Anjli Raval, Oil and Gas Correspondent
 

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Oil production growth from countries outside Opec will be lower than expected this year as the price rout hits North American output and spurs spending cuts by the world’s biggest energy companies, the producers’ cartel said in its monthly report on Thursday.

Although non-Opec supply grew more than expected at about 1.98m barrels a day last year as a result of higher production in the US and Russia, for 2015 it is projected to grow by 1.28m b/d, a downward revision of 80,000 b/d from previous estimates.

“The main factors for the lower growth prediction in 2015 are lower oil price expectations, the declining number of active rigs in North America, the decrease in drilling permits in the US and the reduction in international oil companies’ 2015 spending plans,” Opec said.

Opec crude production in 2014 fell slightly to just over 30m b/d from 30.2m b/d in 2013, based on estimates from secondary sources such as oil analysts. Saudi Arabia, the cartel’s largest producer and leader, told Opec it produced 9.63m b/d in December, up 20,000 b/d from November.

The November decision by the cartel to hold its output target at 30m barrels a day — rather than cut production to shore up prices — was aimed at curbing growth in US shale oil and other high-cost production, such as from Canada, that has been eroding Opec’s market share.

Saudi Arabia and its Gulf allies have in recent weeks reaffirmed the cartel’s stance, blaming non-Opec producers for a supply glut that has led to the sharp fall in oil prices which are hovering at below $50 a barrel. All the while demand remains weak.

The steep drop in prices is a threat to US output from shale fields and stripper wells, Opec said, which trimmed its forecast for this year by 100,000 b/d. Canadian unconventional oil production is also in danger.

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Russia’s production outlook remains uncertain given the “impact of sanctions, low prices and no large projects expected to come online”, Opec said. North Sea oil output is also vulnerable.

“These monthly revisions are a taste of things to come,” said Michael Wittner, oil analyst at Société Générale.

“Although cutbacks from big oil companies are important, it is the US shale slowdown that we’re looking out for; how much small and mid-cap companies in the US cut back on drilling and how this leads to a meaningful cut to production. We’re not seeing this yet, so it’s still going to take some time before the market is balanced,” he added.

The producer group expects global demand to rise by 1.15m b/d next year, or 30,000 b/d more than previously thought, reaching 92.3m b/d as a result of upward revisions to data for the US and Asia.

Even so, demand for Opec crude will drop to 28.8m b/d in 2015, down about 100,000 b/d from its previous expectation, which was already marking its lowest level in more than a decade. The 2015 figure is more than 1m b/d less than it is currently producing.

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