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Unplanned global oil supply disruptions averaged more than 3.6 million bpd in May 2016, the highest monthly level recorded since EIA started tracking global disruptions in January 2011. From April to May, disruptions grew by 0.8 million b/d as increased outages, largely in Canada, Nigeria, Iraq, and Libya, more than offset reduced outages in Kuwait, Brazil, and Ghana. Along with other factors such as rising oil demand and falling US crude oil production, the rise in disruptions contributed to a month-over-month US$5/bbl increase in Brent crude oil spot prices in May.
In Canada, the evacuation of oil workers because of wildfires in Fort McMurray, Alberta, reduced Canada's oil sands production and led to an average 0.8 million bpd supply disruption in May, with a daily disruption peak of more than 1.1 million bpd. In late May, workers began returning to the area, and production is gradually restarting at a number of projects.
In Nigeria, an escalation in militant attacks on oil and natural gas infrastructure led to a substantial increase in supply disruptions in May, which averaged 0.8 million bpd, almost 0.3 million bpd higher than in April. Nigeria's crude oil production fell to an average of 1.4 million bpd in May, its lowest monthly level since the late 1980s. The infrastructure attacks are occurring in response to President Buhari's restructuring and planned phase-out of the amnesty program, discontinued pipeline protection contracts to former militants, and the increased military presence in the Niger Delta. For the first five months of 2016, Nigeria's supply disruptions averaged 0.5 million bpd, 0.2 million bpd more than in 2015. EIA expects Nigeria's disruptions to remain relatively high through 2017.
In southern Iraq, power outages and inclement weather in the Basra Gulf contributed to a 50 000 bpd increase to Iraq's supply disruption. In Libya, exports from Marsa al-Hariga, currently Libya's largest operating oil terminal, were temporarily halted from late-April to mid-May, increasing Libya's disruption by an average of 50 000 bpd in May. Exports from the terminal resumed after the rival state oil companies signed a deal to restart exports.
In EIA's latest Short-Term Energy Outlook, global supply outages are expected to decrease in June because most of the recent outages, particularly in Canada, have already started to subside. The duration of an outage mainly depends on the root cause of the disruption. When an outage is related to weather, natural disaster, labor strikes, or technical failure/accident, the disruption usually ends within weeks or a few months, such as the recent outages caused by the wildfires in Canada and the poor weather in the Basra Gulf in Iraq. Disruptions tied to political disputes or conflicts often last for years, such as in Libya, Nigeria, northern Iraq, South Sudan, and Yemen, among others, which accounted for nearly 90% of unplanned disruptions for the first five months in 2016.
Adapted by David Bizley
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/09062016/eia-unplanned-global-oil-supply-disruptions-reach-highest-level-since-at-least-2011/