BAKU, Azerbaijan, Dec.4
By Leman Zeynalova – Trend:
Total non-OPEC production (crude oil and condensate) will grow by around 2.26 million barrels per day (bpd) in 2020, said Espen Erlingsen, head of upstream research at Rystad Energy, Trend reports.
This will eclipse the 40-year old record by a wide margin, according to the expert.
“The record high production growth from non-OPEC tight oil and offshore puts significant pressure on OPEC’s ability to balance the oil market in 2020. Rystad Energy believes that OPEC will need to extend and deepen production cuts if they have any hope of supporting the oil price in the near-term,” noted Erlingsen.
Looking at the year-over-year change in total non-OPEC oil production from 1960 – the year OPEC was born – towards 2020, one can see that production from non-OPEC countries grew the most in 1978, growing 1.96 million bpd thanks to increases from Russia, the US, the UK and Mexico.
“Next year, this 40 year old production growth record may be beaten. Tight oil is expected to be a key contributor to the non-OPEC oil production expansion, contributing around 1.35 million bpd of the 2.26 million bpd increase according to Rystad Energy analysts. Offshore will balloon by an impressive 1.25 million bpd, almost 0.9 million bpd of which will come from deepwater,” noted the expert.
This is while the International Energy Agency (IEA) expects that non-OPEC output growth is set to increase from 1.8 million barrels per day (mb/d) this year to 2.3 mb/d in 2020.
At the same time, OPEC has revised down the non-OPEC oil supply growth forecast for 2020 by 36,000 barrels per day (b/d) and is now projected to grow by 2.17 million barrels per day (mb/d) for an average of 66.46 mb/d.
In late 2018, OPEC and a number of countries outside this organization (OPEC+ format) decided to modernize the terms of the agreement on the reduction of oil production, in force from the beginning of 2017. The countries agreed to reduce the total production by 1.2 million barrels per day from the level of October 2018.
On July 2, 2019, a decision was made in Vienna to extend the agreement on reducing oil production by OPEC member and non-member states until the end of the first quarter of 2020.
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