IEA Mid-Market Oil Outlook 2008 [updated]
A quick summary of the Mid-Market Crude Oil Outlook from IEA.
- No obvious sign speculators behind high oil prices
- Global oil demand growth still 1.3% in 2007
- Producers operating close to flat out
- Global net decline 5% p.a. (2008-2013 avg?)
- OPEC mature field decline >10% p.a.
- More spare capacity by 2009, but then dip again, recovery by 2013?
- Non-OPEC supply slows to 2012, then picks up in 2013 [???]
- 48% of gobal demand growth in distillate
- Biofuels 2.8 Mb/d by 2013 (max capacity potential 3.3Mbpd), big downside risks remain
- OPEC condensates to grow from c. 3Mbpd to c. 5Mbpd by 2013
- OPEC NGL growth to be used by petrochemical industry
- Remaining GTL insignificant
- Increasing fuel oil demand from Middle East for power generation
- Non-OECD demand to oustrip OECD by 2015
And finally:
Net [non-OPEC] increase of 1.2 mb/d expected for 2008-2013
…and the fact that gas liquids, non-conventionals and
biofuels are drivers of growth, not crude
That if any, is a tacit admission from them for peak light crude at the very least for non-Opec.
They must have really balanced on what to graph and what words to use: they had to make an impact and show things are serious, but at the same time not let the cat out of the bag completely.
It seem that they are saying they do not know (or necessarily believe) that non-OPEC supply can re-gain growth again after 2013.
In total, the often optimistic IEA scenario now reads like this in regards to the supply/demand situation to year 2013:
Incremental supply additions from 2008 to 2013:
Non-OPEC crude capacity +1.2 Mb/d
OPEC crude capacity +2.5 Mb/d
OPEC gas liquids output +2.1 Mb/d - output
World biofuels output +0.6 Mb/d (capacity 2.0 Mb/d)
---------------------------------------------------------
Total supply additions: +6.4 Mb/d (w/ biofuel cap. 7.8 Mb/d)
Total demand subtracted: -7.x Mb/d (+1.4% p.a.)
==============================================================
Spare capacity: -0.6 - -1.x (w/ biofuel max +0.8)
Incremental means on top of the existing production level (that is, already taking into mature field declines)
NB! The supply for 2012 is 2.6 Mb/d lower than the estimate a year ago for year 2012 (MTOMR 2007 in 6/2007). The drop is remarkable c. -28%. That should tell you something about the accuracy and visibility at which IEA now operates. Clearly they don't know.
Summary: if biofuels (read: ethanol) don't come through in spades and/or Iraq doesn't miraculously recover - we are screwed.
Either way, it's going to be really tough, prices are going to be high, unless we hit Asian/worldwide depression, in which case people have other things to worry about.
And do remember, that is just the conservative/optimistic report from IEA. The reality is likely to be far worse.
It'll be interesting to see how the market reacts to the final report later this year, if ever get that far before the market freaks totally.
