СТАТИСТИКА 1 / Международное энергетическое агентство www.IEA.org / Публикации разные / supply glossary 1987-2002

SUPPLY

INTRODUCTION

Definition of Supply

In order to achieve a mass balance in the world oil supply and demand table (Table 1), supply includes not only crude oil and NGLs, but also various types of heavy oil-like hydrocarbons and natural gas-based, coal-based and renewable-based sources which are used as oil product equivalents and are included in our definition of demand. These non-conventional oils include other hydrocarbons and alcohols (including Brazilian alcohol fuel and those used in gasoline blending elsewhere), Canadian synthetic oil production, Venezuelan upgraded Orinoco extra-heavy oil and orimulsion, oil shales, South African coal-based and natural gas-based oil substitutes and methanebased blending components such as MTBE. Total supply of these products is estimated at around 1.8 mb/d in 2002. Processing gains are also shown as a source of oil supply in Table 1. Care needs to be taken in reading the text and tables to distinguish between crude oil and total oil supply. Thus, in Tables 1 and 4, total oil supply is shown (except for OPEC) while Table 4A provides crude oil separately from NGLs & other supplies, with the exception of the ‘other North Sea’ category.

OPEC Crude Production

Estimates of OPEC crude production are based on information from a wide range of sources with tanker-tracking information being particularly useful. Production is generally taken as exports plus local consumption of crude oil and hence does not generally take into account any changes in crude oil stock levels within the country.

Procedures for Projecting Supply

Oil supply projections for individual countries are developed by a bottom-up approach using monthly information on over 400 fields, areas or other elements for over 90 countries. The contribution of individual fields is projected, taking into account growth and decline rates, maintenance schedules and start-up dates for new fields. Information provided by field operators is taken into consideration but judgement is used if there is evidence of conservatism or optimism based on past experience. The current and expected upstream operating environment is also taken into account. For fields where production is affected by the weather (for example, in the North Sea), average weather is assumed. Downward revisions to supply projections are caused by new field delays and unanticipated decreases in output from mature fields due to their coming off plateau early or due to higher-than-expected rates of decline. Random events also add to downside risk. These events can include accident, unplanned or unannounced maintenance, technical problems, labour strikes, guerrilla activity, wars and weatherrelated supply losses, and may cause supply losses of perhaps 200-300 kb/d for non-OPEC supply each year.

SUPPLY GLOSSARY

API Gravity is (141.5/Specific Gravity at 60°F) - 131.5. Thus, the higher the API the lighter the oil.

Associated Gas is natural gas associated with oil accumulations, which may be either dissolved in the oil or may form a cap of free gas above the oil.

Bitumens are exceptionally heavy hydrocarbons, either naturally occurring (e.g. Canada, Venezuela), or deriving from the residue refining process.

Condensates are liquid hydrocarbon mixtures recovered from non-associated gas reservoirs. They

are composed of C4 (butane etc) and higher carbon number hydrocarbons. They normally have an API between 50° and 85°.

Conventional Oil Supplies exclude synthetic crude oil and other hydrocarbons.

Development Well. Well drilled in an area which has already been proved to contain oil.

Enhanced Oil Recovery (EOR) is any process whereby oil is produced other than by natural reservoir pressure.

Flaring. The burning off of gas produced in association with oil due to technical or economic reasons, prohibiting re-injection or shipment.

FPSO. Floating Production Storage and Off-loading vessel. The vessel, often a converted oil tanker, is used offshore as a floating platform for the drilling, production, storage and loading of crude oil.

Fracturing. A way of increasing production from low permeability structures by breaking up the rock and expanding fissures, for example by applying very high fluid pressures.

GOM. Abbreviation commonly used in reference to the US Gulf of Mexico.

Horizontal and Directional Drilling. Following a conventional vertical drilling, it is possible to change direction and drill horizontally or directionally. The approach is particularly useful in increasing the yield from thin layers of oil deposits without needing to drill additional bore holes.

Licence Round. The placing by a state of a number of specified areas on offer to oil companies for exploration.

Lower 48. The mainland states of the US excluding Alaska.

Offshore-Loaded. Oil produced offshore is either moved onshore by pipeline or loaded offshore direct from FPSOs or buoy-mooring facilities.

OPEC. The Organisation of Petroleum-Exporting Countries was formed in September 1960. Its current eleven members are Algeria, Indonesia, Iran, Iraq, Libya, Kuwait, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. Ecuador is deemed to have left the cartel in January 1993 and Gabon in January 1995. Production from the Saudi-Kuwaiti Neutral Zone may be reported separately, but in reality is shared 50/50 between them and included in respective OPEC quotas.

Processing Gain. The volumetric amount by which total output is greater than input for a given period of time. This difference is due to the processing of oils into products, which, in total, have a lower specific gravity than the crude oil, and feedstocks processed (e.g. in conversion processes).

Reserves. Oil reserves fall into three categories:

•Proved Reserves. Proved oil, and gas reserves are estimated quantities of crude oil, condensates and natural gas liquids which geological and engineering data demonstrate with ‘reasonable certainty’ (80 to 90% confidence) to be recoverable in future years by specified techniques (the development scenario has been defined and uses known technology) and which are commercial under economic conditions (prices and costs prevailing at the time of the evaluation).

•Proved plus Probable reserves are reserves based on median estimate of the accumulation that are more likely to be recovered than not (50% confidence). This can result from either better reservoir behaviour than expected under the proved category or additional investments to be decided over the medium to long term (three to ten years) using conventional techniques with possible economic uncertainties.

•Proved plus Probable plus Possible reserves are reserves based on a maximum estimate of the accumulation with maximum recovery factors without economic considerations (10 to 20% confidence).

Satellite Field is a separate accumulation of oil onshore or offshore which is tied back to a central processing facility.

Secondary Recovery. Methods of increasing the percentage of oil recovered from oil fields using natural gas or water injection. It is the simplest form of EOR and is often initiated with primary recovery.

Shale Oil. Oil extracted by heat from clays which are impregnated with oil.

Sidetracking is the use of an existing well bore to drill an additional bore laterally.

Spudding is the initial drilling of a well.

Subsea Template. A frame which is anchored to the sea-bed containing one or more well heads. It is usually tied back to an existing platform or production vessel.

Sweet/Sour Crude. Crude oil with a sulphur content respectively low or high.

Synthetic Crudes are crudes made by upgrading bituminous (e.g. tar sands) or extra-heavy crude oils, increasing their value and making them transportable by pipeline without dilution or heating. Unlike naturally occurring bitumen, synthetic crudes are generally excluded from the definition of conventional crude production.

Tanker-Tracking Data. Information on the number and cargo size of crude oil tankers used in estimating production. Volumes of oil in the tanker are estimated by observing where the water line is on the tanker.

Tar Sands are a mixture of sands (with some rocks and clay), about 10% bitumen and small quantities of water. There are large deposits in Canada (Athabasca) and Venezuela.

Tertiary Recovery. Methods of increasing the percentage of oil recovery beyond that achieved by secondary recovery. These include injecting solvents or high pressure carbon dioxide, igniting part of the oil in the reservoir to generate steam, and biological breakdown of oils to enable them to flow more easily.

Wildcat Well. Well drilled in an unproved area.

Workover is an operation on a producing well to restore or increase production. Tubing may be pulled out and the casing at the bottom of the well pumped or washed free of accumulated sand. Well bores may be fractured or redrilled, gravel packing may be used, or pumps may be replaced.

TRADE

INTRODUCTION

Why Trade?

Each of the three OECD regions is highly dependent on imports of crude oil and petroleum products to meet its needs. In 2002, North America reported net imports from outside the region averaging 8.2 mb/d; countries in OECD Europe reported a total 8.6 mb/d and OECD Pacific countries reported net imports of 7.5 mb/d. Eight of every ten barrels were crude oil. The IEA tracks details of this trade by collecting monthly and annual statistics from each OECD country detailing its imports and exports. These figures are collected for eighteen separate categories of ‘oil’, ranging from crude, additives and feedstocks to petroleum products by type, and for over eighty sources and destinations. The IEA collects even greater detail on crude imports from its Member countries, tracking crude type as well as country of origin.

Compared to the crude trade, the product trade volumes may seem insignificant. In fact, the opposite is true: volumes are small because trade in products takes place at the margin, and marginal supply sets prices. When trade is forced by surpluses at the point of origin, there is weakness in local refining margins resulting from surplus refining capacity. When imports are required to balance shortfalls in local supply, the cost of those imports at the margin sets local prices. So, for example, a spike in the price of gasoline in California is really a price signal indicating that local refineries have operating problems (including capacity limitations), that the need for imports has increased and that supply is being bid away from increasingly-distant or high-cost refining centres.

The Data and Their Limitations

The imports data are generally of higher quality than the export data. Initially-declared destinations for exports may not be reliable, because the location for which a given cargo is headed may change in response to market conditions. Comparison of the figures for global imports with those for global exports can also show substantial imbalances, with export figures apparently overstated. Losses in transit explain a portion of the gap, as does the definition of ‘exports’ used by some countries: shipments not destined for inland consumption within the country’s sovereign territory. The latter may embrace jet fuel loaded on a plane headed for another country, bunker fuel loaded on an international tanker, and deliveries to another country’s embassy or military base.

The figures sometimes show substantial discrepancies in the figures reported by trading partners, even those such as the US and Canada with common borders. For this reason, the net trade positions published in the Report for each OECD region are calculated based on figures for extra-regional trade only.

Use and Analysis of the Data

The highest quality data are obtained by combining the figures for imports to OECD countries with information about exports from OECD countries to non-OECD destinations. This makes a complete picture possible for a trade such as that in North Sea crude. An analyst will look for seasonality, level and trend to establish what a normal pattern might be, then identify abnormal periods. At the stage, comparison of the trade flows to relevant financial indicators will help explain both flows and differences from ‘normal’. Trade flows may reflect normal patterns (structural or baseload supply), or be motivated by demand ‘pull’ via arbitrage, supply ‘push’, or may anticipate price differentials.

TRADE GLOSSARY

AOS IEA ‘Annual Oil Statistics’ including crude and petroleum products trade by source and destination for OECD Member countries. These figures are published in the annual volume ‘Oil Information’.

Arbitrage. The purchase of physicals or futures in one market against the sale of physicals or futures in another market in order to exploit price differentials between these markets. In moving physical oil between markets, the price differential has to be large enough to cover freight, insurance, volumetric loss and other handling charges. When this condition is met, the ‘arbitrage window’ is said to be open.

‘Crack’. Any of a number of differentials which indicate relative refining profitability. The ‘heat crack’ is the difference between the value of heating oil and the price of crude, and the ‘gas crack’ is the difference between gasoline value and crude price.

Crude Imports. IEA Member countries submit monthly registers of their crude oil imports, showing quantities and prices for each of over 100 separate crude streams. The IEA publishes the volume information for key crude streams after aggregation by OECD region.

Demand ‘Pull’. When imports are required to balance shortfalls in local supply, the cost of those imports at the margin sets local prices. That is, prices rise enough to balance supply with local demand, ‘pulling’ supply.

Imports are merchandise brought into one place or country from another. Exports are merchandise sent to one place or country from another. Net Imports/(Exports) are imports minus exports. Collectively, imports and exports are referred to as ‘trade’. Trade may be denominated in volume, financial value, or both.

MOS. IEA ‘Monthly Oil Statistics’ including crude and products trade by source and destination for OECD Member countries, submitted in tonnes. These figures, converted into barrels, are used in the

Oil Market Report and the Annual Statistical Supplement and User's Guide.

Netback (to point of origin). Sales price at destination minus the full cost of transportation (including working capital, the risk of price changes in transit, etc.).

‘Northwest Europe’. The spot market for products from refineries clustered around Antwerp, Rotterdam and Amsterdam, called ARA in the oil trade.

Price-Setting Market. In a perfect market, the location at which supply and demand curves cross and prices are set. For example, when a refiner at Cushing, Oklahoma makes an identical profit or loss whether he runs a barrel of Brent or WTI, then Cushing is said to be the price-setting market for Brent.

Structural Supply (also, baseload supply) A trade flow which normally occurs, even absent apparent economic signals.

Swing Supply. A surplus in a location which gives flexibility with respect to destination. In the crude market, West African is the classic example of swing supply. In the product market, products from the Middle East and Northern Africa are swing supply.

Supply ‘Push’. When trade is motivated by what would otherwise have been surpluses at the point of origin, often signalled by weakness in local refining margins resulting from surplus refining capacity and/or by weak relative prices.

Tariff. A price, typically for pipeline transportation.

FREIGHT GLOSSARY

Charter. The lease of a ship, for anything from a single voyage to a fixed period of time.

Spot freight rates apply to the carriage of a single cargo from one specified port to another in the immediate future. They typically include all expenses of operating the vessel, from fuel to crew, but exclude costs related to the cargo (e.g. inspection fees).

Deadweight tonnes (DWT) are the measure, in long tonnes, of a tanker’s total capacity to carry cargo, bunkers, water, stores and people. A tanker’s capacity to carry crude or product cargo, in metric tonnes, is slightly less.

Tankers are cargo ship fitted with tanks for carrying liquid in bulk. They may be characterised by their generation or age, their condition, the nature of the cargo they are designed to carry, the trade(s) and/or routes in which they normally operate, the maximum tonnage they can carry, their dimensions or operating limits (e.g., beam, or width, and draft, or how much of the boat is below the water-line), the details of their design (e.g., single or double-hull), and the flag under which they operate (particularly whether or not it is considered a ‘flag of convenience’). Tankers or barges carrying crude oil or heavy persistent petroleum products (heavy fuel oil, for example, which coats the sides of the cargo tanks) are called ‘dirty’ vessels. Gasoline, distillates and other light petroleum products must be carried in smaller, more expensive ‘clean’ product tankers or barges. Aframax ships can carry from 75,000 to 119,999 deadweight tonnes, Suezmax tankers from 120,000 to 199,999 deadweight tonnes, and VLCCs 200,000 deadweight tonnes or more.

Worldscale is the standard system for assessing freight rates. Once a year, a set of base charter rates is published for a theoretical standard vessel plying its trade between each of the world’s most common origins and destinations. Spot freight rates are commonly expressed as percentages of those theoretical rates. Thus, if VLCC rates are said to be WS67, actual rates are two-thirds of the base or flat rates published at the beginning of the year.

STOCKS

WHAT IS COUNTED AND HOW

Stocks and stock changes shown in the Oil Market Report (OMR) measure an important part of global stocks – but not all. The OMR reports only on OECD industry and OECD strategic government stock holdings. Non-OECD stocks and stocks held in smaller OECD facilities without reporting requirements are not captured by the data collection systems. The major changes in non-OECD stock levels that are thought to have occurred over the last few years are therefore not reflected in the reported OECD stocks and stock changes.

Among these unreported non-OECD stocks, those held by producers in independent storage facilities are particularly important. Information on those stocks is considered by producing countries to be proprietary information. Nonetheless, attempts are underway to find a mutually satisfactory method of tracking at least aggregate levels of producer inventories held in non-OECD countries, such as those in the Caribbean or more recently in Asia.

OECD industry stocks by refineries, port facilities and large bulk terminal operators are defined as “primary” stock holdings. Stocks in “secondary” storage facilities held by ‘middlemen’ (jobbers and dealers) and “tertiary” stocks held by consumers are not counted. Movements into and among these secondary and tertiary stock levels are subsumed in the demand estimates.

Since OECD secondary and tertiary industry stocks and non-OECD stocks are not specifically accounted for in our World Oil Supply and Demand Balances (Table 1 of the Report), developments related to changes in these stock holdings are reflected in the “Miscellaneous-to-Balance” category. The latter includes changes in non-reported stocks and statistical difference.

The Report uses two sources of data to derive OECD industry stock positions. For its “preliminary” estimates of the preceding month stocks (M-1), the Report bases its calculations on publicly available data. The estimated stock position for each OECD country is obtained by adding any stock change reported by public sources in that country during M-1 to the official stock data for M-2 submitted to the IEA by that country in its Monthly Oil Statistics (MOS) questionnaire (see below). It is important to recognise that these preliminary estimates are derived. They are not stock levels reported by countries to the IEA but rather the likely inventory position that would result from the application of publicly reported stock changes to the officially reported stock positions for the month before.

For Europe, for example, Euroilstock data are used. In the case of the US, weekly and monthly data published by the Energy Information Administration are employed. For those countries for which there are no published stock data available for M-1, stock levels are kept unchanged from the previous month. This applies in Asia-Pacific to Australia and New Zealand, and in Europe to the Czech Republic, Hungary, Poland, Switzerland and Turkey.

The data sources from which the preliminary estimates are calculated are as follows:

It should be emphasised that the Report applies a statistical methodology to standardise preliminary stock estimates across the various OECD regions. For instance, definitions of what constitute “distillates” differ across reporting countries. As such, the Report modifies the publicly available data to conform to the IEA’s MOS definitions. This means that IEA adjustments will differ slightly from those reported by the public sources.

In months prior to preliminary (M-1) estimates, the Report publishes stock data drawn from the MOS questionnaire submitted by OECD Member governments. MOS collects detailed stock information on a national territory basis, including primary industry stocks held on land and in ports. MOS stock data are subject to revision on a monthly basis as more complete information is available from Member governments. The revisions to MOS stock data are systematically smaller than revisions made to preliminary data.

STOCKS GLOSSARY

Crude Oil in Terms of Days of Forward Refinery Throughputs. Days of forward coverage are calculated on the basis of the average refinery throughput of crude oil for the next month.

Days of IEA Net Imports. Stocks are calculated according to IEA methodology in terms of net imports of crude oil and products of the previous year.

Days of Forward Demand. Days of forward demand are calculated on the basis of the average daily demand for the next three months. Stock comparisons with previous years are made in volume terms and days of forward demand. Comparisons in absolute terms effectively understate the differences since they ignore any growth in demand which increases operating minima while comparisons in days of forward demand tend to overstate differences since operating minima increase by less in percentage terms than the growth in demand. They also depend on the accuracy of the demand forecast.

Floating Storage/Oil in Transit. Changes in floating storage/oil in transit in Table 1 represent estimates of the change in global crude oil stocks in transit at sea between producing and consuming countries or held in moored tankers used for temporary storage.

Industry Stocks. Primary stocks owned by oil companies, traders and other organisations except those holding government-controlled stocks. They include stocks held by industry to meet IEA, EU and national emergency reserve commitments.

Primary Stocks. Unless stated otherwise, all stocks included in the Report are primary. They include stocks held in refineries, natural gas processing plants, oil terminals and entrepots (where these are known), pipelines and stocks held on board incoming ocean vessels in port or at mooring. They exclude power station stocks (since demand is reported as deliveries from primary stocks). They are on a national territory basis, i.e. they include all primary stocks within the national boundaries regardless of ownership (stocks held abroad by government or companies are thus excluded). Note that stocks prior to 1 January 1991 are reported on a different basis (see Oil Market Report dated 7 July 1994 for description of the change).

Secondary Stocks are stocks held by power stations, minor bulk plants and wholesalers.

Stock Change is the difference between stock levels at the beginning and end of the period. A negative number indicates a stockdraw while a positive number represents a stockbuild.

Tertiary Stocks are stocks held by end-consumers including industry, commerce and private stocks.

PRICES

GLOSSARY

API. American Petroleum Institute.

ARA.. Amsterdam-Rotterdam-Antwerp.

Arbitrage. The purchase of physicals or futures in one market against the sale of physicals or futures in another market in order to exploit price differentials between these markets. In moving physical oil between markets, the price differential has to be large enough to cover freight, insurance, volumetric loss and other handling charges. When this condition is met, the ‘arbitrage window’ is said to be open.

Basis. The differential between a spot or ‘cash’ price and the nearest equivalent futures price. Basis is normally quoted as cash minus futures price, a positive number indicates a futures discount; a negative number indicates a futures premium. Basis may also refer to price differentials of a commodity in different locations or between different products (e.g. kerosene in the physical market and gasoil in the futures market).

Basis Risk. The potential that the basis underlying a transaction (hedge or arbitrage) changes over time. A change in the basis can affect the usefulness (profitability) of a such a transaction.

Backwardation. The market is said to be in backwardation when the price of near delivery months of futures or physicals contracts trades at a premium to more distant months (see Contango).

Bearish and Bullish. Factors which are likely to depress prices are defined as bearish while factors which are likely to raise prices are defined as bullish.

Cash Price. The current bid or offering price for a crude or product, for immediate delivery (spot price).

Cash Market. The market in which physical oil is traded (e.g. the Rotterdam spot market).

Cash Settlement. A cash payment to close at a futures contract (e.g. Brent on the IPE).

CFD - Contract for Differences. A CFD is a financial transaction in which two parties trade a floating for a fixed price differential between a prompt and a forward price. CFDs provide an opportunity to hedge the basis risk.

CFTC. The Commodity Futures Trading Commission, the regulatory body of US Futures markets.

CIF. ‘Cost, Insurance and Freight’ refers to a transaction in which the buyer purchases a commodity Free On Board (FOB) at a point of origin and agrees to pay the seller the cost of moving the commodity to its final destination including all related insurance and transportation charges.

Closing Price. Price at the close of trading.

Commercial. An entity involved in the production, processing, or merchandising of oil.

Contango. The market is said to be in contango when the price of near delivery months of futures or physicals contracts trades at a discount to more distant months (see Backwardation).

Covering. Purchase of futures to offset a previously established sale (short position).

Crack Spread. The difference between a product price (or an average basket of products) and a crude price in a given physical (or futures) market.