OPEC output surges in September as Iraqi volumes rise
The crude output of the Organization of the Petroleum Exporting Countries (OPEC) surged by 520,000 barrels per day (bpd) to 25.91 million bpd in September, a Platts survey of the cartel and oil industry officials showed.
A recovery in Iraqi volumes and exports, apparently as a result of Baghdad having begun in August to phase out its illegal surcharge, accounted for 300,000 bpd of the additional production.
Excluding Iraq, whose exports are controlled by the United Nations and does not participate in OPEC output agreements, the ten members bound by quotas boosted their combined production by 220,000 bpd over the month to pump an average 23.96-million bpd—2.26-million bpd more than their 21.7-million bpd ceiling.
"The end of Iraq's controversial plan to extract a surcharge from its customers, in violation of UN rules, has certainly had a significant and rapid impact on its role as a supplier," said John Kingston, Platts global director of Oil. "From a customer base of small, unheard-of companies, largely Russian, the Iraqis are again signing up significant world oil companies as buyers, and the rise in exports reflects that."
OPEC's 25.91-million bpd pumped in September is not a great deal lower than the 26.1-million bpd the International Energy Agency sees as fourth quarter demand for OPEC crude plus movements from stocks, and is above the IEA's 25.5-million bpd estimate for the first quarter of 2003.
"OPEC's adherence to quota is not even close, and based on the IEA's estimate of the world's need for OPEC crude oil—that's a good thing for consumers," Kingston said.
Only Iran reduced output in September, its production falling by 70,000 bpd to 3.38-million bpd from 3.45-million bpd in August. Indonesia maintained output at 1.12-million bpd and was also the only member to produce within quota. Iraq accounted for the single biggest increase. Other increases ranged between 10,000 bpd and 70,000 bpd.
Algerian production continued to rise in September, averaging 920,000 bpd. Participants in the survey agreed that Algeria has been steadily increasing its output, but many were less than convinced that production had risen to the 1.1-million bpd level claimed by the country's oil minister during last month's OPEC meeting in Osaka, Japan. Algeria has formally asked OPEC for a quota increase to 1.1-million bpd.
Venezuela boosted output by 60,000 bpd to 2.86-million bpd, a level some participants believed might be close to the country's current capacity. Earlier this year Platts estimated Venezuelan output capacity at 3-million bpd although some analysts said at the time that capacity might have already declined beyond that level. One analyst Thursday said he doubted Venezuela was currently capable of pumping more than 2.9-million bpd.
OPEC ministers on September 19 decided to maintain current output quotas under a 21.7-million bpd ceiling, despite some having acknowledged that cheating was in the order of two-million bpd, and agreed to meet again on December 12 in Vienna.
Much of their reluctance to legitimize the overproduction was based on their belief that several dollars of current price levels are attributable to fears that a US strike against Iraq could disrupt Middle East oil supplies.
The US energy department's Energy Information Administration said on October 7 that had OPEC members not been exceeding their quotas, the OPEC basket would have been above the cartel's targeted $22-28/bbl price band for much of the third quarter.
The basket has now been above the top end of the band for 11 days. If it remains above $28/bbl for a further nine days, OPEC could choose to release an additional 500,000 bpd onto the market without the need for an emergency meeting.
Platts is the energy information, research, consulting and marketing services unit of The McGraw-Hill Companies. — (menareport.com)
© 2002 Mena Report (www.menareport.com)