Russia and Saudi Arabia were coming around to the idea Friday that they need to ease the OPEC/non-OPEC production cuts, which have gone overboard in recent months, removing much more than the 1.72 million b/d of supply they had pledged to curb under the November 2016 agreement.
There was no formal statement by the time we closed this report Friday evening in Asia, but there was talk of putting 1 million b/d more into the market to cool overheated crude prices, according to media reports citing sources privy to the discussions taking place between energy ministers on the sidelines of the St. Petersburg International Economic Forum in Russia.
The proposed addition of 1 million b/d would be a fair correction, in line with our estimate that the market has been deprived of as much as 3 million b/d of supply from the 22 OPEC/non-OPEC producers in the reduction pact in recent months.
Benchmark crude futures, which had closed more than $1/barrel lower Thursday on talk of OPEC looking to ease supply, plummeted by another $2/barrel on Friday’s headlines out of St. Petersburg. Brent, which had pierced the $80/barrel psychological mark a few times during intraday trading over the past fortnight, had slid below $77, while WTI was changing hands under $69 as of 1300 GMT.
Russian Energy Minister Alexander Novak took the lead Thursday, telling reporters that the supply restrictions could be unwound gradually, though the output cut deal should remain in place. Novak said he and Saudi Arabia had a common position on the future of the deal, suggesting an amicable meeting of the minds between the de facto leaders of the OPEC and non-OPEC blocs.
Novak, Saudi Energy Minister Khalid Al-Falih, UAE Energy Minister and current OPEC president Suhail al-Mazrouei, and OPEC secretary-general Mohammad Barkindo were scheduled to hold discussions on the global oil markets in St. Petersburg.
The leaders have less than four weeks to chart a new course, which would be formally adopted at the OPEC/non-OPEC ministerial meeting in Vienna on June 22. Deciding to release more barrels into the market might be the easier part. Agreeing on how exactly it will be done could prove to be far more difficult.
A major reason behind the OPEC/non-OPEC supply cuts reaching far deeper than agreed over the past few months has been the inability of several producers in both groups to fulfill their agreed quotas. The most prominent OPEC member with production woes is Venezuela, which languished around 460,000 b/d below its quota of 1.972 million b/d on average in the first four months of this year. Angola has also been struggling to maintain its output, falling short of its target by around 160,000 b/d in April, according to the latest OPEC data.
Libya and Nigeria, which do not have production limits, continue to be plagued by outages from militant attacks on infrastructure. The only voluntary overshooting of the targeted cut within OPEC has been by Saudi Arabia, which could be corrected, but that would put only about 100,000 b/d more into the market.
Within the non-OPEC group of 10 collaborators, Russia has the capacity to raise output by the 300,000 b/d that it took off the market gradually starting in 2017. However, at least three major producers in this bloc — Mexico, Kazakhstan and Azerbaijan — have under-delivered against their targets in recent months, causing a collective shortfall of nearly 730,000 b/d in March, according to the latest monthly data available. Of these, Kazakhstan is expected to catch up to its ceiling in the second half of this year, but not Mexico and Azerbaijan.
This means Russia and Saudi Arabia will have to do most of the heavy lifting to put more barrels into the market. That would mark a major departure from OPEC’s policy of apportioning any agreed reductions or additions in supply to all members in proportion to their share of the group’s overall production.
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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.