(EnergyAsia, March 18 2011, Friday) — The Organisation of Petroleum Exporting Countries’ (OPEC) crude oil production output rose to an average 29.8 million barrels per day (b/d) in February, up 230,000 b/d from an estimated 29.57 million b/d in January, according to an oil industry survey by energy information provider Platts.
Attributing the jump to increased production from Saudi Arabia, Platts said it more than offset the drop in Libyan supplies, estimated to have averaged 190,000 b/d over the month, as the deepening conflict hit the North African country’s oil production and exports in the final week of February.
Excluding Iraq, which does not participate in OPEC output agreements, the 11 members bound by quotas (OPEC-11) pumped an average 27.1 million b/d in February, 190,000 b/d more than January’s 26.91 million b/d, Platts said.
The survey estimated that Libyan output dropped to around 1.39 million b/d from January’s 1.58 million b/d due the disruption in operations. The International Energy Agency (IEA) last Friday estimated that the volume of shut-in production had now reached one million b/d.
John Kingston, Platts global director of news, said:
“The key questions now centre on how much more production loss we’ll see from Libya for March – likely to be at least one million barrels per day, if not more — and OPEC’s response to that. All signs point to there being a one-for-one substitution so far in terms of barrels, but even so, that doesn’t take into account the market impact from a reduction in the quality of those substituted barrels, as well as a fear premium.”
Platts said Saudi Arabia boosted production by 300,000 b/d to 8.7 million b/d, nearly 700,000 b/d more than its assumed OPEC quota.
Ali Naimi, Saudi Arabia’s oil minister, said the kingdom had met all incremental demand from its customers and was storing additional quantities of crude at various locations to meet any further call on its production.
He said Saudi Arabia has 3.5 million b/d of spare crude production capacity readily available that could help offset any supply shortfall.
His remarks suggest that Saudi Arabia, which claims to have total capacity of 12.5 million b/d, has now boosted production to around nine million b/d, according to Platts.
The report said that the kingdom had started to shift barrels of mainly lighter grades from its eastern ports to the Red Sea to position itself for additional shipments into Europe, where most Libyan crude is sold.
The cartel’s other increases came from the UAE, Iraq, Iran, Kuwait and Ecuador, while Angolan and Nigerian production dipped by 10,000 b/d and 20,000 b/d respectively.
The survey showed that the OPEC-11 exceeded their notional 24.845 million b/d output target by 2.255 million b/d, reducing their level of compliance with the 4.2 million b/d of output cuts agreed in late 2008 to 46.3% from 50.8%. Iraq’s 40,000-barrels-per-day increase took its production to 2.7 million b/d in February, a new post-2003 high.
Platts said OPEC production has been increasing in recent months alongside rising oil prices, which early this year exceeded US$100 per barrel for the first time in two years and continued to climb as political unrest spread across North Africa and the Middle East.
On February 24, North Sea Brent hit a 30-month high of US$119.79 per barrel, but prices have since fallen back to around US$114 per barrel for Brent and US$105 per barrel for US light crude futures.