THE MONTH IN BRIEF: Brent back over $50 as OPEC agrees cuts, Pipeline protests trumped and more woes for Nigeria

• Date: 01 December 2016
• DOI: http://doi.org/10.1111/oet.12442
• Published date: 01 December 2016

THE MONTH IN BRIEF

is section summarizes downstream developments of the previous month. Exploration & Production are covered in

“Upstream Review”.

Brent back over $50 as OPEC agrees cuts, Pipeline protests trumped

and more woes for Nigeria

Much to the oil market’ssurpris e, OPEC ministers meet-

ing in Viennaagreed on November 30 to production cuts

amounting to 1.2mn bpd, sending oil prices soaring.

Prompt Brent futures gained $4.09/bbl on the day, set-

tling nearly 9% up, at $50.47/bbl: the rst time above

$50 since June. e cuts are eective from January 1,

2017, and are to last initially for six months. ey are

designed to reduce OPEC’s output to 32.5 mn bpd. e

largest reduction, 486,000 bpd, was that of Saudi Ara-

bia. Despite protesting that it would not cut its pro-

duction, Iraq also agreed to a reduction amounting to

210,000 bpd. Iran actually obtained an increase of 90,000

bpd through the ex pedient of reducing its intended pro-

duction target. Indonesia, the cartel’s only net importer,

refused to agree to any cut, but face was saved all round

by suspending its OPEC membership. OPEC announced

that a further 600,000 bpd of output reductions had been

agreed by some countries outside OPEC and that these

would be formally ratied at a meeting in Doha on

December 9, 2016.

e election of Donald Trump as the 45th President

oftheUSwasgenerallyhailedaspositivefortheUSoil

industry, especially the midstream sector, where protests

against pipeline construction have delayed a number of

key projects, among which is a pl an to carry oil from the

Bakken Shale in North Dakota to Illinois. e 1,170 mi,

570,000 bpd pipeline, known as the Dakota Access

Pipeline, has attracted strong protests from Native

American groups claiming the routecrosses sacred sites.

Another pipeline route, f rom Canada to the US Gulf, was

denied a permit by President Barack Obama. Mr Tr ump

is seen as being more favourable to new pipelines.

Following a period of relative peace in the Niger

Delta, violence returned to the region early in Novem-

ber with two attacks on pipelines carr ying Forcados

crude, which caused the 200,000 bpd Forcados system

to be shut-in. Another crude oil export grade, B onny

Light, was aected when the line carrying it to the coast

was bombed. is means that the Oil Ministry’s target

for national production of 2.2mn bpd by the end of the

year cannot now be met. e Forcados attack caused

an oil-spill, which is likely to delay any repairs to the

pipeline. Libya ’s Nati onal Oil Company (NOC) repor ted

that national output was just short of 600,000bpd, the

highest for 19 months, a lthough the country remains far

from being pacied [1].

Following some military successes against Islamic

State (IS) by Iraqi and Kurdish forces, the Iraqi

government held talks with Jordan over the resumption

of exports to Jordan by road. D eliveries of about

11,000 bpd were stopped in early-2014 b ecause of

threats by IS to the convoys. Plans for a 1 mn bpd

pipeline to Aqaba, which could be used to supply both

Jordan and Egypt, were also discussed.

Egypt’s falling currency reserves are making it di-

cultforittoimportoil;andthegovernmenthasapplied

for a $12 bn loan from the Internationa l Monetary Fund

(IMF). e IMF has ma de any loan conditional on what

are described as “economic reforms,” including the cut-

ting of fuel subsidies. Other measures could include

privatizing state companies including oil rening. e

IMF’s “reforms” have been attacked by many in Egypt as

primarily beneting US and European banks.

Venezuela and India discussed the possibility of pay-

ing o debts of up to $600 mn owed by Venezuela by

supplying India with crude oil. e Russian govern-

ment asked the port of Primorsk to stop designating

its fees for transhipping oil i n US dollars and switch

to roubles instead. China’s state-owned oil companies

announcedtheopeningofsomeoftheirpipelinesto

third-party access to improveaccess to crude oil by inde-

pendent reners, although few of these are close enough

to the pipelines to benet from the move. Indonesia

said it would allow private companies a greater role in

the domestic downstream market. e British Chancel-

lor of the Exchequer announced tax breaks and other

incentives to encourage the use of electric vehicles.

Germany’s Bild am Sonntag and Süddeutsche Zeitung

revealed details ofa further incident involving the tting

of devices to German motor cars to disguise emission

levels: this time by Audi [2].

References

1. Focus: Libya’s output remains under threat despite

recent rises. Oil and Energy Trends 2016; 41:12; pp

3– 6, DOI: 10.1111/oet.12441.

2. Süddeuts che Zeitung, Ministerium prü vor würfe

gegen Audi: www.sueddeutsche.de/wirtscha/abgas-

skandal-ministerium-prue-vorwuerfe-gegen-

audi-1.3237993.

© 2016 John Wiley& Sons Ltd