OPEC Going Sideways: Not a Good Time for Oil Importers

The Oil Drum ^ | 17 JUL 2010 | Matt Mushalik

[profgoose]

OPEC tells us it has lots of spare capacity, but how much should we believe them? Even when prices were much higher than they are now, back in 2008, they did not make use of all of the spare capacity that they supposedly had.

Figure 1

When one looks at a history of estimates of future productive capacity, we find too, that they have tended to decrease over time (up until the new 2010 report)--also raising questions about current estimates.

The International Energy Agency (IEA) recently put out its Mid Term Oil and Gas Market Report 2010 (MTOMR 2010). Although the report talks about a 7.1 million barrel a day decline between now and 2015 when all of the anticipated new capacity is added, total capacity is expected to increase from 34.85 barrels per day to 35.78 barrels a day (page 82) in that time period.

Figure 2

According to this table, the Iraq is expected to have the largest increase in capacity (amounting to .97 million barrels a day). The second largest increase in capacity is Saudi Arabia, and the third largest increase in capacity is UAE. Iran is expected to have the largest decrease in capacity.

The question is, "Will this large an increase in capacity really result in higher production?"

If we look at historical forecasts of capacity, alongside actual production, we discover a pattern not unlike that recently shown by Steve Kopits with respect to the EIA forecasts. The forecasted amounts keep coming down!

[Venturer]

We need to get enoug of our own wells going where we dont need OPEC and then tell then to buzz off.

But of course the guy with all the answers doesnt care to answer that one.

[Yo-Yo]

I know a spot in the Gulf were we can get 20-60,000 barrels per day...