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Norway's crude oil exports dropped to 1.2 million b/d in
September, down from 1.48 million b/d in August. An escalating
workers' strike since 30 September has shut four of Equinor's oil
and gas fields, and two more operated by Neptune.
Implications
Most losses caused by the recent strike refer to natural gas,
which accounts for almost 60% of the total cuts. The combined crude
oil output from the six fields shut on Monday stands below 80,000
b/d. The impact on crude oil flows from Norway won't be
significant, assuming the strike will last less than a month.
Production of Johan Sverdrup, its largest producing oilfield, won't
be affected by the strike, according to Equinor.
Outlook
After agreeing to cut its production by 250,000 b/d in June and
maintain cuts of 134,000 b/d until the end of the year, total
production of Norway is estimated to be down around 300,000 b/d in
December 2020, than originally planned. The upper limit by the end
of the year stands at 1.725 million b/d.
...
An escalating workers' strike in Norway has shut four of
Equinor's oil and gas fields, and two more operated by Neptune. Oil
prices responded positively as the strike could reduce the
country's production capacity by just over 330,000 b/d. Production
of Johan Sverdrup, its largest producing oilfield, won't be
affected by the strike, according to Equinor. The dispute began in
late September.
Norway's output typically stands close to four million b/d, with
almost half in the form of crude and other liquids and half from
natural gas. It is not clear when the issue could be resolved, with
officials of Norwegian Oil and Gas Association stating, "there is
no solution in sight". The strike has hit Equinor's Gudrun, Gina
Krog and Kvitebjoern fields. Most losses refer to natural gas,
which accounts for almost 60% of the total cuts. The combined crude
oil output from the six fields shut on Monday stands below 80,000
b/d. The impact on crude oil flows from Norway won't be
significant, assuming the strike will last less than a month.
Meanwhile, the country's oil exploration has slumped sharply, by
around a third, with all major oil and gas companies around the
world cutting spending. Several new exploration projects have
already been delayed or cancelled. Exploration is rather crucial
for Norway's production, with most of the currently operating
fields considered rather mature. New discoveries are required to
ensure the national oil and gas industry will remain
sustainable.
Norway was producing an average of 1.75 million b/d of crude
oil, before it decided to support the OPEC+ effort to reduce global
output to support oil prices. Norway agreed to cut its production
by 250,000 b/d in June and maintain cuts of 134,000 b/d until the
end of the year. Moreover, Norway has been delaying the start-up of
production of several fields until 2021.
The total Norwegian production in December 2020 is estimated to
be down around 300,000 b/d than originally planned. New oilfields
originally supposed to start output by late 2020 represent 166,000
b/d. The upper limit by the end of the year stands at 1.725 million
b/d.
Norway's crude oil exports dropped to 1.2 million b/d in
September, down from 1.48 million b/d in August. This has been the
lowest so far this year, according to IHS Markit Commodities at
Sea.
Focusing on crude oil tanker rates in the North Sea, the last
couple of weeks have been rather challenging for shipowners.
Performance continues to disappoint, as the few fresh cargoes added
recently haven't proved enough to improve market's sentiment.
October stems look weak to improve the terms for shipowners, with
limited if any optimism for November as well. The path ahead looks
both difficult and long for tankers in the region. VLCC levels have
been under more pressure, with more units made available after
ballasting West. The last fixture stood just over USD 4.25 million
from North Sea to China.
