Outlook finds OPEC production capacity sufficient to 2020

Current production capacity among members of the Organization of Petroleum Exporting Countries appears sufficient to meet incremental demand through 2020, according to a new analyst forecast.

By OGJ editors
HOUSTON, Nov. 30
-- Current production capacity among members of the Organization of Petroleum Exporting Countries appears sufficient to meet incremental demand through 2020, according to a new analyst forecast.

In its 2010 Global Crude Oil Market Outlook, released Nov. 30, Purvin & Gertz finds that under a base-case petroleum demand assumption, OPEC’s spare production capacity is large enough to cover potential output shortfalls elsewhere.

The outlook also concludes that in the near term, oil-supply growth will come from both OPEC and non-OPEC producers.

“Robust supply increases from non-OPEC producers such as Russia, Kazakhstan, Canada, and Brazil will be mirrored by expected large production capacity increases from Angola, Nigeria, and Iraq,” Purvin & Gertz said. This will result in no appreciable change in OPEC's market share until after 2015.

The new outlook addresses growth in the production of heavy crude oil and finds that global crude slates will trend toward being heavier and more sour and that Asia’s heavy crude imports will increase markedly, especially in India and China. New developments in Brazil and Colombia, as well as increased output of heavy oil in Canada and the Middle East, will compensate for declines in Mexico and Venezuela, according to the report.

Price differentials between light and heavy crudes will remain near current levels until 2015, Purvin & Gertz forecasts, as current refining markets have surplus cracking and coking capacity, resulting in narrow price differentials.

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