Sahara: IEA on North Africa

 

The International Energy Agency (IEA) medium-term outlook report, published on 28 May, anticipates that oil production from OPEC members Algeria, Angola, Libya, and Nigeria will stagnate over the next five years at 7.12 million b/d, posting more or less zero growth from 2012 to 2018. Last year, the agency anticipated supply growth of 685,000 b/d from 2011 to 2017.

 

Antoine Halff , head of markets at the IEA in Paris, said that at first the Arab Spring of 2011 looked like a blip as production recovered quickly from the war in Libya. 'But it turns out it is a big event,' he said. 'We are beginning to see security issues in northern and western Africa and this will have implications for OPEC supply.' Although oil production recovered from the Arab Spring faster than expected, the delayed impact of the revolutions that swept across North Africa is now hurting supply growth forecasts for Libya, Algeria, and Nigeria.

 

The IEA is particularly bearish about Algeria, forecasting a drop in oil production capacity from last year's 1.2 million b/d to 0.8 million b/d by 2018. The other African members of OPEC will see their production capacity stagnate instead of posting significant growth, as the IEA forecast only a year ago. This gloomy outlook comes on the back of escalating security risks, uncompetitive fiscal terms, challenging local content requirements, and contract sanctity concerns. The IEA concludes, 'Increased violence by Islamist extremists and militants, against a backdrop of political instability across much of northern and western Africa since the Arab spring, is changing the equation for acceptable risks for international oil companies.'

 

For more news and expert analysis about the Sahara region, please see Sahara Focus.

© 2013 Menas Associates

Iran disgruntled with IEA

Iran's Oil Minister Mohammad Aliabadi has accused the International Energy Agency (IEA) of breaching its own code of conduct and "principles" by intervening in what he considers to be a well supplied oil markets. Speaking ahead of an energy summit with the EU, Aliabadi said: “There is no additional need for supply on the market…The market is under normal conditions now--supply and demand are desirable."

Aliabadi's comments were prompted by IEA's decision to release some of its oil stocks to make up for lost Libyan supplies. He said, “…the IEA, have these principles. Why are they not abiding by those principles? Instead they are intervening in the market…We believe that prices have to be set by markets."

The IEA's move has led to a rapid fall in the price of crude oil, however, Aliadabi said it was not the prices that concerned Iran, adding: “We are worried about the principles and how they are being put into implementation."

IEA officials counteracted Aliabadi's comments saying they undertook the emergency release, just the third in the agency's history, in response to a lengthy outage of Libyan crude.

A number of IEA members, including Germany and Japan, released equal amounts of oil and refined products. The US released only crude, while France and Italy, released only refined goods. According to an IEA report, a total of 41.6 million of the 60.6 million in emergency oil will come from crude oil with the rest coming from refined products.

Sources: The Wall Street Journal, Fox Business, Dow Jones

For more news and expert analysis about Iran, please see Iran Strategic Focus.

Caspian oil and gas exports expected to show steady rise

A report by the International Energy Agency (IEA) has estimated that natural gas exports from the Caspian region will more than triple in the next decade. Producers including Turkmenistan and Azerbaijan are expected to export almost 100 billion cubic metres of gas in 2020, compared with less than 30 billion last year. Caspian producers already ship gas to China through the TransAsian pipeline, which runs from Turkmenistan, Kazakhstan and Uzbekistan.

Speaking at a conference in New York, Kazakhstan's Oil and Gas Vice Minister Asset Magauov said that Kazakhstan plans to ship 5 billion cubic metres to China this year, increasing to 14 billion cubic meters annually from 2014.

Caspian's “export potential may be much higher than we forecast,” said IEA's Chief Economist Fatih Birol, saying there is a lot of potential for the region to cut domestic energy consumption. Caspian gas is also a possible source for the Nabucco pipeline through Turkey, which would enable Europe to be less dependent on Russian fuel.

The region's oil output is also expected to rise, with Kazakhstan ranked fourth in the world for production growth in volume terms between now and 2035. According to Magauov, Kazakhstan plans to export about 12 million tons of crude to China next year, while also raising gas production to 60 billion cubic metres in 2015 up from 32.2 billion cubic metres last year.

The IEA estimates that the region's crude output will peak at about 5.4 million barrels a day between 2025 or 2030.

Source: Bloomberg

For more news and expert analysis about the Caspian region, please see Caspian Focus.