With non-Opec poised to grow again, Opec will need to increase oil output by just 2.2 million barrels per day (b/d) to meet global incremental oil demand of about 5.5 million b/d over the 2017-22 period, added the latest Global Energy Weekly from Bank of America Merrill Lynch (BofAML).

So about one-third of global oil supply growth will come from Opec in 2017-22.
While Opec countries have the resources to grow production, Opec revenue would likely be higher if no additional investments are made compared to scenarios where increased Opec production leads to lower prices.  For this reason Opec oil output growth is likely to be limited over the next 5 years.

According of BofAML, Saudi Arabia, UAE, Iraq and Iran are the only countries able to increase their output meaningfully in the medium term, while others such as Algeria, Nigeria or Venezuela would need massive investments to reverse current trends and boost output.

Saudi Arabia would likely be better off maintaining steady production and allowing prices to rise to maximize their long-term oil revenue, the report said.

Over a 15-year period, Saudi total oil revenues at $50/bbl and 18mn b/d of production would equate to $4.90 trillion.

Meanwhile, a combination of $65/bbl and 12 million b/d production would bring in $4.30 trillion.

Yet, given production costs of $10-to-$20/bbl, it simply would not pay off for Saudi to aggressively invest in domestic oil productive capacity, even if assuming a zero discount rate on incremental future revenues.

US shale oil production could grow by 3.5 million b/d to 2022

Many oil companies around the world have survived the price meltdown by bringing down breakeven costs in the last two years. But what parts of the world can grow output in the years ahead?

“In our view, US shale oil producers will come out ahead and deliver outsized market share gains by 2022. Shale oil output in the US may grow sequentially by 600 thousand b/d from 4Q16 to 4Q17 on increased activity in oil rigs and fast productivity gains,” said the BofAML report.

Importantly, breakeven costs for key major US plays now stand around the $55/bbl mark. As crude oil prices recover further, cost reflation may partly offset reduced costs linked to less regulation. So assuming a gradual recovery in oil prices into a long-term average of $60 to $70/bbl, average annual US shale oil growth is projected at 700,000 b/d in 2017-22, the report said. – TradeArabia News Service