Canadian Oil Disruption, OPEC Cuts Open Door for Mexico

Canadian crude shipments to the U.S. are poised to shrink just as the effects of OPEC-led output cuts are being felt in the Caribbean. That’s good news for Mexico and other local oil producers.

Syncrude Canada Ltd. told customers they wouldn’t receive any supply in April from its 350,000-barrel-a-day upgrader, according to people familiar with the matter. The plant, which turns bitumen from Alberta’s oil sands into light synthetic crude, moved forward maintenance following a fire last month. Light crude and condensate jumped to the highest level in more than a year last week, and Western Canadian Select on Monday was the strongest since June 2015, when wildfires in Alberta disrupted production.

The loss of some Canadian shipments comes just as U.S. refiners are returning from seasonal maintenance and shipments from the Middle East are declining. Mexico stands to benefit from the disruption, as the higher heavy Canadian crude prices make its similar Maya grade more attractive to U.S. Gulf Coast refiners.

The Organization of Petroleum Exporting Countries pumped 32.095 million barrels a day in March, down 200,000 from the previous month, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. Traders were said to have pulled between 10 million and 20 million barrels of oil from storage in the Caribbean, according to estimates from traders who asked not to be named because their data is proprietary.

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U.S. inventories have remained stubbornly high following the output cuts by OPEC and other large producers that took effect in January, even as signs elsewhere point to the market rebalancing. That may be starting to change: analysts surveyed by Bloomberg expect U.S. inventory data due Wednesday to show the biggest weekly decline this year.

The Syncrude production cut is affecting other oil sands producers, including ConocoPhillips, that mix synthetic crude with their oil sands bitumen to ease its transport. On Monday, Suncor Energy Inc., Syncrude’s majority owner, repeated a statement from last week saying that pipeline shipments of treated product from the Syncrude site will resume in April at 50 percent capacity.

Western Canadian Select crude traded at $3.71 a barrel less than Mexican Maya Tuesday, the smallest discount since wildfires shut about a million barrels of oil sands production in May. The price difference is too small to cover the $7 it costs to ship a barrel of the heavy Canadian to the Gulf Coast by pipeline, according to Carl Evans, an analyst at Genscape Inc.

“Probably the Gulf will take as much Mexican as it can,” Evans said Monday by phone.

The jump last week in prices of synthetic crude and condensate, which are both mixed with bitumen so it can flow easily through pipelines, pushed up heavy crude prices. Western Canadian Select surged 30 cents Tuesday to $10.20 a barrel below West Texas Intermediate, the U.S. benchmark, the smallest discount in almost two years, data compiled by Bloomberg show.

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Solar now employs more people in the US than coal and natural gas

us-solar-industry-hailed-as-light-at-end-of-tunnel-for-jobless-coal-minersSolar power, once derided as an expensive and unreliable energy source, has become a major generator of employment in the United States, according to new data supplied by The Solar Foundation.

In its most recent annual report, Solar Jobs Census 2016, the foundation found that one out of every 50 jobs in the U.S. last year, was created by the solar industry – or 2% of all new jobs. Solar jobs have increased at least 20% over the past four years and have nearly tripled since the first Solar Jobs Census was released in 2010.

In 2016, the five states with the most solar jobs were California, Massachusetts, Texas, Nevada, and Florida.

Of the 260,077 people employed in the solar industry in 2016, over half (52.7%) were involved in installation. Manufacturing represented 14.7% of solar employment, sales and distribution 12.4%, and project development 13.2% of the total. The most dramatic growth occurred in installation, which saw a 212% increase in the number of jobs between 2010 and 2016, according to the report. (see table and graph below)

Perhaps the most interesting finding, from a mining perspective, is how the number of solar jobs compares to other forms of electricity generation. Despite representing just 1.3% of US energy production, “Solar employs slightly more workers than natural gas, over twice as many as coal, over three times that of wind energy, and almost five times the number employed in nuclear energy. Only oil/petroleum has more employment (by 38%) than solar,” reads an executive summary. (see table below)

Other key findings:

The U.S. solar industry expects total employment in the solar industry to increase by 26,258 workers to 286,335 total jobs, an annual growth rate of 10% by the end of 2017. This growth projection is almost 10 times faster than the projected U.S. employment growth rate over the next 12 months.

Development in 2017 is expected to throttle back from the 2016 record year. The Solar Energy Industries Association (SEIA) and GTM Research expect new installations to decline slightly from the 14.1 GW of 2016 to 13.5 GW in 2017. While most of the capacity growth will still be from utility-scale project development, such deployment will grow at a slower rate.

Growth in annual installed capacity continues to be primarily driven by the falling installed costs of solar energy, especially materials or hard costs.

The clear majority of U.S. solar jobs are focused on solar photovoltaic (PV) electric generation. About 93% of solar workers are focused on solar PV electric generation; about 5% support heating and cooling technologies, such as solar thermal, and another 2% work on projects related to concentrating solar power (CSP).

More women and minorities are working in solar. Women represent a greater proportion of the solar workforce than in previous years, having risen steadily from 18.7% in 2013 to the 28% reported in 2016.

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China steps up Americas oil imports, Unipec backs ‘new frontier’

FILE PHOTO: Oil tankers Qi Lin Zuo of China and Sti-Matador stand attached to mooring stations near a refinery in Bayonne, New Jersey

China’s largest crude oil buyer Sinopec aims to ship more cargoes from Brazil, the United States and Canada, to help ensure stable crude supplies as the Middle East boosts refining capacity and Africa suffers disruptions.

Shipments from the Americas hit an all-time high in March, boosting the region’s share of the Chinese market by 1.1 percentage points in the first quarter to close to 14 percent, data from Thomson Reuters Oil Research & Forecasts showed.

“We’re facing a big challenge on the supply side,” said Chen Bo, president at Unipec, which purchases crude for Asia’s largest refiner Sinopec (0386.HK)(600028.SS).

Asia needed to step up crude imports from the “new frontier”, the greater U.S. Gulf Coast region made up of the United States, Canada and Latin America, to meet its growing demand, he told a seminar this week.

China is on track to overtake the United States as the world’s largest oil consumer this year, Chen added.

China will add just under 2 million barrels per day (bpd) of refining capacity between 2016 and 2020, taking its total capacity to nearly 12.5 million bpd by the end of this decade.

Also, by end-2018, the total crude import quota for independent refineries will grow to 2 million bpd, about 500,000 bpd more than March 2017 as government approvals flow through, he said.


Asia, which will account for a third of the world’s refining capacity by 2020, will have to look beyond traditional markets Middle East and Africa for crude supplies, Chen said.

Security of supply and the optimization of supply were vital for Unipec.

“If every consumer goes to the Middle East and Africa we don’t know what will happen to the market. So we have to diversify,” he said.

China’s crude imports from the Americas, led by Brazil, Venezuela and Colombia, hit 5.61 million tonnes (1.3 million bpd) in March, the highest in Reuters’ data going back to 2006.

In the same month, China’s crude oil deficit came in at a hefty 15 million tonnes, after touching a record 19 million in December 2016, as domestic production shrank while imports surged, customs data showed.

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North Dakota oil output set to rise as controversial pipeline opens

North Dakota oil production will get a shot in the arm next month as a pipeline comes online despite opposition by environmental groups and Native Americans, allowing the energy industry to save at least $540 million in annual shipping costs.

The Dakota Access Pipeline gives the state’s producers cheaper access to refineries and other customers on the U.S. Gulf Coast.

Market players said they expect this will hasten a revival of output from the Bakken region which fell sharply along with global oil prices during the past two years.

“We’re back to growth in the Bakken,” Hess Corp (HES.N) Chief Executive Officer John Hess said in a recent interview. The New York-based company has contracts to send roughly half its daily North Dakota output through DAPL. For 2017, Hess has said its Bakken production could grow more than 10 percent.

President Donald Trump approved the $3.7 billion pipeline in February, reversing the prior administration which had blocked it last December with a decision by the U.S. Army Corps of Engineers.

Energy Transfer Partners LP (ETP.N), which operates the 1,100 mile (1,770 km) long DAPL, has begun filling the line with crude and could reach full operating capacity by late April, based on industry estimates.

DAPL “will provide a safer, more environmentally responsible and more cost-effective transportation system to move crude across this country as opposed to truck or rail,” said ETP spokeswoman Vicki Granado.

The pipeline will carry about 500,000 barrels of oil per day, more than half of North Dakota’s daily output, cutting reliance on riskier rail-cars and reducing transport cost by roughly $3 to $5 per barrel, analysts estimate.

That should help level the playing field between Bakken producers and rivals in other U.S. shale plays, many of which are closer to refineries and other customers.

“Economics for drilling in the Bakken will look better because of DAPL,” Rusty Braziel of RBN Energy consultants in Houston, said in an interview.

The state’s drilling rig count has jumped 40 percent since early February, when Trump gave final approval to the pipeline. By the end of the year, analysts expect the rig count to rise another 10 percent or more.

DAPL’s opponents say they will continue to oppose the line and oil production across North Dakota, which pumps more crude each day than any state but Texas.

“Just because oil flow is pending does not mean that it cannot be stopped by court order, and we have a strong, ongoing case in front of the courts,” said David Archambault II, chairman of North Dakota’s Standing Rock Sioux tribe, which lives adjacent to the line.


Transportation savings from DAPL are a key factor oil companies are considering when deciding whether to boost production, executives, analysts and investors said.

Hess plans to triple the number of drilling rigs it operates in North Dakota this year. The company will move the 30 percent of its existing Bakken production from rail to pipeline once DAPL opens.

Oasis Petroleum Inc (OAS.N), another large Bakken producer, said its 2017 output could rise more than 30 percent. DAPL “is definitely going to give us more options to get our product to market,” Oasis Chief Executive Officer Tommy Nusz said in an interview.

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Libya’s Oil Output Drops After Biggest Field Closes

Production fell to 560,000 barrels a day after pipeline shut

OPEC nation was pumping 700,000 barrels a day on March 22
Libya’s biggest oil field was said to stop producing, leading to a 20 percent decline in crude output from the country with Africa’s largest reserves.

The OPEC nation’s output dropped to 560,000 barrels a day, according to a person familiar with the matter who isn’t authorized to speak to the media and asked not to be identified. The North African country was pumping 700,000 barrels a day, Mustafa Sanalla, chairman of state-run National Oil Corp., said on March 22. Oil prices rose as much as 1.4 percent.

The pipeline carrying crude from Sharara, Libya’s biggest field, to the Zawiya refinery stopped operating, the person said. It wasn’t clear why the pipeline was shut. The NOC didn’t respond to calls seeking comment.

Clashes among rival armed groups in early March led to the closing of two of the nation’s biggest oil export terminals, forcing a number of other fields to halt production. The ports have since reopened. Libya pumped as much as 1.6 million barrels a day before a 2011 uprising led to the ouster of former leader Moammar Qaddafi and a breakdown in central authority that stunted oil production. Libya is one of the smallest members of the Organization of Petroleum Exporting Countries.

“The important question for the market will be whether this turns into a lengthy disruption or not,” Richard Mallinson, an analyst at Energy Aspects Ltd. in London, said by email. “The political and security situation remains deeply unstable and so I am not surprised to see Libyan output continue to fluctuate on these kinds of issues.”

Brent crude, a global benchmark, climbed to the highest in a week, rising 71 cents to $51.46 a barrel, the most since March 21, and was trading at $51.30 a barrel by 5:18 p.m. in Dubai.

Sharara, in western Libya, had been producing 221,000 barrels a day, the NOC said March 21. Spain’s Repsol SA is an operator of Sharara. The Eni SpA-developed Wafa oil field, farther to the west near the Algerian border, is also shut, the person said. Wafa has capacity to produce about 35,000 barrels a day.

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U.S. Shale to Feed European Gas Market Battered by Winter

Cheniere may sell LNG cargoes to Europe from next month
Russia also looking to replenish supply after winter chill

The heart of Europe’s gas market may finally get a helping hand from the American shale revolution as fuel is poised to cross the Atlantic to replenish depleted inventories after the coldest January in seven years.

Northwest Europe, one of the biggest trading regions for the fuel, hasn’t yet attracted any liquefied natural gas cargoes from the U.S., which the shale boom turned into the world’s biggest gas producer. So far, sellers have favored markets in South America and Asia where prices have been higher.

But that may be about to change with spring weather poised to damp demand and prices in the biggest consuming region of Japan and South Korea moving closer to those in the U.K. and the Netherlands. Supplies from the U.S. may arrive in the coming months to help replenish European stocks at their lowest level since 2013, according to Houston-based Cheniere Energy Inc., which is expanding its export plant in Louisiana.

“U.S. gas will find an obvious home in Europe once most other markets are filled up,” Trevor Sikorski, head of natural gas and carbon at Energy Aspects Ltd. in London, said by email. “There should be lots of gas as three trains should be operating for most of summer 2017” at Cheniere, he said.

As Asian demand subsides with milder weather, regional prices will move closer to parity with European rates, according to Energy Aspects.

The arbitrage for U.S. gas to both Europe and Asia is already “wide open,” Citigroup Inc. said in a report emailed Wednesday. Asian LNG prices may slide to below $5 per million British thermal units after May, according to the bank. That’s the price of summer gas in the U.K. on ICE Futures Europe in London.

“We are looking to sell into Europe in April-May as European storage sites start refilling, but we will only sell to Europe if we see it offers a price premium,” Eric Bensaude, Cheniere’s managing director of commercial operations, said by phone from London. “The main reason why we did not sell in Europe in the winter is because other markets were paying a higher price.”

Most U.S. LNG exports have so far gone to Latin America, with cargoes also reaching Asia and the Middle East. Supplies from Cheniere’s Sabine Pass have also arrived in Spain, Portugal, Italy and Turkey at an increasing rate over the past three months, according to London-based consultant Timera Energy, which counts BP Plc to Gazprom PJSC as clients. The company estimates that only 17 percent of U.S. LNG went to Europe since exports started in February 2016.

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Researchers Think They’re Getting Closer to Making Spray-On Solar Cells a Reality

Imagine a future when solar cells can be sprayed or printed onto the windows of skyscrapers or atop sports utility vehicles — and at prices potentially far cheaper than today’s silicon-based panels.

It’s not as far-fetched it seems. Solar researchers and company executives think there’s a good chance the economics of the $42 billion industry will soon be disrupted by something called perovskites, a range of materials that can be used to harvest light when turned into a crystalline structure.

The hope is that perovskites, which can be mixed into liquid solutions and deposited on a range of surfaces, could play a crucial role in the expansion of solar energy applications with cells as efficient as those currently made with silicon. One British company aims to have a thin-film perovskite solar cell commercially available by the end of 2018.

“This is the front-runner of low-cost solar cell technologies,” said Hiroshi Segawa, a professor at the University of Tokyo who’s leading a five-year project funded by the Japanese government that groups together universities and companies such as Panasonic Corp. and Fujifilm Corp. to develop perovskite technology.

Not everyone is sold on perovskite as a game-changer from the industry’s heavy reliance on silicon photovoltaic cells. That said, recent research pointing to the material’s potential continues to grip the solar energy research community.

The World Economic Forum picked the material as one of its top 10 emerging technologies of 2016. Meanwhile, solar panel makers and top universities in Europe, the U.S. and Asia are racing to commercialize the technology, with researchers churning out as many as 1,500 papers a year on the material.
Momentum Builds

Perovskite’s usefulness was first hinted at back in 2006 when Tsutomu Miyasaka, a professor at Toin University of Yokohama, was approached by a graduate student interested in testing how well the material could convert sunlight to electricity. Though he’d been testing a number of different materials for solar panels, the Japanese academic had never heard of the synthesized crystal, Miyasaka said in an interview.

The idea to use perovskite, which is based on the same structure as a mineral named after Russian mineralogist Lev Perovski, initially went nowhere. Its structure was poorly understood and the industry had already latched on to silicon as the best material to convert sunlight into electricity.

Silicon solar cells have been around since the early days of the space program and now dominate the industry, with global shipments of solar products expected to have totaled $41.9 billion in 2016, according to market researcher IHS Markit. But they have limitations. For one, tremendous amounts of energy are needed to produce the silicon in solar cells.

Things began to change for perovskite with the first publication of research on the material by Miyasaka’s group in the Journal of the American Chemical Society in 2009.

“We had been turned down by magazines like Nature and Science and I suspect that’s because it was low in efficiency and also the material was unheard of,” Miyasaka said. “We talked about perovskite on many occasions but there was no feedback. Ninety-nine percent of people didn’t understand the structure of perovskite and they decided to ignore it.”
Efficiency Gains

Since then, the buzz has grown, thanks to research showing perovskite can convert sunlight more efficiently than initially thought. The big breakthrough came in 2012 when the material’s conversion efficiency — the portion of sunlight that can be converted into electricity — rose above 10 percent for the first time.

Passing that threshold attracted the attention of researchers toiling away on different types of solar cells that were then yielding lower efficiency, according to Martin Green, a prof

essor at the University of New South Wales who also studies perovskite.

The efficiency of perovskite cells has improved further — exceeding 20 percent in the lab — to reach a level that took silicon cells years to achieve. Though conventional solar cells are still more efficient at about 25 percent, they’ve been stuck at that level for about 15 years, according to the World Economic Forum.

“All of a sudden you got about 10,000 researchers switching over to this field overnight,” Green said.

The efficiency improvements keep coming. In December, engineers at Green’s University of New South Wales announced they achieved a record 12.1 percent efficiency rating on a cell measuring 16 square centimeters. That’s the highest efficiency on a large-size perovskite solar cell to date, according to the university’s website. Higher efficiency ratings have been reported on smaller surfaces.

In September, Ecole Politechnique Federale de Lausanne (EPFL) in Switzerland said their scientists achieved an efficiency rating of 21.6 percent by adding rubidium to improve stability. Panasonic, a Japanese maker of silicon-based solar panels, took part in the Swiss project.

Researchers at Stanford University and the University of Oxford wrote in October their technology obtained a 20.3 percent efficiency, according to the Science website. The gain was achieved by stacking two perovskite cells to capture low-energy and high-energy light waves.

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OPEC and Allies Said to Improve Compliance With Oil-Output Cuts

Committee saw 94% of cuts implemented in Feb., say delegates
Technical meeting took place in Vienna Friday to monitor cuts

OPEC and its allies improved their collective compliance with a supply-cuts agreement last month as deeper reductions from members of the group offset weaker implementation from other producers.

The group of oil producers implemented 94 percent of their pledged 1.8 million barrels a day of supply cuts in February, up from 86 percent the previous month, according two delegates familiar with the conclusions of a meeting of a technical committee at the Vienna headquarters of the Organization of Petroleum Exporting Countries Friday.

The 11 OPEC members — excluding Nigeria and Libya — participating in the agreement exceeded their pledges, implementing 106 percent of the required cuts, the delegates said. The compliance rate of non-OPEC nations, which includes Russia and Kazakhstan, was 64 percent, one delegate said, compared with the 66 percent that the committee saw last month.

OPEC and its allies are almost three months into a deal to reduce production in a bid to eliminate a global oil-inventory surplus after three years of glut. The agreement is set to last six months through June, but several OPEC members are signaling an extension may be necessary. The group will decide whether to prolong the cuts at a meeting in Vienna on May 25.

The compliance numbers are “exceptional,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd. However, “physical markets are not feeling the effects yet.”

Stubborn Stockpiles

Oil prices initially rallied after last year’s historic deal, but erased most of their gains last week amid worries that the price recovery was spurring a revival in U.S. shale oil production. Prices recovered slightly this week after government data showed U.S. crude stockpiles declined for the first time this year, although drilling in the nation continues to expand.

Saudi Arabia’s oil minister, Khalid Al-Falih said Thursday that OPEC would extend the cuts after they expire in June if oil stockpiles remain above the five-year average.

“Oil prices will not react unless we see a meaningful decline in U.S. oil inventories,” said Anas Alhajji, an independent analyst and former chief economist at NGP Energy Capital Management.

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Saudi ‘Mission Impossible’ Makes Longer OPEC Oil Cuts Inevitable

Prolonging curbs into second-half 2017 looks more likely
Saudis say deal to be extended if stocks above 5-year average

Saudi Arabia has set a near-impossible target to end the current round of OPEC oil-production cuts, indicating that a policy rollover into the second half of the year is a near certainty.

OPEC, which pumps about 40 percent of the world’s oil, and several non-OPEC countries including Russia agreed in December to reduce production for six months in an effort to bring supply and demand into balance. At the time, the producers said they could extend the deal for an extra six months.

In an interview with Bloomberg Television on Thursday, Saudi Energy Minister Khalid Al-Falih said that OPEC would extend the cuts after they expire in June if oil stockpiles were “still above the five-year average.” Because oil stocks are so far above that level, the target will probably still be out of reach when the Organization of Petroleum Exporting Countries gathers in Vienna on May 25.

“It looks impossible for total OECD company stocks on land to fall back by mid-year to the five-year average, which OPEC has set as a key benchmark as to whether it should extend its deal,” oil consultants FGE told clients in a note.


Oil stocks in the world’s richest countries stood at 3,025 million barrels in February, or about 297 million barrels above the five-year average, according to Bloomberg calculations based on International Energy Agency data.

To reduce the overhang to within the five-year average on time for OPEC’s next meeting, inventories would need to drop at an unusually high rate — of more than 3 million barrels a day. With current supply and demand trends, OPEC can hope for, at best, a reduction of about 500,000 barrels a day.

WTI Slides

West Texas Intermediate, the U.S. crude benchmark, last week fell below $50 a barrel for the first time this year amid worries about the pace of the stockpile reduction. Brent crude is trading at about $52 a barrel.

OPEC and its allies agreed in December to reduce output by nearly 1.8 million barrels a day in the first half of the year to rebalance the market. So far, OPEC has delivered nearly all the cutbacks it promised, mostly because Saudi Arabia has cut deeper than agreed. Non-OPEC nations have been slower, however, so far delivering about a third of their agreed reductions. Russia has trimmed about half what it promised while Kazakhstan has actually boosted production.

Still, OPEC and its partners are “fully committed” to curbing supply, Al-Falih said. He characterized any lags in compliance as par for the course: “Some are trying to iron out the process of controlling production, which they’ve never done before,” he said. “I believe in the sincerity of their effort.”

On top of a reduction in stockpiles, Al-Falih is looking for signs that the market is confident about the future before deciding whether to extend the supply deal. “We want to signal to them that we’re going to do what it takes to bring the industry back to a healthy situation,” he said.

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Outside OPEC cuts, Libya and Nigeria still on slow oil recovery path

When OPEC reached a deal last year to cut oil output, the decision to exclude Nigeria and Libya from the restrictions was seen as a risk to the group’s efforts to curb a global crude glut.

An oil price rally has already stumbled since the deal, but Nigeria and Libya are not to blame. Output from both nations has slipped since December and violence in the two African states makes their ambitions to hike production look optimistic.

“The success of these cuts, debatable as they may be, will not hinge on Nigeria and Libya,” said ING analyst Hamza Khan.

OPEC members and non-OPEC producers agreed to cut output by 1.8 million bpd for six months from Jan. 1. OPEC has broadly cut the amount pledged, while others have not delivered in full.

After rallying above $58 a barrel in January, Brent has now slipped to around $51, under pressure from bulging U.S. inventories and rising U.S. shale production.

Since the OPEC deal, Libyan production has dipped to 615,000 barrels per day (bpd) from 630,000 bpd in December, as militias battle to control export sites in the east of the country. Libya was producing 1.6 million bpd in 2011.

In Nigeria, militant attacks in the oil-producing Niger Delta have hobbled output, forcing the closure of the Trans Forcados Pipeline for all but a few weeks since February. Maintenance on the Shell-operated Bonga field has also weighed.

Nigerian output in March is now expected to be about 1.43 million bpd, down from 1.54 million bpd in December, after February’s brief rise to 1.65 million bpd. Nigeria is chasing a target of 2.2 million bpd, last achieved in 2012, according to Reuters calculations.

Morgan Stanley forecasts Libyan production could rise to 900,000 bpd in the second half of 2017, while Nigeria could produce 1.6 million bpd in the same time frame. But the U.S. bank says unrest could undermine both those targets.

“It is possible that unplanned disruptions increase further,” Morgan Stanley said in a March 10 research note.


Libya’s prospects look particularly unpredictable. Since Libyan leader Muammar Gaddafi was toppled in 2011, the North African nation has fractured as militias battle for power.

“With three rival governments, extremely weak state institutions, and an abundance of armed actors, Libya is anything but a stable and reliable producer,” Royal Bank of Canada analysts wrote in a note.

In Nigeria, industry sources have told Reuters that repairs are nearing completion on the Trans Forcados Pipeline, which could swiftly add 250,000 bpd to output.

But attacks have repeatedly put the pipeline out of action and could do so again if peace talks with militants seeking a bigger share of oil revenues fail.

Even if Nigeria and Libya deliver on production goals -adding a combined 550,000 bpd, based on the most optimistic forecasts – it will still pale compared to the challenge OPEC faces from U.S. shale oil producers, who are adding capacity.

Buoyed by the price revival since OPEC agreed cuts, U.S. shale firms are expected to add 79,000 bpd of extra production in March alone, reaching total output of 4.87 million bpd.

Meanwhile, rising U.S. inventories are overshadowing OPEC’s efforts, with the U.S. Energy Information Administration reporting a rise in the week to March 3 of 8.2 million barrels to a record 528.4 million barrels. [EIA/S]

“Storage numbers out of the United States, that’s what would be keeping the bulls up at night,” said ING analyst Khan.

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