JP Morgan expects constant Saudi Arabia’s oil production
Baku, Azerbaijan, April 4
By Aygun Badalova - Trend:
The US JP Morgan bank expects Saudi Arabia's oil production to remain constant under the freeze agreement.
In its weekly Oil Market report, obtained by Trend, the bank mentioned that Kuwait announced plans to restart Khafji field with 300,000 barrels per day (bpd) of oil in the Neutral Zone, which has been shut since October 2014.
"We expect the restart to take between 3-to-6 months. If the potential restart is confirmed in coming days, the field may begin production in 3Q16 and a net increase of 250,000 bpd is achievable by the end of the year, but decline rates will determine the production profile into 2017," the report said.
Kuwait and Saudi Arabia agreed to resume production at offshore Khafji oil field although no restart date was immediately available, Kuwait News Agency (Kuna) reported.
Production at Khafji was halted in October 2014 because of environmental concerns. The filed lies in the Saudi-Kuwaiti neutral zone. Kuwait Gulf Oil Co. and Saudi Aramco Gulf Operations Co. jointly operate it. Neither company commented on restart reports.
JP Morgan said that of the 250,000 bpd increase in Saudi Arabia's production by late-2016, only a 50-percent increase of supply should be available in the market as the production split equally between Kuwait and Saudi Arabia.
"With crude from the field being close in quality to some Arabian crude grades, Saudi Arabia will likely offset the incremental exports from their share of Neutral Zone production by reducing output from domestic fields of similar quality," JP Morgan's report said.
The bank's analysts expect Saudi Arabia's oil production at 10.2 million barrels per day in 2016 and 2017.