LONDON: Global oil markets are tightening quickly on falling supply from Venezuela, which posted 2017’s biggest unplanned output fall and could see a further decline in 2018, the International Energy Agency (IEA) said on Friday.
Debt and infrastructure problems cut Venezuela’s December output to 1.61 million barrels per day (bpd), somewhere near a 30-year low. That helped oil prices top $70 per barrel in early January, their highest level in 3 years.
“The general perception that the market has been tightening is clearly the overriding factor and, within this overall picture, there is mounting concern about Venezuela’s production,” the IEA, which coordinates energy policy in industrialized nations, said in its monthly report.
“Given Venezuela’s astonishing debt and deteriorating oil network, it is possible that declines this year will be even steeper... US financial sanctions are also making it tougher for Venezuela’s oil sector to operate,” the IEA said.
As a result of lower Venezuelan production, the IEA said OPEC’s crude output in December fell to 32.23 million bpd, boosting the group’s compliance with a deal to curb output to 129 percent.
In addition to Venezuela, December saw production problems in the North Sea, which helped cut global December oil supply to 97.7 million bpd, down 405,000 bpd from November.
Commercial stocks in industrialized countries declined for the fourth consecutive month in November and likely fell again in December, the IEA said.
OPEC agreed to lower production in 2017 and has agreed to maintain output cuts for the whole of 2018 to help bring the those stocks down to a 5-year average.
The IEA said that if OPEC and its non-OPEC allies maintained good compliance with the output deal, oil markets would balance in 2018.
“Global crude oil markets saw an exceptionally tight 4Q17,” the IEA said, adding that it saw a combined fall of 1 million bpd during that period on declining stocks in industrialized nations and a fall in Chinese balances.
The recovery in oil prices and a decline in global oil stocks has been helped by robust global demand growth in 2017 but it will slow down in 2018, the IEA said.
It kept its oil demand growth estimate for 2018 unchanged at 1.3 million bpd, down from 1.6 million bpd in 2017, mainly due to the impact of higher oil prices and changing patterns of oil use in China.
Besides slowing demand, a spectacular rise in US output is expected to keep oil prices under pressure, the IEA said.
The IEA said that rapid US growth and gains in Canada and Brazil will drive up non-OPEC supply by 1.7 million bpd in 2018, versus last year’s 0.7 million bpd increase. Non-OPEC nations will be producing just short of 60 million bpd this year.
“US crude supply will push past 10 million bpd, overtaking Saudi Arabia and rivaling Russia,” the IEA said.
The IEA said short-cycle US production was reacting to rising oil prices and therefore it raised its forecast for US crude oil growth for 2018 to 1.1 million bpd from 870,000 bpd in its previous report.
“This represents, after the downturn in 2016 and the steady recovery in 2017, a return to the heady days of 2013-2015 when US-led growth averaged 1.9 million bpd,” the IEA said.
Oil markets tightening as Venezuelan output collapses, IEA says
Oil markets tightening as Venezuelan output collapses, IEA says
Saudi Arabia opens 3rd round of Exploration Empowerment Program
RIYADH: Saudi Arabia’s Ministry of Industry and Mineral Resources, in collaboration with the Ministry of Investment, has opened applications for the third round of the Exploration Empowerment Program, part of ongoing efforts to accelerate mineral exploration in the Kingdom, reduce early-stage investment risks, and attract high-quality investment from local and international mining companies.
The third round of the Exploration Empowerment Program offers a comprehensive support package targeting exploration companies and mineral prospecting license holders.
The initiative aims to lower investment risks for projects and support a faster transition from prospecting to development.
"The program provides coverage of up to 70 percent of the total salaries of Saudi technical staff, such as geologists, during the first two years, increasing to 100 percent thereafter, in line with program requirements.
This support aims to develop talent, build national capabilities in mineral exploration, promote job localization, and facilitate the transfer of geological knowledge.
The application for the third round opened on Jan. 14, allowing participants to benefit from the Kingdom’s attractive investment environment, its stable legal framework, and streamlined regulatory structures, as well as integrated infrastructure that supports the transition from mineral resources to operational mines.
The ministry has set the timeline for the third round, with the application period running from Jan. 14 to March 31.
This will be followed by the evaluation, approval, and signing of agreements from April 1 to May 31, with the eligible projects set to be announced between June 1 and July 31 of the same year.
The program stages include submitting exploration data during the reimbursement and payment phase from Sept. 1 to Nov. 30, followed by technical and financial verification of work programs and approval of the disbursement of support funds in January 2027.
The exploration data will then be published on the National Geological Database in April 2027.
The ministry emphasized that the EEP focuses on supporting the exploration of strategically important minerals with national priority. It also contributes to enhancing geological knowledge by providing up-to-date data that meets international standards, helping investors make informed decisions and supporting the growth of national companies and local supply chains.
The ministry urged companies to apply early to benefit from the program’s third round, which coincided with the fifth edition of the International Mining Conference, which was held from Jan. 13 to 15.
