Non-OPEC supply experienced some improvement in 2012, increasing by 0.6 mb/d over the previous year. The current estimation is slightly lower than the initial forecast in July 2011 of 0.7 mb/d. The forecast for non-OPEC supply growth in 2012 encountered several revisions due to the shifting dynamics in the various regions. Weather, technical, and geopolitical factors were the main drivers behind these revisions. While regional forecasts showed some variations from the initial projections, overall non-OPEC supply growth remained relatively steady throughout the forecast period.
Among the main developments in non-OPEC supply growth in 2012 were downward revisions in the projections for South Sudan and Sudan, Syria, and Yemen, as political unrest in these countries disrupted crude output. Additionally, technical and weather factors negatively impacted the output of Brazil, Azerbaijan, and the North Sea. In contrast, accelerated developments in US tight oil output led to strong upward revisions in its growth in 2012.
Overall, the bulk of the growth in non-OPEC supply in 2012 came from North America, supported by gains in the US and Canada. The increase in supply from Russia came next, followed by China. However, OECD Western Europe, Africa, and Middle East supply fell. At the same time, natural decline from mature fields in Mexico and Brazil led to slightly lower supply from these countries. In the current year, non-OPEC supply is expected to increase further by 1.0 mb/d, supported mainly by North America . As in the previous year, US oil supply in 2013 is expected to achieve the highest growth among all non-OPEC countries. The expected increase is supported by continued developments in tight oil, in the form of both crude oil and NGLs. Additionally, the Gulf of Mexico is seen adding some growth in 2013 supported by new
projects, while Alaskan production is estimated to decline. US oil supply growth is currently projected to stand at 0.6 mb/d in 2013, representing an almost 400 tb/d decline in growth compared to the previous year. Expected US growth in 2013 could encounter revisions in either direction in the coming months.
The strong growth achieved from tight oil developments in 2012 is seen slowing in 2013, mainly due to the high decline rates which require continued drilling to maintain a steady output and further drilling to achieve growth. Additionally, infrastructure limitations, water supply, environmental concerns, and price issues could impact some of the growth. On the other hand, improvement in drilling and operational efficiency is seen supporting growth, as increasingly less time is required to complete wells. Furthermore, advances in multi-stage fracking technologies are allowing producers to recover more oil.
The non-OPEC supply forecast is based on a bottom-up approach. Consequently, the projection is associated with varying risks and uncertainties among the individual countries, leading sometimes to opposite trends. Accordingly, to avoid frequent and unnecessary revisions to the non-OPEC supply forecast, time should be given to allow for the individual projections to offset one another before considering any impending revisions to non-OPEC supply. Last year, the relatively complete actual production profile for the early part of the year only began to emerge in the second half of 2012. One potential scenario for 2013 would be for North America to once again see an upward revision, while supply projections from South Sudan, Brazil, and the North Sea encounter downward adjustments. These revisions would be offsetting and thus leave the overall supply forecast broadly unchanged. However, reliable production data would need to be available before carrying out any such change.
Source: OPEC