OPEC oil production declined by 1 percent in 2014

OPEC’s oil production averaged 29.98 mb/d in 2014, which is 0.02 mb/d less than the production level of 30 mb/d as was agreed by OPEC members in December 2011. When compared with the 2013 production of 30.19 mb/d, it indicates a decline of 1 percent.

The decline in production can be attributed to shortfall in the daily production of six countries out of 12 under consideration. These countries include Algeria, Angola, Kuwait, Libya, Venezuela and Qatar.

The six countries accounted for more than 30 percent of the OPEC total production in 2014, with a cumulative oil production of 9.08 mb/d in 2014, compared to 9.74 mb/d a year earlier. The difference of 0.66 mb/d indicates the level of shortfall in OPEC oil production during the period under review.

Libya recorded the highest proportion of shortfall, losing about 50 percent of its crude oil production in 2014, contrary to the country’s plans of producing 1.2 mb/d by early 2015.

Next in magnitude to Libya is Angola with a shortfall of about 5 percent in its oil production between 2013 and 2014.

Kuwait, Qatar and Venezuela had a shortfall that is less than 2 percent, while Algeria had a shortfall that is less than 1 percent.

On the positive side, six countries had their oil production increase in the 2014. These countries include Ecuador, Iran, Iraq, Nigeria, Saudi Arabia and United Arab Emirates.

The six countries cumulatively produced a total of 21.42 mb/d in 2014, compared to 21.39 mb/d in 2013, with a positive variance of 0.03 mb/d.

In comparison, there is a clear indication that the addition to OPEC oil production (arising from increased production by these six countries) could not offset the shortfall. This resulted in 1 percent drop in OPEC production in the review period.

Iraq topped the list of countries with improved oil production with about 7 percent increase to 3.2 mb/d in 2014, from 3.0 mb/d in 2013. This is line with what Iraqi deputy prime minister, Rowsch Nuri Shaways, said at the World Economic Forum in Davos, Switzerland. “Because of the new challenges, especially the price of oil, Iraq has to try its best to raise its oil production and exports,” Shaways had said. As at January 2015, Iraq was pumping at about 4 mb/d.

Next in magnitude to Iraq is Ecuador with a record of about 4.5 percent increase in production. The country’s oil production increased from 516,000 b/d in 2013 to 539,000 b/d in 2014 and it is expected to reach 558,000 b/d by 2015, according to Ecuador’s non-renewable natural resources ministry data.

Iran occupied the third place with a growth rate of about 3.4 percent in production. Its production increased to 2.8 mb/d in 2014, from 2.7 m b/d in 2013.

Nigeria, Saudi Arabia and UAE experienced an increase of less than 1 percent in crude oil production.

Looking at the entire picture, Saudi Arabia, Iraq, Kuwait, Iran and UAE accounted for 71 percent of OPEC’s total oil production in 2014. The five countries had a total production of 21.2 mb/d, which represents 71 percent of 29.9 mb/d produced by OPEC members in 2014.

In terms of individual-country performance, Saudi Arabia topped the OPEC production ladder with daily production of 9.7 mb/d in 2014, from 9.6 mb/d in 2013, representing an increase of 0.82 percent. As at February 2015, Saudi Arabia’s daily production reached 10 mb/d and the country plans to maintain its output target to preserve market share, rather than cut supply to boost prices.

Iraq came second on the production ladder with daily production of 3.2 mb/d. Kuwait occupied the third place with production of 2.77 mb/d in 2014, down from 2.82 mb/d in 2013. The country plans to raise output despite a fall in oil prices. Kuwait Oil Company (KOC) plans to tender this year for oilfield enhanced technical service agreements with British Petroleum, Chevron, Total and Royal Dutch Shell showing interest.

Iran occupied the fourth place, while UAE came fifth.

OPEC started oil production on a downward note in 2015 as production fell by 53 percent to 30.15 mb/d in January, from 30.21 mb/d in December 2013. This is in line with the OPEC production trend in 2014.

Similarly, 12 countries (six on either side) were responsible for OPEC’s production increase and decrease. Algeria, Ecuador, Iran, Libya, Qatar and Iraq recorded a decline in crude oil production. With aggregate production of 8.81 mb/d in January 2015 compared to 9.27 mb/d in December, the six countries reduced OPEC’s total production by 0.46 mb/d, which is responsible for the shortfall experienced in OPEC’s oil production in January 2015.

The remaining six countries – Angola, Saudi Arabia, Kuwait, UAE, Venezuela and Nigeria – cumulatively increased OPEC’s production by 0.40 mb/d in January 2015. This, however, is not enough to offset shortfall in OPEC oil production. However, OPEC’s Natural Gas Liquids (NGLs) production is forecast to grow by 0.20mb/d to 6.03mb/d in 2015.

OLOWA PETER