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Rystad had expected national output to rebound Europe’s oil and gas sector then please click here for
to 2.1mn boepd by 2035, up from 1.65mn boepd NewsBase’s EurOil Monitor.
last year. But setbacks at Lancaster, the first
fractured basement field to reach production, FSU: OPEC+ warns of oil surplus in 2021
have prompted the consultancy to rethink its Russia, Saudi Arabia and other members of the
assumptions. OPEC+ oil alliance have warned that a sustained
Hurricane slashed its estimate last month for second wave of the coronavirus (COVID-19)
how much oil could be recovered from Lancaster pandemic and a surge in Libyan output could
to 16mn barrels, from 37.3mn barrels previously, push the oil market back into surplus next year.
after discovering that the field was more com- The oil cartel’s Joint Technical Committee
plex than earlier thought. Fractured basement held a virtual monthly meeting on October 15.
resources were expected to account for almost They considered this renewed surplus as a worst-
one fifth of future national output, according to case scenario, Reuters reported citing a confi-
Rystad. dential document. They had ruled this out as a Unprecedented
The consultancy now predicts UK produc- possibility in their September meeting.
tion to max out at only 1.7mn boepd in 2035 and The committee’s base-case scenario still antic- cuts by the
wind down to next to nothing by mid-century. ipates a supply deficit in 2021 of around 1.9mn
There has been long-held scepticism in the barrels per day, although this was less than the OPEC+ alliance
industry about the ability of fractured reservoirs 2.7mn bpd deficit forecast a month earlier. But have been critical
like those found at Lancaster to produce at a their worst-case scenario foresees a swing to a
stable level, owing to their complex and unpre- 200,000 bpd surplus. This could mean that oil in rebalancing
dictable nature. They were largely ignored until storage levels remain above the five-year average
Hurricane came on the scene in 2004, with its next year, rather falling under it after the first global supply
exploration work to date having yielded four quarter, as OPEC+’s base-case scenario predicts.
fractured basement discoveries. Unprecedented cuts by the alliance of oil pro- with demand
Lancaster entered production last year but ducers have been critical in rebalancing global
has not lived up to expectations, meaning devel- supply with demand since the coronavirus pan-
opments at other sites are likely to be rethought. demic struck. They had hoped to taper the cuts
In other news, France’s finance ministry is by 2mn bpd at the start of 2021, but a looming
looking to rein in state export guarantees for surplus could threaten these plans.
fossil fuel production projects, according to its Meanwhile, BP has confirmed that the
proposal to Parliament last week. Trans-Adriatic Pipeline (TAP) is still on track to
Guarantees, which reduce risks for French deliver the first gas from Azerbaijan to Europe by
companies and commercial banks in export the end of this year, as the UK oil major looks to
transactions, will no longer be provided for the quell concerns of a delay amid continued fight-
dirtiest forms of oil, including heavy oil, shale oil ing in the Nagorno-Karabakh region.
and bitumen oil sands, starting next year. France In a statement on October 13, BP said the
stopped issuing guarantees for projects that use commissioning of TAP and an interconnecting
hydraulic fracturing or flaring this year, and ear- pipeline would be completed in November. This
lier called time on coal as well. “will allow the Shah Deniz consortium to finalise
Gas projects will be safe for now, with guar- the final steps required to start the 25-year-long
antees continuing to be offered until 2035. The supplies of natural gas from Azerbaijan to cus-
ministry justified this delay by saying the fuel tomers in Italy, Greece and Bulgaria as planned
would help coal-reliant economies scale down by the end of 2020.”
their emissions. But it said it might bring forward
the end-date in the future. If you’d like to read more about the key events shaping
the former Soviet Union’s oil and gas sector then please
If you’d like to read more about the key events shaping click here for NewsBase’s FSU Monitor.

P10 www. NEWSBASE .com Week 42 21•October•2020