Opec output rises offset Russian fall in June

Spanish Market: Crude oil
07/07/23

Opec+ production edged up in June ahead of planned cuts this month, as increased output from Opec members offset a fall in Russian supply.

Russian production fell for a third consecutive month to its lowest since May 2022, Argus estimates. This helped push output by the group's non-Opec members down by around 20,000 b/d on the month. But production by the 10 Opec members subject to targets was 60,000 b/d higher, leaving combined output up marginally at 36.76mn b/d (see table).

The eight Opec+ members that agreed to make additional cuts of 1.16mn b/d from May achieved a combined reduction of 1.06mn b/d in June, falling nearly 100,000 b/d short of their effective target. Algerian output dipped below its ceiling following a drop in exports, while the continued absence of seaborne Kirkuk exports kept Iraqi production below target for a second month. Saudi production fell below its implied target but most other producers were still pumping above their effective quotas, Argus estimates.

Saudi Arabia's production was just under its ceiling of 9.98mn b/d in June but is scheduled to fall to just under 9mn b/d this month and in August, following Riyadh's announcement that it is extending its 1mn b/d unilateral crude production cut for July into August. Algeria's production ceiling is scheduled to fall to around 940,000 b/d after it announced a production cut of 20,000 b/d for next month.

Overall Opec production rose last month thanks mainly to increases from Nigeria, Iraq, and Gabon. Iraqi production rebounded to its highest since March, when Kirkuk flows from the Kurdistan region in northern Iraq through Turkey first came to a halt. Kirkuk loadings at Turkey's Ceyhan terminal remain suspended, although around 10,000 b/d of the grade was trucked to Jordan in June.

Iraq's recovery followed a resumption in exports from the Qayarah oil field in Nineveh province. The field was recaptured from Islamist group Isis in 2017, but had been badly damaged after Isis set a number of oil wells on fire.

Nigerian production increased for a second month as Bonny Light output continued to rise steadily following Shell's lifting of a long-standing force majeure in March. Erha loadings more than doubled in June, after the grade's export operations were disrupted by strikes at ExxonMobil's Nigerian assets in April.

Notable success

Output by Opec producers without targets has mostly been on the up. Iranian crude production has passed the 3mn b/d mark, according to oil minister Javad Owji. Argus assessed the country's output at 2.91mn b/d in June, the highest since November 2018. Tehran's success in boosting output this year has been notable, given that talks to revive the 2015 nuclear deal have hit a brick wall and there has been no movement on sanctions relief.

Venezuelan production fell in June, according to the oil ministry, state-owned PdV and other industry sources, one of the first major drops since February. A loosening of some US sanctions late last year helped spur production this year, and even boosted optimism that the country could reach 1mn b/d by August, but major infrastructure constraints continue to hinder efforts.

A new threat has arisen to Libya's political stability and its crude production. Khalifa Haftar, head of the Tobruk-based Libyan National Army based in the east of the country, threatened on 3 July to use military force unless the politically fragmented country agreed a mechanism for the "fair" distribution of oil revenues by the end of August. Libya's oil minister Mohamed Oun said on 5 July that the oil revenue distribution mechanism demanded by Haftar would be "very difficult to implement".

By Denise Albrighton

Non-Opec crude production				mn b/d
	Jun	May*	May target	± target

Russia	9.45	9.50	10.48	-1.03
Oman	0.81	0.81	0.84	-0.03
Azerbaijan	0.51	0.50	0.68	-0.17
Kazakhstan	1.60	1.58	1.63	-0.02
Malaysia	0.34	0.34	0.57	-0.23
Bahrain	0.19	0.20	0.20	-0.00
Brunei	0.05	0.05	0.10	-0.05
Sudan	0.07	0.07	0.07	-0.00
South Sudan	0.17	0.17	0.12	0.04
Total non-Opec	13.20	13.22	14.69	-1.49
*revised

Opec wellhead production				mn b/d
	Jun	May	May target	± target

Saudi Arabia	9.97	9.98	10.48	-0.51
Iraq	4.21	4.18	4.43	-0.22
Kuwait	2.56	2.57	2.68	-0.12
UAE	2.89	2.90	3.02	-0.13
Algeria	0.94	0.98	1.01	-0.07
Nigeria	1.36	1.28	1.74	-0.38
Angola	1.11	1.12	1.46	-0.34
Congo (Brazzaville)	0.25	0.25	0.31	-0.06
Gabon	0.21	0.19	0.18	0.03
Equatorial Guinea	0.06	0.05	0.12	-0.06
Opec 10	23.56	23.50	25.42	-1.86
Iran	2.91	2.78	na	na
Libya	1.18	1.18	na	na
Venezuela	0.76	0.79	na	na
Total Opec 13*	28.41	28.25	na	na
*Iran, Libya and Venezuela are exempt from production targets

Opec+ production				mn b/d
	Jun	May*	May target	± target

Opec 10	23.56	23.50	25.42	-1.86
Non-Opec 9	13.20	13.22	14.69	-1.49
Total	36.76	36.72	40.10	-3.35
*revised

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21/11/24

Cost of government support for fossil fuels still high

London, 21 November (Argus) — The cost of government measures to support the consumption and production of fossil fuels dropped by almost third last year as energy prices declined from record highs in 2022, according to a new report published today by the OECD. But the level of fiscal support remained higher than the historical average despite government pledges to reduce carbon emissions. In an analysis of 82 economies, data from the OECD and the IEA found that government support for fossil fuels fell to an estimated $1.1 trillion in 2023 from $1.6 trillion a year earlier. Although energy prices were lower last year than in 2022, countries maintained various fiscal measures to both stimulate fossil fuel production and reduce the burden of high energy costs for consumers, the OECD said. The measures are in the form of direct payments by governments to individual recipients, tax concessions and price support. The latter includes "direct price regulation, pricing formulas, border controls or taxes, and domestic purchase or supply mandates", the OECD said. These government interventions come at a large financial cost and increase carbon emissions, undermining the net-zero transition, the report said. Of the estimated $1.1 trillion of support, direct transfers and tax concessions accounted for $514.1bn, up from $503.7bn in 2022. Transfers amounted to $269.8bn, making them more costly than tax concessions of $244.3bn. Some 90pc of the transfers were to support consumption by households and companies, the rest was to support producers. The residential sector benefited from a 22pc increase from a year earlier, and support to manufacturers and industry increased by 14pc. But the majority of fuel consumption measures are untargeted, and support largely does not land where it is needed, the OECD said. The "under-pricing" of fossil fuels amounted to $616.4bn last year, around half of the 2022 level, the report said. "Benchmark prices (based on energy supply costs) eased, particularly for natural gas, thereby decreasing the difference between the subsidised end-user prices and the benchmark prices," it said. In terms of individual fossil fuels, the fiscal cost of support for coal fell the most, to $27.7bn in 2023 from $43.5bn a year earlier. The cost of support for natural gas has grown steadily in recent years, amounting to $343bn last year compared with $144bn in 2018. The upward trend is explained by its characterisation as a transition fuel and the disruption of Russian pipeline supplies to Europe, the report said. By Alejandro Moreano and Tim van Gardingen Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Talks in Baku torn between mitigation and finance

21/11/24

Cop: Talks in Baku torn between mitigation and finance

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Cop: EU, four countries commit to 1.5°C climate plans

21/11/24

Cop: EU, four countries commit to 1.5°C climate plans

Baku, 21 November (Argus) — The EU, Canada, Mexico, Norway and Switzerland have committed to submit new national climate plans setting out "steep emission cuts", that are consistent with the global 1.5°C temperature increase limit sought by the Paris Agreement. The EU and four countries made the pledge at the UN Cop 29 climate summit in Baku, Azerbaijan today, and called on other nations to follow suit — particularly major economies. Countries are due to submit new climate plans — known as nationally determined contributions (NDCs) — covering 2035 goals to the UN climate body the UNFCCC by early next year. The EU, Canada, Mexico, Norway and Switzerland have not yet submitted their plans, but they will be aligned with a 1.5°C pathway, EU climate commissioner Wopke Hoekstra said today. The Paris climate agreement seeks to limit the global rise in temperature to "well below" 2°C and preferably to 1.5°C. Canada's NDC is being considered by the country's cabinet and will be submitted by the 10 February deadline, Canadian ambassador for climate change Catherine Stewart said today. Switzerland's new NDC will also be submitted by the deadline, the country's representative confirmed. Pamana's special representative for climate change Juan Carlos Monterrey Gomez also joined the press conference today. Panama, which is designated as carbon negative, submitted an updated NDC in June. It is planning to submit a nature pledge, Monterrey Gomez said. "It is time to streamline processes to get to real action", he added. The UK also backed the pledge. The UK announced an ambitious emissions reduction target last week. The UAE — which hosted Cop 28 last year — released a new NDC just ahead of Cop 29, while Brazil, host of next year's Cop 30, released its new NDC on 13 November during the summit. Thailand yesterday at Cop 29 communicated a new emissions reduction target . Indonesia last week said that it intends to submit its updated NDC ahead of the February deadline, with a plan placing a ceiling on emissions and covering all greenhouse gases as well as including the oil and gas sector. Colombia also indicated that its new climate plan will seek to address fossil fuels, but it will submit its NDC by June next year . By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: EU says finance draft text not acceptable

21/11/24

Cop: EU says finance draft text not acceptable

Baku, 21 November (Argus) — The latest draft of the text on climate financing presented at the UN Cop 29 climate summit is not ambitious enough on mitigation — reducing emissions — and "clearly unacceptable," EU energy commissioner Wopke Hoekstra said today. Parties must agree at Cop 29, in Baku, Azerbaijan, on a new collective quantified goal (NCQG) — a new climate finance target — building on the $100bn/yr that developed countries agreed to deliver to developing countries over 2020-25. The text is the main outcome for the summit. "What we had on our agenda was not just to restate the [Cop 28] consensus but actually to enhance that and to operationalise that," but the text goes in the opposite direction, Hoekstra said. Parties to last year's Cop 28 summit in Dubai made an historic pledge to "transition away" from all fossil fuels. The EU has warned against any backsliding on this pledge . "We cannot accept the view that the previous Cop did not happen," Hoekstra said. A draft text on the mitigation work programme — a process that focuses on emissions reduction — was released by the Cop 29 presidency in the early hours of this morning. It does not mention phasing out or reducing fossil fuels in energy systems, or reference the agreement reached on the latter point at Cop 28 last year. Hoekstra indicated today's text does not provide enough clarity to allow the EU to put a concrete number on the amount of climate finance that should be available. The bloc has insisted the final number for climate financing can come only when other elements, including the structure and contributor base, are settled. But recipient country groups such as the G77 and Like-Minded Developing Countries (LMDC) groups have expressed impatience at the lack of a concrete number. Minor bright spots in the numerous draft texts released overnight include those on Article 6, which governs international carbon credits, Hoekstra said. But the commissioner is "sure there is not a single ambitious country who thinks this is nearly good enough." By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexico to keep some energy regulator independence

20/11/24

Mexico to keep some energy regulator independence

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