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Norwegian liquids production was higher m/m by 0.24 mb/d at 2.02 mb/d in November, the first print above 2 mb/d since January 2018, as the Johan Sverdrup field continued to ramp up. While crude output rose y/y by 0.22 mb/d, liquids production was higher by 0.14 mb/d y/y due to lower NGLs output (-74 thousand b/d y/y). Production from the Johan Sverdrup field reached 0.35 mb/d in early December, and should reach peak production in Q1 20. December production should remain relatively strong, boosted by stable output at Norway’s newer fields and higher NGLs production from gas fields ramping up for the winter.
However, loading programmes suggest crude output could be weaker as three Troll cargoes and a Johan Sverdrup cargo were deferred to January loading. The planned December loading schedule is lower by 58 thousand b/d m/m at 1.47 mb/d, led by reduced Troll loadings. The deferred December cargoes will support January’s programme, which is set to rise by 0.14 mb/d m/m to 1.61 mb/d, with more Johan Sverdrup, Ekofisk, Gullfaks and Troll parcels. Norwegian grades remain in strong demand across Europe as light sweet barrels are being pulled by simple refiners due to the current strength of VLSFO cracks and weakness in HSFO cracks. The atmospheric residue (AR) content of a barrel of Ekofisk is over 45% by volume and more than 57% by weight. Moreover, the AR contains less than 0.5% sulphur, making it an ideal marine fuel. Asian buying interest in low-sulphur grades with high AR is also strong, with over 7 mb of Johan Sverdrup due for January delivery to China and Korea as well as 3 mb of Ekofisk heading east in November (the most since April 2017). This has sustained strong premiums in Troll (trading at $3.50 per barrel above Dated Brent), Oseberg and Ekofisk (both holding at above $2.00 per barrel). Grane is the only differential to weaken in the last month as it competes with Johan Sverdrup cargoes. Increasingly, we see more Johan Sverdrup barrels staying in Europe.