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Non-Opec-Plus Production to Peak in 2025

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Liquids production outside Opec-plus is set to peak in 2025, according to Energy Intelligence’s medium-term outlook. This is the result of recent weak upstream investments. To be sure, a group of non-Opec-plus producers — the US, Canada, China, Brazil, Norway and Guyana — will roll out an average 800,000 barrels per day of new crude output in 2023-25. But those barrels will mostly offset natural declines at older fields. In fact, our outlook indicates that these producers will see a net loss of crude production in 2025. However, major non-Opec-plus producers manage to keep total liquids output steady thanks to rising volumes of biofuels and natural gas liquids (NGLs). Norway will launch major new offshore fields like the 220,000 b/d expansion of Johan Sverdrup and the 200,000 b/d Johan Castberg play. In South America, Guyana will see the 220,000 b/d Liza Phase 2 expansion, and Brazil will welcome the start of the 225,000 b/d Buzios 6. Crucially, the US shale patch, following a final burst in 2022, is expected to remain essentially flat in 2023 and then decline in 2024 and 2025. Consultancy Rystad Energy reckons global upstream investment was $530 billion in 2019 and lost $140 billion structurally since then as “companies slashed investment budgets to protect cash flow.” The impacts are more visible in US shale than conventional exploration and mature assets, Rystad notes.

Producers outside Opec-plus start the medium-term outlook strongly. In 2021, they halt the pandemic decline, and next year the forecast shows solid growth. But below the headline numbers there is weakness. Without the last hurrah for US shale, the 2022 forecast demonstrates the beginning of glacial growth for new oil. In 2022, with Brent expected to average over $70 per barrel, non-Opec-plus is seen adding 1.2 million b/d — of which 620,000 b/d is from the US. US shale growth slows to 100,000 b/d in 2023, and then output drops by 100,000 b/d in both 2024 and 2025. That means non-Opec-plus supply growth is shouldered mainly by Norway, Brazil and Guyana. Canada will add 1% per year, the Canadian Association of Petroleum Producers forecasts. China sees some smaller additions in the coming years but they are mostly canceled out by natural declines.

NGLs and biofuels will see significant growth. Output of NGLs and biofuels now total 17 million b/d and 3 million b/d, respectively, compared to 73 million b/d of crude. But they will play an increasingly vital role in global balances. Since 2011, global NGL output has grown 6 million b/d, compared to 1.6 million b/d for crude. Both Opec-plus and nonaligned producers are adding NGLs. Output in the US, the world’s largest NGL producer, will approach 6 million b/d in 2024, a 13% increase on this year’s production, before starting to decline in 2025. NGLs in Russia are expected to climb rapidly as older legacy fields grow gassier and East Siberia’s wet gas fields are tapped. Overall, the forecast sees NGLs adding 700,000 b/d in the next four years and biofuels gaining 300,000 b/d, with the US accounting for the bulk.

For Opec-plus, this means it can continue rolling back the production curbs enacted in May 2020. The pace of tapering will depend on how much oil demand grows — a huge uncertainty given potential Covid-19 variants and the push to decarbonize the global economy. As demand grows and liquids output from non-Opec-plus slows, the alliance can increase production steadily. Another big uncertainty ahead is natural decline rates. In our outlook, average decline rates are set around 3% per year. But as producers focus on optimizing production from existing fields, they are also investing less and diversifying outlays into other fuels and alternative energy businesses. In some quarters, shareholders are even prodding companies to wind down oil fields in lieu of reinvesting back in the business. The rationale is that a return today is better than a potential stranded asset in an uncertain future.

Non-Opec-Plus Slows Down Supply Growth
(million b/d)Non-Opec-PlusGlobal Demand
202044.092.1
202144.397.6
202246.0100.7
202346.5101.7
202446.8102.7
202547.0103.8

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