and further build spare capacity.”
On the demand side, the report expected 2005 world oil demand to rise 2.3% over the same quarter last year or 1.89 mb/d, on continued strength in global oil consumption above recent years but below 2004. The report also contains a slight revision in demand mainly due to lower than normal temperatures in the Northern Hemisphere during the second half of February and the first half of March as well as indications of somewhat stronger consumption from preliminary OECD data for the first two months of 2005.
Turning to supply, the report said that non-OPEC gains are now expected to average just under 1 mb/d, which represents a year-on-year increase of 2% from 2004. For the full year, non-OPEC supply is expected to average 50.7 mb/d. OPEC Production in March averaged 29.76 mb/d, an increase of 300,000 b/d from February. OPEC 10 increased by 334,000 b/d, while Iraq showed a slight decrease of 34,000 b/d.
The report also noted that preliminary data for the US and Europe suggest that oil stocks saw a build at the end of March compared to February, the bulk of which came from crude. With the continued increase in OPEC production, crude oil stocks are projected to continue to build, the report said. Seasonally important gasoline stocks in the US are up by 8% over the same quarter last year and 6% above the five yearly average.
The new supply/demand balance for 2005 shows that world oil demand is now expected to average 84 mb/d, while non-OPEC supply + OPEC NGLs and non-conventional oils are expected to average 54.9 mb/d. This results in an average difference of 29.1 mb/d for 2005 compared to 29.0 mb/d from the previous MOMR, the report said.
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