Opec+ crude production edges lower

Opec+ crude production fell in November as cuts by Saudi Arabia and Opec's other Mideast Gulf members more than offset a rise in Russian and Kazakh supply.

Production by the 19 Opec+ members subject to quotas fell by 310,000 b/d to 38.29mn b/d (see table), according to Argus' survey, leaving the group 1.81mn b/d short of its new substantially lower November target last month. Opec+ agreed to cut its collective quota by 2mn b/d for November onwards on the back of concerns about Chinese oil demand and worries of a global recession. But the group has been failing to deliver on pledged supply for over two years now, owing to years of underinvestment, disruption and sanctions.

Non-Opec members of the group raised their combined output by 460,000 b/d to an eight-month high. Kazakhstan's production rose by 330,000 b/d with the return of the Tengiz field, leading to a 500,000 b/d increase in loadings of its main export grade CPC Blend. Crude output levels were around 1.8mn b/d in early December, data from state-owned monitoring service IACOG show, but are likely to drop as tankers remain bottled up in the Black Sea by a dispute over insurance and transit through the Turkish straits. Over 20 vessels, almost all of which carry CPC Blend, are waiting to pass into the Mediterranean.

Russian production was higher last month, largely reflecting the restart of Sakhalin 1. Rosneft assumed temporary operatorship of the project from ExxonMobil in October, and exports of Sokol crude from the De Kastri terminal trebled to nearly 150,000 b/d last month, data from Vortexa show. Exports of other crude streams fell as the EU's embargo on Russian crude and the start of the G7 price cap scheme approached. Urals exports were down by 70,000 b/d and ESPO Blend shipments fell by 40,000 b/d. Crude deliveries did rise to Russian refineries, though. Russian deputy prime minister Alexander Novak has acknowledged that his government's planned ban on trade within the price cap mechanism could result in production losses.

Output among the 10 Opec members with targets was down by 770,000 b/d in November, reaching a six-month low. The group's Mideast Gulf members reduced their combined output by 820,000 b/d, while west African producers added 70,000 b/d. Delivered output by west African producers, particularly Nigeria and Angola, was still well below what was pledged, and they were responsible for close to a 1mn b/d shortfall relative to targets last month despite the recovery.

Nigerian output rose after several production and export facilities came back online. This enabled shipments of Forcados crude to resume after a three-month break. Nigeria's crude production hit 1.59mn b/d in early December, state-owned NNPC said on 8 December, which would be the highest since mid-2020. The increase is because of an improved security situation in the onshore and offshore sectors, NNPC's chief upstream investment officer Bala Wunti says.

Saudi Arabia's 440,000 b/d output reduction meant that it accounted for nearly three-fifths of all the cuts made by the Opec 10 last month. The monthly fall in Iraqi production was below the level required, leaving it above quota.

For want of condensate

Limited flows of much-needed condensate from Iran were behind a month-on-month decline in Venezuelan crude production. Most Venezuelan crude is heavy or extra heavy and requires blending with condensate to make it easier to move by pipeline. State-owned PdV has relied heavily on Iran for sporadic condensate cargoes in the past year, which several traders said ran out in November.

Libyan production fell by 80,000 b/d to 1.09mn b/d last month. But Libya's NOC reported Libyan crude output of 1.21mn b/d on 6 December.

By Denise Albrighton