Two things are certain in 2018 in the oil markets. In June, OPEC will convene in Vienna where it will announce that the global oil markets are almost in balance, outlining an exit strategy where the 14 country block and the Russia-led NOPEC block will eliminate strict targets but agree to a rough cap for total production. By December 2018, there will be no restrictions beyond market forces on the supply side. After agreeing to limit itself for the good of the market for more than two years, major OPEC countries will be eager to unshackle themselves for a variety of reasons – Saudi Arabia has the Aramco IPO to worry about, Iraq wants to make up for lost time, Iran needs to circumvent American sanctions, Venezuela is at risk of default, while Nigeria desperately needs to restructure its economy.
The wildcard in this scenario is US shale producers. It was thought that many would rush in the fill the gap left by OPEC this year. That has happened to some extent – crude from Eagle Ford and the Permian has made it far and wide, from South Korea to Sweden, some destinations for the very first time – but the wave has been smaller than thought. Burnt by the last time they unrestrainedly raised output, American shale producers are focusing more on optimisation and returning value to shareholders this time round, as crude oil prices went north of US$55/b and have been staying steady there. The wave, however, will slowly rise. US crude production is expected by the EIA to rise to rise to 9.9 mmb/d, rising from 9.3 mmb/d in 2017, which was already a record high.
So OPEC is backing off and American producers are cautiously raising production. What does this mean for prices? A look at the futures markets indicate some bullishness, with the net long positions rising. Supporting this is the growth in global oil demand – which is expected to be solid if unspectacular in 2018, but enough to support average crude prices of US$60/b. Recent wounds should prevent oil from falling below US$50/b, as drillers and explorers value caution over aggression. The main variable is US shale production. Some predict a 2018 increase of as much as 1.3 mmb/d, while the more careful, like the IEA, think growth will be closer to 800 kb/d. There is reason to believe that diminishing returns could be kicking in technological in America’s major shale basins, but there is still a lot of room to grow. Exactly how much it grows will be the major variable for prices. That’s difficult to predict; as shale producers are too numerous to predict collectively. But this much is certain - in 2018, the value of oil will not be decided in Vienna, but in Texas.
Key oil forecasts for 2018
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The global oilfield scale inhibitor market was valued at USD 509.4 Million in 2014 and is expected to witness a CAGR of 5.40% between 2015 and 2020. Factors driving the market of oilfield scale inhibitor include increasing demand from the oil and gas industry, wide availability of scale inhibitors, rising demand for biodegradable and environment-compatible scale inhibitors, and so on.
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The oilfield scale inhibitor market is experiencing strong growth and is mainly driven by regions, such as RoW, North America, Asia-Pacific, and Europe. Considerable amount of investments are made by different market players to serve the end-user applications of scale inhibitors. The global market is segmented into major geographic regions, such as North America, Europe, Asia-Pacific, and Rest of the World (RoW). The market has also been segmented on the basis of type. On the basis of type of scale inhibitors, the market is sub-divided into phosphonates, carboxylate/acrylate, sulfonates, and others.
Carboxylate/acrylic are the most common type of oilfield scale inhibitor
Among the various types of scale inhibitors, the carboxylate/acrylate type holds the largest share in the oilfield scale inhibitor market. This large share is attributed to the increasing usage of this type of scale inhibitors compared to the other types. Carboxylate/acrylate meets the legislation requirement, abiding environmental norms due to the absence of phosphorus. Carboxylate/acrylate scale inhibitors are used in artificial cooling water systems, heat exchangers, and boilers.
RoW, which includes the Middle-East, Africa, and South America, is the most dominant region in the global oilfield scale inhibitor market
The RoW oilfield scale inhibitor market accounted for the largest share of the global oilfield scale inhibitor market, in terms of value, in 2014. This dominance is expected to continue till 2020 due to increased oil and gas activities in this region. The Middle-East, Africa, and South America have abundant proven oil and gas reserves, which will enable the rapid growth of the oilfield scale inhibitor market in these regions. Among the regions in RoW, Africa’s oilfield scale inhibitor market has the highest prospect for growth. Africa has a huge amount of proven oil reserves and is one of the leading oil producing region in the World. But political unrest coupled with lack of proper infrastructures may negatively affect oil and gas activities in this region.
Major players in this market are The Dow Chemical Company (U.S.), BASF SE (Germany), AkzoNobel Oilfield (The Netherlands), Kemira OYJ (Finland), Solvay S.A. (Belgium), Halliburton Company (U.S.), Schlumberger Limited (U.S.), Baker Hughes Incorporated (U.S.), Clariant AG (Switzerland), E. I. du Pont de Nemours and Company (U.S.), Evonik Industries AG (Germany), GE Power & Water Process Technologies (U.S.), Ashland Inc. (U.S.), and Innospec Inc. (U.S.).
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Headline crude prices for the week beginning 9 December 2019 – Brent: US$64/b; WTI: US$59/b
Headlines of the week
In the U.S. Energy Information Administration’s (EIA) International Energy Outlook 2019 (IEO2019), India has the fastest-growing rate of energy consumption globally through 2050. By 2050, EIA projects in the IEO2019 Reference case that India will consume more energy than the United States by the mid-2040s, and its consumption will remain second only to China through 2050. EIA explored three alternative outcomes for India’s energy consumption in an Issue in Focus article released today and a corresponding webinar held at 9:00 a.m. Eastern Standard Time.
Long-term energy consumption projections in India are uncertain because of its rapid rate of change magnified by the size of its economy. The Issue in Focus article explores two aspects of uncertainty regarding India’s future energy consumption: economic composition by sector and industrial sector energy intensity. When these assumptions vary, it significantly increases estimates of future energy consumption.
In the IEO2019 Reference case, EIA projects the economy of India to surpass the economies of the European countries that are part of the Organization for Economic Cooperation and Development (OECD) and the United States by the late 2030s to become the second-largest economy in the world, behind only China. In EIA’s analysis, gross domestic product values for countries and regions are expressed in purchasing power parity terms.
The IEO2019 Reference case shows India’s gross domestic product (GDP) growing from $9 trillion in 2018 to $49 trillion in 2050, an average growth rate of more than 5% per year, which is higher than the global average annual growth rate of 3% in the IEO2019 Reference case.
Source: U.S. Energy Information Administration, International Energy Outlook 2019
India’s economic growth will continue to drive India’s growing energy consumption. In the IEO2019 Reference case, India’s total energy consumption increases from 35 quadrillion British thermal units (Btu) in 2018 to 120 quadrillion Btu in 2050, growing from a 6% share of the world total to 13%. However, annually, the level of GDP in India has a lower energy consumption than some other countries and regions.
Source: U.S. Energy Information Administration, International Energy Outlook 2019
In the Issue in Focus, three alternative cases explore different assumptions that affect India’s projected energy consumption:
EIA’s analysis shows that the country's industrial activity has a greater effect on India’s energy consumption than technological improvements. In the IEO2019 Composition and Combination cases, where the assumption is that economic growth is more concentrated in manufacturing, energy use in India grows at a greater rate because those industries have higher energy intensities.
In the IEO2019 Combination case, India’s industrial energy consumption grows to 38 quadrillion Btu more in 2050 than in the Reference case. This difference is equal to a more than 4% increase in 2050 global energy use.