Oil
OPEC sees less demand for its oil to 2018 amid shale boom
LONDON – OPEC acknowledged it underestimated the significance of the North American energy boom as it tripled estimates for shale oil produced there and predicted a decline in demand for its own crude through to 2018.
The need for crude from the Organization of Petroleum Exporting Countries (OPEC), which produces about 40 percent of the world’s oil, will fall by 1.1 million barrels a day to 29.2 million barrels a day between 2013 and 2018, the Vienna-based group said Friday in its annual World Oil Outlook. Oil production from shale formations in the U.S. and Canada is seen climbing to 4.9 million barrels a day in 2018, compared with an estimate of 1.7 million barrels a day in last year’s report.
“The big picture is obviously surging shale production,” Mike Wittner, head of oil market research at Societe Generale SA, said in a interview before the release of the report.
OPEC’s analysis shows how growing oil output in North Dakota and Texas will prevent the 53-year-old group of 12 oil producers, mostly situated in the Middle East, from capitalizing on the 4.8 million barrel-a-day increase in oil demand it expects over the next five years.
The supply surge has also contributed to a decline this year in the price of oil grades on the U.S. Gulf Coast that influence the price of exports from Saudi Arabia, Kuwait and Iraq. The Gulf crude Mars Blend has fallen 12 percent this year to $93.05 a barrel yesterday, according to data compiled by Bloomberg.
Development of shale deposits will push combined U.S. and Canadian oil output to 16.9 million barrels a day by 2018, from 14.8 million this year, according to OPEC’s outlook report. It assumes there’ll be no development of such resources outside North America over the next two decades.
“Until three years ago, oil and NGLs production from the U.S. was considered to be on a long-term trend of slow, but steady decline, after having peaked in 1970,” OPEC said.
“Surging production from tight oil plays and NGLs from shale gas plays has transformed the U.S. supply outlook,” it said in its latest report.
Total oil output from countries outside OPEC, including non-crude sources such as natural gas liquids, will increase to 59.3 million barrels a day by 2020, from 52.9 million last year. This will reduce OPEC’s share of the global oil market to 39 percent at the end of the decade, from 41 percent last year.
Shale oil production in the U.S. and Canada will hit a plateau from about 2017 because of the steep decline in output from wells, a transition away from the most productive “sweet spots” in rock formations, environmental concerns and rising costs tied to the availability of equipment and skilled labor, OPEC said.
“The rapid acceleration of tight oil supply in the U.S., and, to a degree, in Canada, is not thought to be sustainable over the long term,” the report said. Demand for OPEC crude will rebound after 2018 as shale production begins to falter, it said.
OPEC kept estimates for global oil demand growth through to 2018 in line with those it published last year. World oil consumption will increase by an average of 900,000 barrels a day each year to reach 94.4 million a day in 2018, driven by growth in emerging economies.
Consumption in those nations will increase to 44.4 million barrels a day in 2018, from 38.9 million barrels a day this year, overtaking demand in developed nations in the second half of 2014, according to the report.
The Nigerian National Petroleum Company Limited (NNPC) has unveiled a bold strategy to reduce methane emissions in the oil and gas sector by 60% by 2031, with an ultimate goal of achieving net-zero emissions by 2060.
This announcement reinforces Nigeria’s leadership role under the Global Methane Pledge initiative and its commitment to tackling climate change.
The Group Chief Executive Officer of NNPC, Mele Kyari, disclosed these plans during a meeting on Thursday with Robert Leahman, the U.S. State Department’s Global Methane Program Manager, and a delegation from Deloitte.
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The discussions, held at the NNPC Towers in Abuja, focused on collaborative efforts to reduce methane emissions through innovative and sustainable practices.
“Reducing methane emissions is not just an environmental necessity but also a strategic imperative for Nigeria’s energy transition. We are leveraging partnerships to adopt global best practices and innovative solutions,” Kyari stated.
Key among these efforts is a pilot project in the Niger Delta, aimed at establishing emissions baselines, mitigating methane leaks, and promoting sustainable operations across Nigeria’s energy sector.
The project, a partnership between NNPC, Deloitte, and the U.S. Bureau of Energy Resources, will utilize data-driven methodologies to pinpoint and address methane hotspots.
Robert Leahman commended Nigeria’s proactive stance, describing it as a benchmark for other nations on the continent.
“Nigeria’s leadership under the Global Methane Pledge sets a standard for the continent. These initiatives will not only help reduce emissions but also drive sustainable development in the energy sector,” he said.
Kyari highlighted the broader benefits of addressing methane emissions, noting its significance for both environmental protection and economic efficiency.
“This collaboration is a game-changer. By addressing methane leaks, we’re reducing waste, saving costs, and protecting the environment. It’s a win-win for our economy and the planet,” he added.
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
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