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Page added on January 18, 2017
Oil Production Here Is Declining Faster Than Anywhere On Earth
Series of important warnings emerging in the oil sector this week. With several sources noting that production is taking a steep nosedive — in one particular part of the world.
Asia-Pacific.
Industry specialists Wood Mackenzie released data Monday showing that Asian crude output is falling notably. In fact, the decline is substantially greater than production pullbacks anywhere else in the world.
WoodMac’s Asia-Pacific upstream research director Angus Rodger said the region’s overall output is heading lower fast. With forecasts showing that Asia-Pacific crude production will fall by 1 million barrels per day, or over 13%, by 2020 — to 6.5 million b/d, from a current 7.5 million b/d.
That’s largely a consequence of declines in Asia-Pacific’s “big four” oil producers — China, Indonesia, Malaysia, and Thailand. Coming as big fields in those countries hit maturity — thus requiring higher levels of investment to keep them pumping.
Such capital investment however, has been severely cut back across Asia during the recent fall in crude prices. With all of China’s state-owned oil majors reporting double-digit declines in capital spending last year.
Those cuts mean Asia’s largest oil fields are now seeing an average production decline rate of 7%. Far above declines seen in other major producing nations.
The biggest impact is in China. Where the government this week admitted that domestic oil production is tumbling — with officials forecasting a 7% fall in national output by 2020, to 4 million barrels per day.
Wood Mackenzie sees China’s production falling even further. With the consultancy forecasting Chinese production at 3.5 million b/d in 2020.
That jives with recent data, which show China’s oil output dropped 9% in November 2016 as compared to a year earlier. Suggesting that production declines may be setting in faster than the government is anticipating.
That means increased reliance on oil imports for China. And could accelerate the push by Chinese companies to secure newer and lower-cost fields in other parts of the world. Watch for new data on Chinese and Asian production, to see just how fast output is declining.
Here’s to a big tank running dry.
By Dave Forest
15 Comments on "Oil Production Here Is Declining Faster Than Anywhere On Earth"
Davy on Wed, 18th Jan 2017 6:41 pm
More bad news for makati and his Asian century.
makati1 on Wed, 18th Jan 2017 8:53 pm
No need to worry.
2015 Oil consumption per capita (bbl/day):
Philippines – 0.3
Indonesia – 0.3
China – 1.2
Thailand – 0.9
Russia – 0.3
Malaysia – 0.2
US – 16
https://en.wikipedia.org/wiki/List_of_countries_by_oil_consumption
Asia will survive and buy from Russia if necessary.
tahoe1780 on Wed, 18th Jan 2017 9:22 pm
and the U.S. wants to exclude them from the South CHINA Sea just as the P’s make nice. http://www.latimes.com/world/asia/la-fg-philippines-duterte-china-snap-story.html Wasn’t denying Japan access to oil seen as a precipitating factor?? http://history.stackexchange.com/questions/26280/where-did-japan-get-their-oil-during-wwii
Nony on Wed, 18th Jan 2017 10:21 pm
Production always has some lag to prices. Chinese production did not work at low 40s. (average of last 2 years). But mid 50s is another kettle of fish. IEA already talking about China, Brazil and Mexico (not just US shale) growing if prices are in the upper 50s.
https://www.bloomberg.com/news/articles/2017-01-18/iea-sees-significant-increase-in-u-s-shale-oil-as-prices-rise
Of course what that means is prices are unlikely to sustain much duration above $55.
Sissyfuss on Thu, 19th Jan 2017 12:29 am
When is China getting is shipments of oil from Venezuela? I remember reading about a 4 billion dollar deal between the two.
GregT on Thu, 19th Jan 2017 12:59 am
“When is China getting is shipments of oil from Venezuela?”
If there’re smart, which no doubt they are, they’ll wait until after Trump takes out the CIA. If he manages to survive for that long……
Cloggie on Thu, 19th Jan 2017 2:29 am
Dirty Underground Coal Gasification, here I come.
http://www.dailymail.co.uk/news/article-2593032/Coal-fuel-UK-centuries-Vast-deposits-totalling-23trillion-tonnes-North-Sea.html
https://en.wikipedia.org/wiki/Underground_coal_gasification
https://www.youtube.com/watch?v=lOBXsmKdlcA
#RenewableEnergyNow
Cloggie on Thu, 19th Jan 2017 2:39 am
Russia – 0.3
Malaysia – 0.2
US – 16
@makati, you may want to recalculate Russian oil consumption
https://en.wikipedia.org/wiki/List_of_countries_by_energy_consumption_per_capita#/media/File:World_Map_-_Energy_Use_2013.png
makati1 on Thu, 19th Jan 2017 4:00 am
Cloggie, Russia should be about 47 bbl/day, not 0.3. I copied the wrong number from my paper. Thanks.
rockman on Thu, 19th Jan 2017 8:17 am
Sissy – China has been importing Venezuelan oil for years. Not nearly as much as from the ME but more trade deals have just been cut last year. “The heads of state indicated that the two countries aim to increase joint production by (about 300 million bbls/year) in the coming years.” Also understand that while China owns a certain amount of Venezuelan oil it doesn’t preclude some of that production being sold to US refineries. China will optimize the value of its Venezuelan investment.
“China and Venezuela Sign $2.2 Billion Deal to Boost Oil Output
Venezuelan state oil company PDVSA signed a US $2.2 billion investment deal Thursday with China’s National Petroleum Company (CNPC) to increase production by 227 thousand barrels per day (BPD). Among the deals is a joint venture to develop China’s Jie Yang refinery, which will process 400 thousand barrels per day (BPD), 70 percent of which will come from Venezuela. PDVSA will retain a 40 percent stake in the project, while CNPC will have 60 percent participation.
Another agreement will see a $225 million joint investment in the mixed firm Petrozumano, aimed at expanding output by 15,000 thousand BPD. The state companies also agreed to invest a further $500 million in new technologies for the Petrourica mixed firm, which will yield a 30,000 BPD increase. Another plan will involve the development of a new pilot project for extracting Venezuela’s extra heavy crude, which is slated to boost output from 160 thousand to 230 thousand BPD. Lastly, the two countries signed off on a project to rehabilitate 500 wells of light crude, amounting to 42,800 BPD in new output.
“We’ve agreed on very important, realistic, concrete, and verifiable goals for increasing production that have the financial backing of credit lines worth [US]$9 billion dollars,” Maduro added. The head of state indicated that the two countries aim to increase joint production by 800,000 BPD in the coming years. CNPC is China’s biggest oil and gas company and is one of the world’s largest contractors in the engineering and oil servicing sectors.
paulo1 on Thu, 19th Jan 2017 8:33 am
Sorry Mak,
Us per capita cannot be 16 bbl/day.
Per year?
apples and oranges, anyway.
rockman on Thu, 19th Jan 2017 10:02 am
Paulo – From http://www.indexmundi.com/g/r.aspx?v=91000
Consumption per 1,000…not per capita:
US: #22 61/1,000
Philippines: #158 3/1,000
The EU: 30-50/1,000
KSA: #11 100/1,000
China: #127 7/1,000
Russia: #89. 15/1,000
Gibraltar: #1 860/1,000
Most of African nations: Less the 2/1,000
Kenz300 on Thu, 19th Jan 2017 10:49 am
China is moving to all electric vehicles.
Climate Change is real. It will be the defining issue of our lives.
How Exxon & The Koch Brothers Have Funded Climate Denial – YouTube
https://www.youtube.com/watch?v=qXm6ihnWN4A
Sissyfuss on Thu, 19th Jan 2017 10:53 am
Thanks for the knowledge, Rock. Maybe the increased revenue will allow the Venezuelan people more food choices than pets and tree bark.
JR on Sat, 21st Jan 2017 10:09 pm
Sooner the better.