February 9, 2023

WWW.ENERGYINTEL.COM

Opec-Plus: 2023 Starts With Small Production Increase


  • Crude oil production by the 23-member alliance ticked up 60,000 b/d in the first month of 2023 to 44.13 million b/d.
  • Output by the 19 member with a monthly quota rose by 180,000 million b/d to 38.2 million b/d, led by gains in Kuwait and Nigeria.
  • The alliance’s production shortfall narrowed slightly over the month but remains enormous at 1.9 million b/d.

Opec-plus enters 2023 with a host of challenges — some new, some old — but foremost on the minds of its leaders will be the fate of Russian production, the dynamics of Chinese demand and sea-shift in global flows now that Russia’s barrels, both crude and products, are banned by major markets.

Price-wise, the Opec Basket has been range-bound since December between $78-$88. The price provides a degree of contentment for the alliance, even if Brent started February $4 cheaper than a year ago. The year will be long and full of unexpected twists, and Opec first and foremost wants stability — hence the decision at its meeting last week to stick to the cuts agreed last October.

Created with Highcharts 9.0.0($/bbl)OPEC BASKET: 2023 PRICE RANGEBOUND FOR NOWApr'21May'21Jun'21Jul'21Aug'21Sep'21Oct'21Nov'21Dec'21Jan'22Feb'22Mar'22Apr'22May'22Jun'22Jul'22Aug'22Sep'22Oct'22Nov'22Dec'22Jan'23Feb'23$60$70$80$90$100$110$120Source: Opec

Nigeria Rises, Iraq Falters

The 10 members of Opec with a quota lifted January crude production by 260,000 barrels per day compared to December to 24.51 million b/d, according to Energy Intelligence’s assessment. This was 900,000 b/d short of the target for the 10.

Three countries — Kuwait, Nigeria, and Angola — together increased output by 460,000 b/d.

Kuwait ramped up oil exports by about 10 million barrels for the month, according to shipping data, while data indicate that refining runs were also robust. In sum, our assessment shows Kuwait output rose by nearly 190,000 b/d to 2.74 million b/d, or about 60,000 b/d over its target for January.

Nigeria, a traditional underperformer, started the year with a remarkable boost thanks to a rebound in accident-prone Forcados and offshore Qua Iboe, where output reached the highest level since April 2020, according to one report. As a result, Nigerian production for the month reached 1.34 million b/d, the highest since June 2021, according to our preliminary assessment. Still, the country remains 400,000 b/d short of its January target — the second largest shortfall after Russia.

Output by Opec’s second largest producer, Iraq, collided with weather-related events impacting exports. Exports of Basrah crude amounted to 3.16 million b/d for the month, a low over the past 12 months. Monthly output, as a result, fell 100,000 b/d to 4.29 million b/d, the lowest level since March 2022.

The three Opec members without a quota — Iran, Libya and Venezuela — all saw production retreat, resulting in a collective 185,000 b/d decline for the month. This dragged down the group’s gain to 70,000 b/d.

Created with Highcharts 9.0.0('000 bbl)OPEC-PLUS SHORTFALL DIPS IN JANUARYSep'21Oct'21Nov'21Dec'21Jan'22Feb'22Mar'22Apr'22May'22Jun'22Jul'22Aug'22Sep'22Oct'22Nov'22Dec'22Jan'2305001,0001,5002,0002,5003,0003,5004,000Source: Energy Intelligence

Russia Unfazed by Sanctions

Russia’s crude production for the month is assessed at just under 9.8 million b/d, shedding about 40,000 b/d compared to December, according to our preliminary assessment. This is nearly 50,000 b/d more than average output for entire 2022, but the result is 680,000 b/d short of its target — the largest shortfall in the alliance.

To be sure, Russia’s crude production capacity is considerably less than the 10.48 million b/d target under the current deal — and most likely closer to 10 million b/d.

Top government officials in Moscow have said that production might decrease this year by 500,000 b/d-700,000 b/d — including gas condensate, which is not subject to Opec-plus production restrictions — while consensus has the anticipated decline in a range from 850,000 b/d (Opec) to 1.3 million b/d (International Energy Agency).

Energy Intelligence’s base scenario sees Russian output of crude and condensate contracting by 1.2 million b/d, although in an alternative scenario, the country will prioritize volume over price and, regardless of the size of discounts, and pump as much oil as it can. In this case, output would decline by only 550,000 b/d.

Meanwhile, Kazakhstan’s output nearly reached 1.7 million b/d as the country tries to make up for lost income last year, while Azerbaijan’s posted the lowest level of production in 16 years at 540,000 b/d.

Crude production by non-Opec members of the alliance fell by 80,000 b/d to 13.69 million b/d, or 1 million b/d off their required production level under the deal.

January 2022 Opec-Plus Compliance
OpecBaseTargeted OutputVoluntary CutJanuary ProductionDecember ProductionJanuary CutCompliance Rate
Saudi Arabia11,50010,47852610,408 10,473 1,092 108%
Iraq4,8034,4312204,291 4,389 512 133
UAE3,5003,0191603,038 3,041 462 189
Kuwait2,9592,6761352,735 2,548 224 66
Nigeria1,8291,742841,340 1,197 489 482
Angola1,5281,455701,252 1,119 276 294
Algeria1,0571,007481,018 1,019 39 --
Congo (Br)32531015249 224 76 407
Gabon1871779145 200 42 367
Eq Guinea127121636 45 91 1417
Opec 1027,81525,4161,27324,512 24,255 3,303 159
Iran3,296002,485 2,610 ----
Venezuela1,17100650660 ----
Libya1,114001,155 1,205 ----
Opec 1333,39625,4161,27328,802 28,7303,303259%
Non-OpecBaseTargeted OutputVoluntary Cut January Production December ProductionJanuary CutCompliance Rate
Russia11,50010,4785269,794 9,836 1,706 224%
Kazakhstan1,7091,628781,695 1,686 14 --
Oman88384140843 848 40 0
Azerbaijan71868433540 548 178 439
Malaysia59556727388 401 207 667
Bahrain2051969137 200 68 656
South Sudan1301246133 102 (3) --
Brunei10297578 75 24 380
Sudan7572380 70 (5) --
Non-Opec 915,91714,68772713,68813,7662,229 207
Mexico1,7531,75301,6411,576 ----
Non-Opec 1017,67016,44072715,329 15,342----
Combined 1943,73240,1032,00038,200 38,0215,532 177
Opec 2351,06641,856--44,131 44,072 ----

Gary Peach, New York