Robert J. Beck
Economics Editor
A large increase in production by members of the Organization of Petroleum Exporting Countries boosted world oil production 2.8% in 1989.
World flow rose 1.652 million b/d to an average 59.661 million b/d last year.
Production is up 6.052 million b/d, or 11.3%, in the last 4 years. Production in 1989 was the highest since 59.715 million b/d in 1980.
Non-Communist production rose 4.6% to 44.381 million b/d. This was also the highest level since 1980's 45.146 million b/d. Communist flow dipped in 1989.
OPEC accounted for the entire increase in production in 1989. Output was up in all but one OPEC country, Ecuador, and the group's total production increased 12.2% to 22.048 million b/d.
Non-OPEC, non-Communist production slipped 441,000 b/d in 1989 to 22.333 million b/d. This 1.9% drop was due mainly to sharp declines in the U.S. and U.K.
This was the lowest level of production for this group since 1983's 20.718 million b/d.
Mainly due to a drop in U.S.S.R. production, Communist output fell 1.9% in 1989 to 15.2 million b/d. It was the second consecutive year for declining Communist area production after years of steady growth.
China set another production record.
Another drop in Communist crude and condensate production is widely expected during 1990. That would mean 3 successive years of slackening Communist flow-the longest such period since the end of World War II.
The increase in world production was spurred by another strong increase in demand for petroleum products.
Non-Communist demand increased 2.1% or 1.05 million b/d, and stock build was an estimated 225,000 b/d, the International Energy Agency estimated.
The demand increase was 400,000 b/d in Organization for Economic Cooperation and Development (OECD) countries and more than 600,000 b/d, possibly greater, in developing countries.
OPEC PRODUCTION
Persian Gulf states-Iran, Iraq, Kuwait, and the United Arab Emirates-posted some of OPEC's largest gains.
Other OPEC members with large increases were Nigeria, Libya, and Indonesia.
Saudi Arabia showed noticeable restraint. Its production was up only 1% to 4.995 million b/d for 1989. Neutral Zone production was up 84,000 b/d, and Saudi Arabia gets 50% of that.
The only OPEC member posting a decline was Ecuador, down 8.2% to 279,000 b/d for 1989.
OPEC's share of nonCommunist production rose to 49.7% in 1989 from 46.3% the year before. It was only 41.4% in 1985. OPEC's share of total world production climbed to 37% in 1989 from 33.9% in 1988 and only 29.9% in 1985.
NON-OPEC PRODUCTION
Production in non-OPEC, non-Communist countries dropped in 1989, mainly due to substantial declines in U.S. and U.K. production.
U.S. production fell 493,000 b/d to 7.647 million b/d.
Contributing to the slip were a temporary North Slope production cut following the Valdez tanker grounding in March and low drilling activity that hastened natural declines in the Lower 48.
Production in the U.K. fell 21.8% to 1.773 million b/d for the year, mainly because of a series of North Sea accidents.
Large increases in non-OPEC countries occurred in Norway, Syria, Brazil, India, Colombia, Malaysia, and North Yemen.
COMMUNIST FLOW OFF
Communist nations produced an estimated 15.28 million b/d in 1989 vs. a revised average of 15.578 million b/d in 1988 and 15.6 million b/d in 1987.
All three of the Communist bloc's large producers-the U.S.S.R., China, and Romania-produced less oil than planned in 1989 and will fall substantially below long term goals originally set for 1990 in their current 5 year economic plans.
Communist nations produced less than 26% of the world's oil last year vs. nearly 28% in 1987. By contrast, the Communist share of global oil flow rose sharply during the 1970s.
The U.S.S.R. produced 12.14 million b/d of crude and condensate last year. Flow was down from 12.446 b/d in 1988 and 12.48 million b/d in 1987.
The country still provided more than 79% of total Communist oil production in 1989. But its share slipped from 82.4% in 1980.
Western Siberia accounted for most of the Soviet Union's 1989 oil production decline, although it continued to provide about two thirds of the U.S.S.R.'s total.
Most of western Siberia's oil field discoveries last year were small.
New eastern Siberian fields placed on production in 1989 failed to yield as much oil as planned. Flow fell from the area's largest fields, including supergiant Samotlor.
Average flow from western Siberian wells continues to drop. Water cuts rose faster than anticipated in many fields.
The U.S.S.R.'s second largest oil producing region-the Volga-Ural area-also registered a 1989 decline.
The Soviet oil ministry, now combined with the gas ministry, reported last summer that it had a total of 154,000 wells. Of those, 12,000 were idle.
While Moscow officials insist that the U.S.S.R. is still finding more oil than it is producing, they acknowledge that the proportion of reserves being discovered in remote fields with poor reservoir permeability and other problems is rising sharply.
CHINA, OTHERS
China was able to hike oil production to 2.751 million b/d last year from 2.733 million b/d in 1988. The gain occurred despite the civil turmoil during the early months of 1989, when production dropped below the level achieved in the comparable 1989 period.
Increased Chinese flow of only 18,000 b/d-well below 1%-was far less than planned. Official target for 1989 was an average 2.78 million b/d, a gain of 1.7%.
Bejing reported that supergiant Daqing field produced about 1.09 million b/d last year, about 40% of total Chinese flow.
Plans call for Daqing to maintain average production of 1 million b/d during the next 10 years (OGJ, Feb. 26, p. 48).
China's current 5 year plan called for oil production to reach 3 million b/d in 1990. That target is far beyond reach. Beijing disclosed that January 1990 crude flow was up only 0.7% from the same month last year.
Romanian and Yugoslav oil production continued to slide last year. Romanian flow fell from 188,000 b/d in 1988 to about 180,000 b/d, while Yugoslavia's production dropped from 74,000 b/d to about 67,000 b/d.
Viet Nam apparently did not achieve its projected 1989 oil production of 33,500 b/d from the nation's only producing field, Bach Ho (White Tiger) in the South China Sea, where 1988 flow was about 16,700 b/d.
Cuba was able to raise production to only about 15,000 b/d last year from 14,000 b/d in 1988.
Other estimated 1989 Communist oil production includes Albania 50,000 b/d, Hungary 39,000 b/d, East Germany 7,000 b/d (mostly condensate), Bulgaria 5,000 b/d, Poland 3,000 b/d, and Czechoslovakia 3,000 b/d.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
