The Organization of the Petroleum Exporting Countries (OPEC) in its July Monthly Oil Market Report (MOMR) revised down its forecast on liquids output by non-OPEC producers in 2020 by 30,000 bpd from its previous report. The group now expects non-OPEC producers to pump an average of 61.76 million bpd of liquids this year, 3.26 million bpd lower than a year earlier. The forecast was adjusted down due to minor downward revisions in the production forecasts of Guyana, India, Colombia, Ghana, Canada, Argentina Ecuador, and others. Meanwhile, the output forecasts for the US and China were revised up.
In 2021, Non-OPEC liquids production is expected to grow by 0.92 million bpd, to an average of 62.68 million bpd. The US, Brazil, Norway, Canada, Australia, Ecuador, and Qatar are expected to be the main drivers in next year’s non-OPEC liquids output growth. However, the increase from these producers mostly reflects a recovery of production from 2020, rather than new projects. For instance, many US shale producers have cut their capex due to low demand and prices caused by the coronavirus pandemic. An industry survey showed that the active oil rig count, an indicator for future output, has declined drastically in most shale regions, including the Permian Basin.
The drastic drop in oil demand and prices caused by the COVID-19 pandemic have affected investment in the oil and gas upstream sector, with producers cutting their capital spending on exploration and production (E&P). OPEC said that currently, there are only 16 new projects of more than 10,000 bpd in non-OPEC countries which are expected to start up in 2021. The total planned production for these projects is estimated to reach around 300,000 bpd. An industry survey on project ramp-ups in 2021 showed a total of 2.72 million bpd of new production is planned for next year, which will be partially offset by natural declines. However, the large portion of this increase will only compensate for the lost supply that was curbed this year.
