Oilwatch monthly. ASPO Netherlands. Your coverage on the latest worldwide oil production developments. 16 June (next update: 14 July 2008)

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1 Oilwatch monthly Your coverage on the latest worldwide oil production developments 16 June (next update: 14 July 2008) The first oil shock of the 21st century New realities sunk in last month in the minds of western citizens as oil prices reached a level around 135 dollars (80 euro s per barrel). Transport, car manufacture, airline and fishing industries are buckling under the high price of gasoline and diesel. Gasoline prices in the United States have risen above 4 dollars per gallon and in Europe they hover around 7.3 dollars per gallon. Widespread protests in the western world are now becoming a pattern of life, similar to what already happened two years ago in the developing world. Roadblocks by striking truckers are leading to temporary economic breakdown in Portugal, Spain and Southern France, with more countries to follow suit in all likelihood. It sounds like a surreal scenario in the light of oil prices eight years ago, only 12 dollars per barrel in However, the first phase of the transition away from oil dependence has just begun. Western economies are getting hit since many industries cannot cope with 100+ dollars per barrel and its euro equivalent. Consumers will start cutting consumption were they feel it most, in their cars. At least in Europe, they will start driving less short distances to buy goods in supermarkets and shopping malls and to make house calls. This might already be occuring if the latest US Energy Information Administration figures are to be believed. World oil consumption declined by almost 1 million barrels per day from April to May according to the EIA. Mainly because of a decline in European and Japanese consumption. However, it is difficult to read anything in these figures, since oil consumption from May to April 2007 declined by million barrels per day in the entire OECD. Latest figures from the international energy agency also don t shed much light on the issue of oil demand. Estimating a slight decrease in the 2nd quarter of 2008, after which demand rebounds in the 3rd and 4th quarter. The effects of the petrol panick thus are difficult to cipher out. As I see it, oil demand is not likely to waver down soon. Short traffic blocks by truckers don t lead to decreased demand since they mainly leads to large oil consumption of the stationary cars and trucks on the road. Cutting short driving distances might lead to a slight halt in the rising price of crude. However, in the course of a few months this cut will be taken up by those who are willing to pay more in the global economy. This is the essence of the first phase of the transition away from oil. Demand that is cut in the world in western economies will be absorbed by fast growing economies in other parts of the world. As soon as easy demand has been cut consumers will be willing to pay more for their more essential oil usage. Leading to even higher prices near 200 dollars per barrel setting the scene for phase 2 of the oil transition. Which can unfortunately be summarised as the breakdown of several oil intensive industries, up to the point that a significant breakdown in oil demand occurs, and thus a likely breakdown in the rising price of oil. Rembrandt Koppelaar President Rembrandt Koppelaar +31 (0) contact@peakoil.nl Powered by Definitions Crude Oil, petroleum found in liquid and semi liquid form including deepsea and lease condensates. Liquids, all forms of liquid fuels including conventional, heavy, and extra heavy oil, oil shale, oil sands, natural gas liquids, lease condensates, gas-to-liquids, coal-to-liquids and biofuels One Barrel of oil is equivalent with 159 litres Newsletter Index Page 2: Page 3: Page 4: Page 5: Page 6: Page 7: Page 8-10: Page 11: Page 12-14: Page 15: Page 16-17: Page 18: Page 19-20: Page 21: World Production Overview OPEC & Non-OPEC Prod. Overview Liquids Demand Overview OECD stock Overview World Oil export estimate Spare Capacity Overview Middle East Production Charts Europe Production Charts Africa Production Charts Former USSR Production Charts Asia Production Charts North America Production Charts South America Production Charts Oceania Production Charts Chart 1: Oil Price Weighed Average of Blends Dollar per barrel Euro per barrel Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Source: Energy Information Admistration

2 World production overview World liquids production status In May world production of total liquids increased by 490,000 barrels per day from April according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of million b/d. Average global production in 2007 was million b/d according to the IEA. In the first five months of 2008 an average of million b/d was produced. The US Energy Information Administration (EIA) in their International Petroleum Monthly puts average global 2007 production at million b/d and the first three months of 2008 at million b/d. Chart 2: World Liquids Production January May Liquids (EIA) 2004 Source: Energy Information Admistration, International Energy Agency World conventional crude versus liquids production ratio Approximately 86% of world liquids production in 2007 came from conventional crude oil including lease condensates. The remaining share of 14% was produced by other unconventional sources including Biofuels, Extra Heav Oil, Tar Sands, Polar Oil and Natural Gas Liquids. In absolute amounts unconventional production has increased steadily, from 4 million b/d at the end of the 1970 s, to approximately 12 mb/d in 2007 excluding lease condensates. Chart 4: World Crude and Liquids production Source: Liquids C onventional c rude Energy Information Administration, IHS Energy, International Energy Agency Chart 5: World Unconventional Production World crude oil production status Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates decreased by 134,000 b/d from February to March. All time high crude oil production now stands at million b/d at February B iofuels X-Heavy crude (excl. Canada) Canadian Oil Sands Polar Oil Natural Gas Liquids Chart 3: World Crude Oil Production January March Source: Energy Information Administration, IHS Energy, International Energy Agency, Canadian Association of Petroleum Producers 71 Conventional Crude (EIA) Source: Energy Information Administration Page 2

3 OPEC & Non-OPEC production overview OPEC production status Total crude oil production including lease condensates of the OPEC cartel increased by 400,000 b/d to a level of million b/d, from April to March, according to the latest available estimate of the IEA. Natural Gas Liquids production remained at a level of 4.96 million b/d from April to May. Average total liquids production in OPEC countries in the first five months of 2008 was million b/d, versus million b/d in 2007 and million b/d in Chart 6: OPEC Crude Oil Production January May Non-OPEC production status Total crude oil production including lease condensates of non-opec declined by 34,000 b/d from February to March to a level of 41 million b/d, according to the latest available estimate of the EIA. Average crude oil production of Non-OPEC in the first three months of 2008 was 42 million b/d, versus 48 million b/d in 2007 and million b/d in Total non-opec liquids production increased by 90,000 b/d to a level of million b/d from April to May, according to the latest figures of the IEA. Average total liquids production of non-opec in the first five months of 2008 was million b/d, versus million b/d in 2007 and million b/d in Chart 8: Non-OPEC Crude Oil Production Jan March IEA (Crude Oil) EIA (Crude Oil) EIA (Crude Oil) 2004 Chart 7: OPEC Natural Gas Liquids Prod. Jan May 2008 Source: Energy Information Admistration Chart 9: Non-OPEC Liquids Production Jan May IEA (Natural Gas Liquids) 2004 Source: International Energy Agency IEA (Liquids) EIA (Liquids) 2004 Source: International Energy Agency & Energy Information Administration Page 3

4 OPEC & Non-OPEC demand overview OPEC liquids demand developments In 2002 OPEC-12 (excluding Iraq) consumed 5.26 million b/d according to the JODI database. Since then, demand has increased by 1.2 million b/d to 6.46 million b/d in The increase was mainly caused by higher consumption in Iran and Saudi Arabia, which increased by 476,000 and 357,000 b/d between respectively 2002 and In 2008 this pace of growth appers to continue. Consumption in Saudi-Arabia in the first three months of 2008 was 1.45 million b/d and 1.63 million b/d in Iran. Compared to a consumption level of 2 million b/d in both Saudi Arabia and Iran in Chart 10: OPEC-13 Liquids Demand January March 2008 million b/d Source: JODI Database Chart 11: Iran & S. Arabia Liquids Demand Jan March 2008 million b/d Source: JODI Database S audi Arabia Iran Iran S audi Arabia Iraq Venezuela UAE Qatar Nigeria Libya K uwa it E c uador Angola Algeria Indones ia Non-OPEC liquids demand developments OECD liquids demand in recent years has started to decline according to the latest Energy Information Administration figures. In 2005 the OECD group of countries consumed on average of million b/ d, which declined to million b/d in Of the total OECD decline in consumption in 2006, 196,000 b/d came from the US and 238,000 b/d from other OECD countries. while consumption in OECD Europe increased by 13,000 b/d in In 2007, OECD consumption declined further by 203,000 b/d to an average of million b/d. This decline was mainly caused by a consumption decline of 257,000 b/d in OECD Europe and less importantly a decline of 74,000 b/d in other OECD countries except the United States. In the United Sates demand growth rebounded, leading to an average increase in consumption of 129,000 b/d in Chart 12: OECD Liquids Demand Jan November 2007 Million barrels per day Source: Energy Information Administration Other OECD OECD Europe USA In the first three months of 2008 Chinese oil consumption was 6.48 million b/d according to the JODI database. The low figure in comparison to 2007 is likely due to an error in the datasource. China consumed on average 6.27 million b/d in 2005, growing to 6.78 million b/d in 2006 and 7.29 million b/d in Consumption in India was 2.67 million b/d in the first thre months of 2008, versus an average of 2.43 million b/d in 2007 and 2.29 million b/d in Chart 13: India & China Liquids Demand Jan March 2008 million b/d India C hina 2004 Source: JODI Database Page 4

5 Oil Stocks overview Crude oil and oil product stocks status Industrial inventories of crude oil in the OECD increased in March to a level of 948 million barrels from 941 million barrels in February according to IEA statistics. Gasoline stocks in the OECD declined by 9 million to level of 398 million barrels from February to March. More recent data from the EIA shows that gasoline stocks in the USA declined by 15 million barrels per day in April to a level of 215 million barrels. Chart 14: OECD Crude Oil Stocks January April Million barrels Source: International Energy Agency Chart 16: OECD Motor Gasoline Stocks Jan May 2008 Million barrels Total OECD (IEA) OECD Europe (IEA) OECD Pacific (IEA) USA Stocks (EIA) Source: International Energy Agency & Energy Information Admistration Total product stocks in the OECD were 1336 million barrels in March 2008, slightly lower than the five year average of 1376 million barrels. Chart 17: USA Motor Gasoline Stocks January May 2008 Chart 15: OECD Product Stocks January April Million barrels Million Barrels Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Energy Information Admistration Source: International Energy Agency Page 5

6 Crude Oil Exports World Crude Oil Export Status The series was derived by subtracting the consumption of oil products, refinery fuel and direct crude oil sales from liquids production in producer countries. Data comes from the Joint Oil Data Initiative (JODI) for demand and the International Energy Agency (IEA) and Energy Information Agency (EIA) for supply. Biofuels are not included in consumption data but are included in production data. Because biofuels are not identified in the production data it is not possible to separate this flow. Given that net energy biofuel production has increased by approximately 50,000 to 100,000 b/d annually in recent years, the series is slightly optimistic. This method gives a crude approximation of the export market because it assumes that all producers refine their own oil products to satisfy internal market needs. In reality not all oil producers have their own refineries to meet internal product demand. Therefore, more crude will be exported to foreign countries were it is refined into usable products. These usable products are then imported back to the country were the crude oil came from. To derive precise export statistics one would need to combine four components for each individual oil producing country: 1) crude oil export flows, 2) crude oil import flows, 3) total product export flows, 4) total product import flows. Statistics that show only crude oil exports or total product imports on an aggregate basis only reveal one component of the equation, and cannot be taken at face value. Unfortunately, data on all four components is not readily available for countries outside the OECD. At the moment the statistics shown are purely based on the method of subtracting the consumption of oil products, refinery fuel and direct crude oil sales from liquids production in producer countries, unless otherwise noted. From 2005 to 2006, worldwide liquids production increased by nearly 1 million b/d from 84.1 million b/d in 2005 to 85 million b/d in 2006 according to the IEA. Our proxy-exports database, which uses the methodology outlined above, shows that annual worldwide exports are roughly in the order of 46.3 million b/d, 47.5 million b/d,47.4 and 47.3 million b/d and in 2004, 2005, 2006 and 2007 respectively. In the first three months of 2008 average world exports amounted to million b/d. Chart 18: World Liquids Exports Estimate Jan March 2008 million b/d In the first three months of 2008 average non-opec exports were estimated to be million b/d. A proximy estimation of exports for 2003 gives a figure of million b/d, increasing to million b/d in 2004 and subsequently declining to million b/d in 2005 and million b/d in In 2007 non-opec exports increased to million b/d. Chart 19: Non-OPEC Liquids Exports January March 2008 million b/d Source: derived from the IEA, EIA and JODI Database A proxy estimation of exports for OPEC 13 (including Iraq) for 2004 gives a figure of million b/d in 2004, increasing to million b/d in 2005, million b/d in 2006 and decling to million b/ d in In the first three months of 2008 OPEC exports amounted to an average level of million b/d. Chart 20: OPEC Liquids Exports January March 2008 million b/d Source: derived from the IEA, EIA and JODI Database Source: derived from the IEA, EIA and JODI Database Page 6

7 Spare Capacity & Crude Oil Exports OPEC Spare Capacity Total OPEC spare production capacity declined to 1.40 million b/d in May from a level of 1.7 million b/d in April according to the Energy Information Administration. Saudi Arabia still being the sole country with spare capacity. According to the International Energy Agency total effective spare capacity (excluding Indonesia, Iraq, Venezuela and Nigeria) stands at 1.96 million b/d in May from a level of 2.33 million b/d in April. Estimating Saudi Arabia to be capable of producing an additional 1.45 million b/d within 90 days and Iran, Libya, Qatar and the United Arabic Emirates another 1 million b/d. Chart 21: EIA OPEC Spare Capacity Jan May 2008 Source: Energy Information Administration Chart 22: IEA OPEC Spare Capacity Jan May Venezuela UAE Qatar Nigeria Libya Kuwait Iraq Iran Indonesia Ecuador Angola Algeria Saudi Arabia Venezuela UAE Qatar Nigeria Libya Kuwait Iraq Iran Indonesia Ecuador Angola Algeria Saudi Arabia Data on actual flows from the IEA shows that crude oil exports from Saudi Arabia to the OECD declined by 140,000 b/d from 2005 to Chart 23: Saudi Arabia Crude Oil Exports Total exports to OEC D Netherlands G ermany United Kingdom Franc e Canada Source: International Energy Agency Data on actual flows from the IEA shows that crude oil exports from Mexico to the OECD declined by 50,000 b/d from 2005 to 2006 Chart 24: Mexico Crude Oil Exports Tota l exports to O E C D Netherlands United S tates Source: International Energy Agency G ermany Franc e Belgium Source: International Energy Agency Page 7

8 Middle East Production Charts Chart 25: Kuwait Production Chart 26: Kuwait Production January May Crude Oil (IEA) Quota (OPEC) Chart 27: Iran Production Chart 28: Iran Production January May Crude Oil (IEA) Quota (OPEC) Chart 29: Qatar Production Chart 30: Qatar Production January May Crude Oil (IEA) Quota (OPEC) Page 8

9 Middle East Production Charts Chart 31: Saudi Arabia Production Chart 32: Saudi Arabia Production January May Crude Oil (IEA) Quota (OPEC) Chart 33: UAE Production Chart 34: UAE Production January May Crude Oil (IEA) Quota (OPEC) Chart 35: Iraq Production Chart 36: Iraq Production January May Crude Oil (IEA) Page 9

10 Middle East Production Charts Chart 37: Oman Production Chart 38: Oman Production January May Chart 39: Yemen Production Chart 40: Yemen Production January May Chart 41: Syria Production Chart 42: Syria Production January May Page 10

11 Europe Production Charts Chart 43: Denmark Production Chart 44: Denmark Production January March Chart 45: Norway Production Chart 46: Norway Production January May Chart 47: United Kingdom Production Chart 48: United Kingdom Production Jan May Page 11

12 Africa Production Charts Chart 49: Algeria Production Chart 50: Algeria Production January May 2008 Crude Oil (IEA) OPEC (Quota) Chart 51: Angola Production Chart 52: Angola Production January May Crude Oil (IEA) 0.8 Chart 53: Libya Production Chart 54: Libya Production January May Crude Oil (IEA) Quota (OPEC) Page 12

13 Africa Production Charts Chart 55: Nigeria Production Chart 56: Nigeria Production January May Crude Oil (IEA) Quota (OPEC) Chart 57: Egypt Production Chart 58: Egypt Production January May Chart 59: Gabon Production Chart 60: Gabon Production January May Crude Oil (EIA) Page 13

14 Africa Production Charts Chart 61: Equatorial Guinea Production Jan March 2008 Chart 62: Sudan Production January March Source: Energy Information Admistration Source: Energy Information Admistration Chart 63: Other Africa Production January March Liquids (IEA + EIA) Page 14

15 Former USSR Production Charts Chart 64: Azerbaijan Production Chart 65: Azerbaijan Production January March Chart 66: Kazakhstan Production Chart 67: Kazakhstan Production January March Chart 68: Russia Production Chart 69: Russia Production January May Page 15

16 Asia Production Charts Chart 70: China Production Chart 71: China Production January May Chart 72: India Production Chart 73: India Production January May Chart 74: Malaysia Production Chart 75: Malaysia Production January May Page 16

17 Asia Production Charts Chart 76: Vietnam Production Chart 77: Vietnam Production January March Chart 78: Other Asia Production January March Liquids (IEA + EIA) Page 17

18 North America Production Charts Chart 79: United States Production Chart 80: United States Production January May Chart 81: Canada Production Chart 82: Canada Production January May Chart 83: Mexico Production Chart 84: Mexico Production January May Page 18

19 South America Production Charts Chart 85: Argentina Production Chart 86: Argentina Production January May Chart 87: Brazil Production Chart 88: Brazil Production January May IEA (Liquids) Chart 89: Colombia Production Chart 90: Colombia Production January May Page 19

20 South America Production Charts Chart 91: Ecuador Production Chart 92: Ecuador Production January May IEA (Liquids) Chart 93: Venezuela Production Chart 94: Venezuela Production Jan May Crude Oil (IEA) Quota (OPEC) Chart 95: Other S. America Production Jan May Source: International Energy Agency Page 20

21 Oceania Production Charts Chart 96: Australia Production Chart 97: Australia Production January May Chart 98: Indonesia Production Chart 99: Indonesia Production January May Crude Oil (IEA) Page 21