IEA: Global 2022 oil production rise to be nearly twice increase in demand
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The world-wide increase in oil production will see a rise from 1.5 million barrels per day (bpd) in 2021 to 6.4 million bpd in 2022, according to the International Energy Agency’s latest review of oil markets. In contrast, demand for oil will slow – from 5.4 million bpd to 3.3 million bpd over the same period.

   A quarter of the increase in production – 1.8 million bpd out of 5.4 million bpd – will be provided by countries outside the OPEC+ production agreement – mainly by the United States, Canada and Brazil. In the United States, from the beginning of October, weekly production levels have not fallen below 11.3 million bpd and in the first nine months of 2021, the average level stood at 10.9 million bpd.

    The rise was prompted by the June ruling by a federal court in Louisiana to block President Joe Biden’s moratorium on the sale of new oil and gas leases for drilling on federal land while reviewing how to reform the programme. As a result, according to the Bureau of Land Management, in 2021 (except January) 333 permits were issued for carrying out drilling work on federal land – more than in 2018 (279) and in 2019 (284).

    In Canada, according to data from the Canada Energy Regulator, production rose from 4.4 million bpd in 2020 to 4.6 million bpd in the first seven months of 2021. The main driving force behind the rise was the lifting of oil production restrictions in effect from 2018-2020 in the province of Alberta because of a lack of oil storage capacity. The problem was solved by the fall in demand linked to COVID-19 – the average load for Canadian oil refineries declined from 88 % in 2019 to 78 % in 2020.

    In 2022, expansion of export pipeline capacity will spur increased production. Last October, repairs were completed on the Line 3 pipeline extending from Alberta to the U.S. state of Wisconsin. Its diameter has been expanded from 35 to 36 inches and capacity now totals 760,000 bpd. At the beginning of 2023, the modernisation of the Trans Mountain Pipeline will be completed, boosting its capacity from 300,000 bpd to 890,000 bpd.

    In Brazil, increased production in 2022 will be linked to resumed production in the offshore Peregrino field. Equinor intends to reactivate the field’s first phase, where production stood at 60,000 bpd until it was halted in May 2020. The Norwegian company also plans next year to start production at its second phase – where recoverable reserves total 273 million barrels of oil.

   The main driving force going forward will be the Buzios field and the Sergipe-Alagoas basin – Petrobras intends to channel more than 80 % of its investment programme to these two developments over 2022-2026 – a total of $84 billion.

    For the OPEC+ countries, the main driver of growth could be Saudi Arabia: in November 2021, the kingdom produced 9.9 million bpd, considerably less than at the beginning of the pandemic (11.5 million bpd in May 2020). The same applies to Russia, where in November 2021, production stood at 10.9 million bpd – below the level of April 2020 of 11.3 million bpd, according to data from the Central Distribution Authority of the Fuel and Energy Complex.

    The slowdown of growth in demand – from 5.4 million bpd to 3.3 million bpd in 2022 – is linked by the IEA to the end of the effect of a low statistical base. By the end of 2022, world-wide demand will return to the pre-pandemic level of 99.95 bpd. But in the period covering the first and second quarters, the surplus will rise from 1.7 million bpd to 2 million bpd.

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