o i l s u p p l y f a l l o u t - ptt prism oil supply - mi fallout.pdf · production by 1.5 mmbd...
TRANSCRIPT
1
F A L L O U T
O I L S U P P L Y
F A L L O U T
O I L S U P P L Y$100 Era
2
Oil price has been migrating upward since 2016
THE CHANGING THEME OF OIL MARKET
$/BBL
LOW & LONG REBALANCING Geopolitics is back!
20
30
40
50
60
70
80
90
100
110
120
THE FALLOUT FROM IRAN SANCTIONGeopolitics Is Back!
Joint Comprehensive Plan of Action (JCPOA)
“The Iran Deal is defective at its core. If we do nothing, we know what will
happen. In just a short time, the world’s leading state sponsor of terror will be
on the cusp of acquiring the world’s most dangerous weapons....”
Donald Trump, The 45th President of the United States of America3
The U.S. is prepared to use sanctions to drive Iranian oil exports down to zero.
DIMINISHING IRANIAN CARGOESGeopolitics Are Back!
Turkey : 7%
India : 23%
China : 26%
Japan : 11%
S. Korea : 11%
3.7 MMBD
Production
2.6 MMBD
Export
European Union : 20%
IRAN
Iran crude and condensate exports are expected to dwindle
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5Ju
l-1
5
Oc
t-1
5
Ja
n-1
6
Ap
r-16
Ju
l-1
6
Oc
t-1
6
Ja
n-1
7
Ap
r-17
Ju
l-1
7
Oc
t-1
7
Ja
n-1
8
Ap
r-18
Ju
l-1
8
Oc
t-1
8
Ja
n-1
9
Ap
r-19
Ju
l-1
9
Oc
t-1
9
MMBD
Expected Crude and condensate export
Export ramped up after sanction was lifted
Average 2.6 MMBD
Abbreviation : MMBD = Million Barrel Per Day
5
Mapping The Fundamental
2019 FUNDAMENTAL - OFFSETING THE IRANIAN SUPPLY
DEMAND SUPPLY
MMBD -1.5
Iran
-1.5Need 2.7
MMBD more to balance
+1.2
(1.1 – 1.3)
Abbreviation : MMBD = Million Barrel Per Day
6
THE SUBSTITUTIONGeopolitics Are Back!
Source: Time Magazine vol. 31 Aug.’16, 7 Jan.’08, 16 Apr.’18
Can the three largest producers offset lost in Iranian production?
7
Here comes
OPEC+No more
OPEC
OPEC+ : The Expandable
EXPANDING IS THE ONLY WAY
35% of global supply
82% of proven reserves
55% of global supply
90% of proven reserves
8
OPEC+ Production Comparing to Baseline in Oct’16* and OECD Crude and Products Inventories
OPEC+ : The Expandable
TURNING POINT…
Source: IEA, Reuters
Saudi Arabia Crude Oil Production
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
2012
2013
2014
2015
2016
2017
2018
MMBD
Saudi claims that their production could reach 12 MMBD by three months
This mean that Saudi Arabia could ramp up production by 1.5 MMBD more by three month…
2,700
2,750
2,800
2,850
2,900
2,950
3,000
3,050
3,100
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
Oc
t-1
6
No
v-1
6
De
c-1
6
Ja
n-1
7
Fe
b-1
7
Ma
r-1
7
Ap
r-1
7
Ma
y-1
7
Ju
n-1
7
Ju
l-1
7
Au
g-1
7
Se
p-1
7
Oc
t-1
7
No
v-1
7
De
c-1
7
Ja
n-1
8
Fe
b-1
8
Ma
r-1
8
Ap
r-1
8
Ma
y-1
8
Ju
n-1
8
Ju
l-1
8
Au
g-1
8
Se
p-1
8
Saudi Arabia Russia Venezuela Iraq
Kuwait UAE Other OECD Inventories
MMBD
*Excluding Libya, Nigeria, Equatorial Guinea, Gabon and Congo
OECD Inventories 5-year average
MMB
Abbreviation : MMBD = Million Barrel Per Day
9
OPEC+ : The Expandable
TURNING POINT… NOT SO FAST
60
70
80
90
100
110
120
130
140
8.0
8.5
9.0
9.5
10.0
10.5
11.0
2012
2013
2014
2015
2016
2017
2018
Production
Rig Count
Both INVESTMENT and POLITICS are dragging down Saudi’s claim
Saudi Arabia Crude Production vs Rig Count
MMBD Rig
0.5 MMBDOf production from Saudi-
Kuwait neutral zone will remain offline until the
dispute is resolve
The GCC Crisis With Qatar Is Still Linger
Saudi – UAE led coalition cut ties with Qatar since 2017
Kuwait is still trying mediate the issues
Qatar is one of Irankey alliance
Gulf Cooperation Council (GCC) include Saudi Arabia, UAE, Bahrain, Kuwait, Oman, and QatarSource: Reuters, Bakers Hughes Inc.
Abbreviation : MMBD = Million Barrel Per Day
+0.9
OPEC+
+0.6
+0.3
10
Mapping The Fundamental
2019 FUNDAMENTAL - OFFSETING THE IRANIAN SUPPLY
DEMAND SUPPLY
MMBD -1.5
Iran
-1.5Need 1.8
MMBD more to balance
Abbreviation : MMBD = Million Barrel Per Day
+1.2
(1.1 – 1.3)
$/BBL
20
30
40
50
60
70
80
90
100
110
120
Oil Price Movement VS E&P Capital Expenditure
U.S. : Retaliation of the Shale Oil?
NORTH AMERICA IN FOCUS
285.03174.26
107.18 144.32 174.64
579.64
442.51
361.68352.69
365.87
2014 2015 2016 2017 2018
North America International
-24%
-39%
-18%
-38%
-2%
+35%
+4%
+21%
*Billion USD
As oil prices move up, short-cycle investments continue to attract the lion's share of incremental upstream investment.
11Source: Barclays E&P Spending Survey, PIRA
Abbreviation : MMBD = Million Barrel Per Day
U.S. : Retaliation of the Shale Oil?
PERMIAN AS THE SPOTLIGHT
12U.S. is on the path to become the largest crude oil producer in the world by 2019 led
by Permian as the key producing region.
32%
45%
21%
17%
29%
19%
19% 18%
Mar-15 Sep-18
6.00MMBD
7.52MMBD
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18
Permian Bakken Eagle Ford Others
Mar.’156.0 MMBD
7.52 MMBD
Monthly average of U.S. Shale Oil ProductionMillion Barrel per Day (MMBD)
Source: EIA
13
U.S. : Retaliation of the Shale Oil?
PERMIAN AS THE SPOTLIGHT
Port of Corpus Christi
Port of Houston
Louisiana Offshore Oil Port
Cushing Inventory
Permian Basin
Pipeline mismatching limits production growth in Permian Basin and could reach 1.0 MMBD before more pipelines come online in Q3/19
Estimated production
3.55 MMBD
Takeaway capacity
3.40 MMBD
Source: Bloomberg
14
Mapping The Fundamental
2019 FUNDAMENTAL - OFFSETING THE IRANIAN SUPPLY
DEMAND SUPPLY
Market will
be balance in 2019
0
MMBD -1.5
Iran
-1.5
+0.9
OPEC+
+2.7
+1.4
U.S.
+0.4
Other Non-OPEC
Abbreviation : MMBD = Million Barrel Per Day
+1.2
(1.1 – 1.3)
15
LITTLE ROOM (SPARE) TO BREATHE
Ramping up production causes OPEC spare capacity to fall to the lowest level in history…
*Spare Capacity : Ability to increasing production by 30 days and sustainable at least 90 days
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Iraq Kuwait Libya Nigeria Qatar Saudi Arabia United Arab Emirates
OPEC Spare Capacity *MMBD
Saudi and allies are ramping production to compensate Iranian loss
The fragile Market
Source: Energy Aspects
Abbreviation : MMBD = Million Barrel Per Day
16
The Fragile Market
THE KEY SUPPLY RISKS IN 2019
Deteriorating Economy
VENEZUELA
0.0
0.6
1.2
1.8
2.4
3.0
2010
2011
2012
2013
2014
2015
2016
2017
2018
MMBD
Political risk remains the point of convergence
LIBYA
NIGERIA 0.0
0.4
0.8
1.2
1.6
2.0
2010
2011
2012
2013
2014
2015
2016
2017
2018
MMBDMMBD
Previous election
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2010
2011
2012
2013
2014
2015
2016
2017
2018
Previous election
MMBD
Source: Reuters
Abbreviation : MMBD = Million Barrel Per Day
17
The Fragile Market
THE TWO KINGDOMS vs THE STATES
Source: Reuters, CNBC
U.S. relationship with the world is crumbling even among the largest crude oil producer
18
Price Projection
STILL ON THE UPSIDE
AVERAGE
Balanced market with limited spare capacity