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OPEC Guide



OPEC compliance with cuts 115% over January-March: Platts survey

April 5, 2017 - By Herman Wang, Eklavya Gupte in London



  • OPEC 80,000 b/d above stated ceiling, with Indonesia
  • Nigeria, Libya, UAE, Angola, Venezuela all decline
  • Saudi output 10.0 million b/d; Iraq 4.40 million b/d
  • Iran remains below quota at 3.77 million b/d


OPEC crude oil output fell for the fourth straight month in March, dropping to 31.85 million b/d as the group continues to show relatively strong adherence to its production cut deal agreed late last year, according to an S&P Global Platts survey released Wednesday.


The March output figure represents a 180,000 b/d drop from February -- and a 960,000 b/d drop from October, the benchmark month from which OPEC agreed to cut about 1.2 million b/d to hasten the market's rebalancing.


Nigeria and Libya, which are exempt from the cuts, saw significant declines in production during the month, along with Angola, Venezuela and the UAE, according to the Platts survey.


OPEC's largest producer Saudi Arabia averaged output of 10.0 million b/d, still below its quota under the deal of 10.058 million b/d, but closer than it has been in previous months, according to the survey.


Saudi officials have said that while production has rebounded from sharp cuts made in January, the first month of the OPEC deal, the volume of oil that it supplies to market for exports and domestic consumption will remain stable through the deal. Any additional produced oil may go into storage, while any large cuts in production during a month may be made up by selling oil from storage.


Iraq, which has faced criticism for not fully complying with its required cut, produced 4.40 million b/d in March, the survey found.


Analysis continues below...


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Iraqi officials have pointed to the country's sharp fall in exports as evidence it is adhering to the deal. But while exports have indeed decreased, the OPEC deal covers production.


Iraq remains some 77,000 b/d above its quota over the January-March period, the highest overproduction among OPEC members.


Iran, which is allowed a slight output increase under the deal, raised production 20,000 b/d in March to 3.77 million b/d, the survey found, as oil production from the South Pars and Azar fields began. That is still below its quota of 3.797 million b/d.


PRESSURE TO COMPLY


Nigeria's output dropped 110,000 b/d in the month, as key export grade Bonga underwent field maintenance. Bonga output typically averages around 150,000-200,000 b/d.


Shell said in early March that Bonga production would be shut in for about four to five weeks for maintenance and engineering upgrades at the Bonga floating production, storage and offloading (FPSO) vessel.


The drop in March interrupted three straight months of growth in Nigerian output, as the militancy that plagued its production appears to have eased.


Fellow exempt member Libya, meanwhile, saw production drop to 620,000 b/d in March, according to the survey, as renewed fighting between rival militant groups forced the Sharara field in the southwest of the country to shut down mid-month. State oil company NOC subsequently declared force majeure at the Zawiya terminal, which was lifted Monday.


Venezuela saw a 60,000 b/d drop in the month to 1.95 million b/d, with the Puerto La Cruz refinery partially shut down and production impacted by delays in ship loadings, as cash-strapped national oil company PDVSA struggles to pay for shipments and demurrage. It remains 17,000 b/d above its quota, based on a January-March average.


Angola also saw a 60,000 b/d fall, according to the survey, with exports lower in the month.


The UAE, under pressure from fellow OPEC members to come into compliance with its quota, lowered production to 2.85 million b/d, a 50,000 b/d decline from February, the survey found, as the country put major grade Murban on maintenance.


The country's January-March average remains about 19,000 b/d above its quota, the second highest overproduction after Iraq, based on the Platts survey.


STILL ABOVE CEILING


OPEC's collective March output is still some 80,000 b/d above its stated ceiling of 32.5 million b/d, when Indonesia, which typically produces about 730,000 b/d, is accounted for. Indonesia suspended its OPEC membership in November and is not included in the Platts survey estimates for 2017.


Of the 11 members of OPEC that have a quota under the deal, compliance is 115%, based on January through March averages.


If Iran is not included, the 10 members of OPEC required to cut production have achieved a collective 103% of their cuts, based on January through March averages.


Since the deal covers an average of January to June output, month-to-month fluctuations are to be expected.


The Platts estimates were obtained by surveying OPEC and oil industry officials, traders and analysts, as well as reviewing proprietary shipping data.


In concert with OPEC, 11 non-OPEC countries led by Russia have also agreed to cut output by 558,000 b/d in the first half of 2017, with many of those countries phasing in their reductions or relying on natural declines.


The deal will be up for review at OPEC's May 25 ministerial meeting in Vienna.


S&P Global Platts OPEC survey methodology


Since 1988, S&P Global Platts has published a monthly survey tracking OPEC crude oil production by country. The estimates are obtained through a review of proprietary shipping data, news reportage and surveys of knowledgeable sources.


Data reviewed include loading programs, export statistics and tanker tracking via Platts cFlow. Sources interviewed for the survey include national oil company or ministry officials; analysts at international agencies, think tanks, consultancies and banks; and traders. The sources remain confidential and are interviewed by a team of Platts oil news reporters -- typically led by Herman Wang, Platts OPEC correspondent, and Eklavya Gupte, Platts senior editor for Europe and Africa news.


The survey is typically published between the 5th and 10th of each month, and it measures oil output -- excluding condensates and NGLs.








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