special presentation group supply trends Ögew / dgmk · jbc products & services tuesday, 21...

Supply Trends

ÖGEW / DGMK

17 October 2014

JBC, Johannes Benigni

Special Presentation GROUP

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Crude Prices


Price Structure

The price has moved down on the front end and up on the back end of the curve


Supply Overview

~93 mb per day of liquids supply of which 73 mb per day is crude oil


Supply – Balances

Europe, Asia and the North America are short


Supply Outlook – Short Term

US and Canada boost non-OPEC supply, while within the OPEC group Libya and Iraq increase


Supply – US

Shale boom is likely to slow down towards the end of the decade


Supply – US

Lower oil prices means that less additional wells will be drilled


Supply – US

Average costs per well increased this year again


Supply - Canada

Canadian supply to increase as long as infrastructure keeps pace


Supply – Russia

New frontier projects will not be enough to compensate for the declines


Supply – Other FSU

Other FSU East suppliers fail to deliver


Supply – Brazil

Brazil output is about 1 million b/d below expectations


Supply – MENA Region

Geopolitical risk remains high in MENA region


Supply - Deepwater

Deep Water hopes in the U.S. Gulf, Brazil and West Africa


Supply – Costs

“Easy barrels are gone” – frontier supplies come at a cost


Supply - Costs

IOCs have only limited access to cheap resources (about 3/4s are in the hands of NOCs)


Price Signals

The physical market has already stabilized and turned


Market Structure


Economy


Investors

The financial players got excited


Demand

Weak economic situation weighs on demand


Call on OPEC

OPEC “must” see that a cut is inevitable


Saudi Arabia

Slide 26Tuesday, October 21, 2014

Increase domestic crude use and lower production levels lead to a sharp cut in crude exports

www.jbcenergy.com

Competing Grades

There is no indication of a price war among OPEC


Saudi Arabia

No problem for the Saudis to cut


Saudi Arabia


Supply Outlook – Long Term

“Cheap” crude is only available in the Middle East, but will it be available?


Supply Outlook – Short Term

• Non-OPEC supply is set to increase mainly on the back of US crude additions

• While the North America boosts production, others disappoint:– Brazil output is increasing, but way below initial expectations– FSU East output is expected to decrease next year due to lower

output from Russia, Kazakhstan (Kashagan delays) and Azerbaijan

– Other regions are not seen to have the capability to increase output

• In the Middle East, OPEC will need to lower output to make room for Iraqi barrels

• Libya output is also expected to increase over the upcoming months; however not to the same levels as seen before the 2011 crisis.


Supply Outlook – Long Term

• Cost of production is set to increase due to frontier developments

– Cost overruns and project delays are telling the story

• U.S. Shale boom is likely to slow down, but others will try to follow

• Main crude supply additions to cover demand will have to come from OPEC Middle East


Thank you!

special presentation group supply trends Ögew / dgmk · jbc products & services tuesday, 21...

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