McKinsey Energy: Deepwater oil supplies are likely to rise by 500,000 barrel per day

​           The report of McKinsey Energy International expects a large growth in deep-water oil production projects next year, which will increase the world's oil supply by more than 500,000 barrels per day by 2022, revealing that this increase in new supplies will not Would be sufficient to address the expected supply gap in the coming years due to the earlier contraction of investment.
The international report suggested that the current relative slowdown in oil prices would lead to a rise of around $ 70 a barrel between 2022 and 2024. It would then restart the efforts of producers to rebalance supply and demand, A level of between 60 and 65 dollars a barrel in the long term.
The international report - which is highly reliable - confirmed that the decline in international oil prices in the past years led to a rapid decline in the number of oil projects, especially with regard to the final investment decisions, but the current investment situation is much better as the signs of recovery are beginning to show again.
According to the report, despite the current recovery, oil flows are expected to be much lower than in previous years, noting that markets will remain in supply shrinks in the next three to five years.
The report said crude prices would rise to $ 70 per barrel in the medium term, adding that rising prices would revive deep-water projects, leading to global oil output growth, but the market would still struggle to address the supply gap with demand as it is expected to witness Demand is accelerating significantly in the coming years, not accompanied by growth in supply at the same pace.
The report pointed that the reduction of investments in upstream projects is likely to lead to a shortfall in oil supply, pointing out that the global investments in oil upstream projects suffered significant reductions because of the low oil prices environment, which in turn led to a decline in the growth of oil supplies to International level.
The report highlighted the decline in capital expenditure in oil and gas projects from $ 800 billion in 2014 to $ 400 billion in 2016. Global spending on exploration and evaluation activities fell 40 percent to $ 11.2 billion between 2014 and 2016, Many investment decisions in 2016 have already occurred in 2014, before the current recovery in 2017 occurs.
The International Report said that the International Investment Management figures and figures show good signs of an investment recovery in 2017, especially with respect to smaller, less capital-intensive projects that have already entered the starting stage.
However, economic estimates suggest that the reduction of large and large investment spending will lead to a 50-60 percent reduction in new projects over the next three to five years compared with the average oil projects in the years 2010-2014.
According to the international report, the decline in investment and contraction of production is expected to contribute to the narrowing of the markets over the next two years, stressing that production of new projects that entered into production after 2014 is not enough to address the expected gap in supply levels of oil , Pointing that in fact, the process of filling this gap will come more than 60 percent of the new production of producers outside OPEC from the projects that have taken their investment decisions and started production before 2014.
The report, which specializes in research on traditional energy investment issues, said deepwater projects could provide an increase in global oil output, but would struggle to address the projected supply gap due to overall investment contraction.
Deepwater projects boost global supplies as their projects approved in 2017 achieve larger supply volumes after recovering from the difficulties, severe downturns and constraints imposed on them as prices fall in 2014, the report said.
Many projects, particularly deepwater, have succeeded in squeezing costs to overcome low oil prices. The worst years of stagnation in deep water projects are 2016, before market conditions improve in 2017, the report said.
At the same time, smaller deepwater projects suffered a minor setback with 19 projects falling in 2016 and 2017 compared to 22 in 2014, according to the report.
The international report said that despite the downward trend in investment in platforms, it tends to be the most powerful and most effective productivity, especially after the success of efforts to raise production efficiency and achieve a lot of cost savings, which fell at the price of the parity from over $ 50 a barrel to the level of about 40 Dollars per barrel.
On the other hand, in terms of prices at the end of last week, oil prices rose to the highest level of settlement in October amid news of optimism about the strength of the Chinese demand in addition to the decision of US President Donald Trump not to recognize that Iran complies with the nuclear agreement and other tensions In the Middle East.
Brent futures rose 92 cents, or 1.6 percent, to $ 57.17 a barrel, while US crude rose 85 cents, or 1.7 percent, to $ 51.45 a barrel.
The two contracts were placed at the highest settlement level since September 29, and during the week Brent crude rose nearly 3 per cent while US crude rose more than 4 per cent.
China's oil imports totaled 9 million bpd last month, the data showed, with average imports averaging 8.5 million bpd between January and September, boosting China's position as the world's largest oil importer.
    The prices have been bolstered by tensions in Iraq, which have increased since the Kurds voted in favor of independence on Sept. 25, and Kosirt Rasul, deputy head of the Kurdistan region of Iraq, said Kurdish authorities sent reinforcements of thousands of troops to the Kirkuk oil region to address "threats" from the central government Iraq.
    For its part, US energy companies cut the number of working oil excavators for the second week in a row to continue to decline drilling activities continued for two months despite the rise in crude prices above $ 50 a barrel.
    Companies cut the number of oil drilling platforms by five in the week ending October 13 to a total of 743, the lowest since early June, Baker Hughes said.
    The number of rigs, an early indicator of future production, is still larger than 432 excavators that were operating a year ago after energy companies boosted spending plans earlier this year as they expected higher crude prices in the coming months.
    Some exploration and production companies trimmed their 2017 investment plans over the past few months after crude prices fell below $ 50 a barrel in May, but are still planning to spend more money this year than last year.
    The US Energy Information Administration reported that crude oil inventories in the United States fell last week as refiners increased production while gasoline stocks rose and distillate stocks fell.
    Crude stocks fell 2.7 million barrels in the week ending October 6, compared with analysts' expectations of a 2 million barrel drop. "Crude inventories at the Cushing's futures delivery center in Oklahoma increased 1.3 million barrels to 63.78 million barrels," the department said.
    Refinery consumption rose from 229,000 barrels per day (bpd), with operating rates up 1.1 percentage points. Gasoline inventories rose 2.5 million barrels compared to analysts' forecasts of a drop of 480,000 barrels.
    Data from the Energy Information Administration showed distillate stocks, including diesel and heating oil, fell 1.5 million barrels against a forecast of 2.2 million barrels, and US crude oil imports last week fell 1.1 million barrels per day to 6.35 million barrels.
    US production is expected to rise to 9.2 million bpd in 2017 and to a record low of 9.9 million bpd in 2018 from 8.9 million bpd in 2016. The International Energy Agency expects US crude production to grow by 470,000 barrels per day this year and 1.1 million bpd In 2018.
    The Energy Agency forecast that commercial oil inventories fell in the third quarter of this year, the second decline since the collapse of the price of crude in 2014, thanks to the decline in the quantities of oil in floating or movable stocks.
    The Organization of Economic Co-operation and Development (OECD)'s trade inventories in August fell 14.2 million barrels to 3.015 billion barrels, bringing the surplus level to 170 million barrels over the five-year average.
    OPEC's supply remained unchanged in September at 32.65 million barrels per day, but fell 400,000 barrels a day from a year ago, which means that the Organization's commitment to cut output by 1.2 million bpd was 88 percent last month and 86 percent since the beginning of the year, agency.
    OPEC agreed with its partners, including Russia, Oman and Kazakhstan, to cut production by 1.8 million barrels per day until March next year. "There is no doubt that major producers have renewed their commitment to do everything necessary to strengthen the market and support the long rebalancing process, much has been done towards rebalancing the market, but building on this success in 2018 will require continued discipline.