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Norwegian liquids production fell by 88 thousand b/d m/m to 1.75 mb/d in February, lower y/y by 0.20 mb/d (10%). The m/m reduction was entirely due to lower crude output, which fell to a five-month low of 1.39 mb/d. March’s loading programme is 3% lower m/m, with a combined 80 thousand b/d m/m drop in Ekofisk and Troll loadings offsetting higher volumes of Oseberg and Statfjord. April’s loading programme is slated to be 1% lower m/m at an 11-month low of 1.12 mb/d. North Sea differentials softened m/m in February from historically strong levels on the back of peak European refinery maintenance in March, arrivals of record US crude exports (1.1 mb/d), and improved weather in the Med, which allowed backed up crude to reach refiners. Meanwhile, the acute tightness in medium and heavy crudes continued to sharpen the divergence between light and heavy crudes in the region, with heavy grade Grane trading at an unprecedented premium to Dated Brent in early March. In April we see further downward pressure on North Sea differentials, especially with the return of Libya’s Sharara field from force majeure.
We forecast a 0.10 mb/d fall y/y in Norwegian liquids output (vs 73 thousand b/d last month) in 2019, marking a third straight year of declines. We expect Q1 19 production to be lower y/y by 0.16 mb/d, while in Q2 19 we expect the start-up of Equinor’s Trestakk field (plateau rate of 20 thousand b/d) to be more than offset by full-month maintenance at Ekofisk and associated fields in June. Beyond 2019, the key pillar of supply growth for Norway is the Johan Sverdrup field, which at capacity could produce 0.66 mb/d (from two phases). We expect ramp-up to take 18 months, yielding growth of 0.15 mb/d in 2020.