giovedì 17 ottobre 2013

Financial Times: Gulf oil production hits record

"Despite the shale revolution, the Middle East is and will remain the heart of global oil industry for some time to come". I think that these words of Fatih Birol (IEA) are enough to explain the topic of the following article of Ajay Makan (Financial Times). The shale revolution is already a reality in US, but, as last data say, it's still far to seriously threat the "Gulf states supremacy".

The Gulf states are producing more oil than ever before, defying expectations that the US shale revolution would break their 40-year grip on the global oil market and diminish their importance to the world’s consuming nations. 

Surging production in North America is expected to eat into the market for oil from Opec. But the quartet of Gulf kingdoms that dominate the cartel of oil exporters have so far emerged unscathed. Instead, they have expanded their share of the world market as political and social factors have reduced production from a number other members. 

Saudi Arabia, Kuwait, the United Arab Emirates and Qatar set aggregate production records in each of the last three months, according to fresh estimates from the International Energy Agency. In September they accounted for 18 per cent of global demand – a level only matched twice in IEA data stretching back to the 1980s.

“Despite the shale revolution, the Middle East is and will remain the heart of global oil industry for some time to come,” Fatih Birol, the IEA’s chief economist said.

US crude oil production has increased by 50 per cent since 2008 and the country is expected to meet the lion’s share of the world’s growing demand over the next five years. But while US companies tend to maximise production to generate more profits, the Gulf states – and Saudi Arabia in particular – invest heavily to maintain spare capacity.

That has allowed them to raise production to offset a run of disruptions across the Middle East and Africa in the last two years. US-led sanctions have reduced Iranian production by 1m barrels a day since the start of last year, while civil unrest has returned this summer to Libya and crude oil theft increased in Nigeria. 

As a result Gulf states are capturing more of the fast growing Asian market. India imported 44 per cent of its crude from Saudi Arabia, Kuwait, Qatar and the UAE in July, up from 36 per cent in 2011, while China relies on the countries for a quarter of its imports compared to 21 per cent in 2007.

A rapid return to production among other Opec members, for example through a resolution to Iran’s nuclear standoff with the US, could yet leave the Gulf states exposed to the US shale revolution. And some analysts argue that Opec could yet need to discuss production cuts when its oil ministers next meet in Vienna in December.

The record output has provided a windfall for the oil-dependent monarchies. The 16.4m barrels a day produced by the four states during the third quarter was worth more than $150bn at today’s prices of more than $100 a barrel. 

The principal beneficiaries have been Saudi Arabia, which has increased output more than 10 per cent since the start of the year to a record of 10.19m b/d in August, and the UAE where the 2.77m b/d produced in September was a record, and 7 per cent higher than at the start of the year. Kuwait has also set a series of production records this year, but Qatar has been unable to raise production significantly. 

It also means the region remains crucial to the world’s major powers. The US continues to import almost 60m barrels a month from the Gulf, a number that has actually increased in the last three years even as US imports overall have fallen. 

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