Members of the Organization of the Petroleum Exporting Countries (OPEC) could earn an estimated USD1,171 billion of net oil export revenues in 2012 and USD1,133-billion in 2013, according to the U.S. Department of Energy data unit, the EIA.
Last year, OPEC earned $1,026 billion in net oil export revenues, a 33% increase from 2010, with Saudi Arabia raking in the largest share of these earnings at USD312 billion, representing 30% of total OPEC revenues.
According to the International energy Agency (IEA), OPEC supply hovered at three-and-a-half-year highs again in March, rising by 135,000 barrels per day bpd, to 31.43 million bpd.
This is especially true as increased output by Saudi Arabia Iraq, Libya, Kuwait and the UAE more than offset declines in Iran, Angola and Nigeria.
OPEC is now producing 1.4 mb/d above its collective target of 30 mb/d but the higher output largely offsets exceptionally reduced non-OPEC supplies.
"The 'call on OPEC crude and stock change' for 2012 is unchanged at 30.1 million bpd but has been raised for 2Q12 and 3Q12, by 0.1 million bpd and 0.2 million bpd respectively, also to an average 30.1 million bpd for the six-month period, due to further downward revisions in non-OPEC supplies," said the IEA in its latest note.
However, that has reduced OPEC's 'effective' spare capacity to an estimated 2.54 million bpd in March from 2.75 million bpd in February.
The lower spare capacity estimate partly reflects the removal of Iranian spare production capacity from the calculation on the assumption that sanctions will now progressively cap the country's ability to raise output amid diminishing export markets.
"The group's sustainable capacity for 2Q12 is now estimated at 34.91 million bpd," says the IEA. "For 3Q12, capacity is forecast to increase by 360 kb/d, to 35.27 mb/d, largely due to increased supplies from Iraq as well as smaller incremental volumes from Angola, Nigeria, Libya, the UAE and Kuwait."
MENA INVESTMENTS IN ENERGY
However, these revenue windfalls has not immediately translated into investments being poured into the energy sector.
"There has long been uncertainty about the pace at which investment in the region's upstream industry will occur, how quickly production capacity will expand and, given the heavy subsidies that are fuelling rapid growth in domestic energy usage, how much of the expected increase in supply will be available for export," says Fatih Birol, chief economist at the IEA.
The prospect of new spending priorities and higher perceived risks in the wake of the Arab Spring has heightened this uncertainty, prompting the IEA's annual World Energy Outlook 2011 to include a special Deferred Investment Case to investigate the implications of a possible investment shortfall.
In the study's central scenario, the MENA region is forecast to contribute more than 90% of the required growth in oil production to 2035, with much of the increase coming from Iraq (five million barrels per day), Saudi Arabia (four million bpd), along with Kuwait, UAE and Libya.
To achieve this growth, the IEA expects upstream investment to average USD100 billion per year from 2011 to 2020, before rising gradually thereafter. In the Deferred Investment Case, investment over the period of 2011 to 2015 is assumed to be reduced by a third from this level.
"Such a shortfall would radically alter the global energy balance. MENA production is 6 million bpd lower in 2020 compared with the central scenario. Consumers face a substantial near-term rise in the oil price to USD150 per barrel," says Mr. Birol in a note.
"Higher prices prompt greater investment in resources outside the MENA region, though their higher development costs mean that the shortfall in MENA production is only partially offset. Higher prices also lead to some loss of demand. While MENA countries gain in the short term from more expensive oil, their loss of market share to producers outside the region diminishes their export revenues over the long term."
MENA countries are fearful of the rising production in Canadian oil sands and the United States shale oil production, apart from rising discoveries in the Gulf of Mexico, offshore near Brazil and Venezuela and the largest unmonetised shale gas reserves in China.
MENA investments in the energy sector also appear to have been reined in as governments have distracted by the short-term appeasement of the population amid the cloud of a populist revolution.
It is unclear whether the stalling of energy investments is temporary or whether it is trend that will last for some time.
"Each of us with a stake in the energy sector should pay close attention over the coming months for signs of whether investments in the MENA region are being deferred or are advancing," said Mr. Birol. "The former could have far-reaching implications not only for energy markets but also for the broader economy."
© alifarabia.com 2012
