Norway oil data – Jun 2018

Published at 09:47 11 Jul 2018 by

Norwegian liquids production rose m/m by 88 thousand b/d to 1.75 mb/d in June, but this was still lower y/y by 0.14 mb/d. This was 3% below the NPD’s June forecast and across H1 18 liquids output underperformed NPD expectations by 4%. Decline rates from existing assets have been the key-driver and in May (the latest detailed data available for fields), output from fields in decline fell below 1 mb/d (-23% y/y). June’s recovery was likely led by the Oseberg, Heidrun and Grane fields returning from maintenance—output fell sharply at these fields in May. July loading programmes indicate output will rise once again, led by a recovery at Statfjord (+72 thousand b/d), although this will be partially offset by a shutdown of the Knarr field (output of 19 thousand b/d in May) on 10 July owing to strikes. The closure marks the first production impact from industrial action since 2012. Back then, the government stepped in after 16 days to force the end of the strike and restart output. August loading programmes suggest output will be broadly flat vs. July levels, with gains at Oseberg (+39 thousand b/d m/m) offset by lower Stafjord and Troll programmes.

North Sea crude markets continue to face significant overhang, although currently its more of a Forties oversupply (around 7 mb in our estimates) rather than of Norwegian crudes, which have been moving to the Med recently to replace lost Libyan barrels. But with Libyan production set to resume shortly, Atlantic Basin light crude balances will deteriorate further, especially with the arb to Asia still shut. So, even with the ongoing strikes in Norway, we expect to see another month or two of weakness in North Sea grades, unless Chinese buying to replace US barrels focusses on the North Sea, pulling demand higher.

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