Wednesday, June 4, 2008

OPEC's Oil Production Rose 300,000 bpd in May

OPEC's Oil Production Rose 0.9% in May, Survey Shows
By Diane Munro and Mark Shenk
June 4 (Bloomberg)

The Organization of Petroleum Exporting Countries increased oil production 0.9 percent in May as Iraqi output climbed to a pre-war high, a Bloomberg News survey showed.

OPEC pumped an average 32.28 million barrels a day last month, up 300,000 barrels from April, according to the survey of oil companies, producers and analysts. April output was revised down by 125,000 barrels a day. Production by the 12 members with quotas, all except Iraq, rose 200,000 barrels to 29.79 million barrels a day.

Crude oil on the New York Mercantile Exchange reached a record $135.09 a barrel on May 22 and closed at $122.30 a barrel today. Prices are up 85 percent from a year ago.

Iraqi production increased 100,000 barrels to an average 2.49 million barrels a day last month, the highest since October 2002. Output in the Persian Gulf nation has been curbed since the March 2003 U.S.-led invasion.

Iraqi Exports

Iraq exported an average 2.01 million barrels of oil a day in May, up 100,000 barrels from the previous month and the highest since before the invasion, the survey showed.

Exports from Iraq's two Persian Gulf ports, Basrah and Khor al Amaya, averaged 1.56 million barrels a day in May, up 100,000 barrels from the prior month. The increase followed repairs to infrastructure damaged by military action during March in the Basrah oil-producing region.

Oil exports from Iraq's northern fields to Turkey's Ceyhan export terminal on the Mediterranean Sea were unchanged at 442,000 barrels a day in May. April exports from Ceyhan were revised 22,000 barrels a day higher. Iraq exported about 10,000 barrels a day overland to Syria.

Nigerian production rose 50,000 barrels to an average 1.9 million barrels a day last month. April's output was the lowest since 1999. Security concerns and militant attacks on oil infrastructure in the country's Niger Delta region hampered repair work last month.

Exxon Mobil Corp.'s Nigerian oil unit gradually restored output from the Qua Iboe, Erha, Yoho and Oso fields over the month following a strike by the Petroleum & Natural Gas Senior Staff Association of Nigeria, or Pengassan, which represents white-collar workers. The strike ended on May 1.

Saudi Pledge

Saudi Arabia, OPEC's largest producer and the world's top oil exporter, raised production by 130,000 barrels to an average 9.25 million barrels a day in May. It was the biggest increase among OPEC members last month.

``Saudi Arabia probably made the big increase for political reasons, while Iraq and Nigeria had gains due to improved security,'' said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts.

Saudi Oil Minister Ali al-Naimi said on May 16 that the kingdom had started ramping up production on May 10 in response to stronger demand from customers. He said output would reach 9.45 million barrels a day in June. The Saudi announcement followed a meeting that day in Riyadh between President George W. Bush and King Abdullah.

``The Saudis are either just taking advantage of the high prices or are responding to political pressure and trying to purge some of the speculation that's in the market,'' Mueller said. ``They are following through with the promise made during George W. Bush's visit.''

The planned increase in June output won't be affected by delays to the new Khursaniyah field. The field will eventually pump 500,000 barrels a day, Saudi Aramco said. The state-owned company will increase capacity by a further 250,000 barrels a day by the end of the year because of expansion of the Shaybah field.

Output Declines

Iran, the second-biggest OPEC producer, cut output last month because of a lack of interest in its high-sulfur, heavy oil grades. The country pumped an average 3.82 million barrels a day in May, down 60,000 barrels a day from April. Iran has at least 14 very large crude carriers, or VLCCs, floating near Kharg Island, a loading facility.

Libyan oil production declined 35,000 barrels a day to 1.735 million barrels a day in May because of operational problems at al-Jurf offshore oil field, which is operated by Total SA. A technical problem led to 45,000 barrels a day of production being shut-in beginning on April 24.