Oil oversupply to worsen

US, WASHINGTON (ORDO NEWS) — It remains a week before the OPEC + countries begin to flood the world oil market with an estimated additional 2.5 million barrels per day amid a pandemic caused by an outbreak of coronavirus.

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This will create one of the biggest problems with oil supplies in the world. At this time, the British operator INEOS decided to postpone the scheduled maintenance of the Forties pipeline in the North Sea. According to Rystad Energy, he was supposed to give the market several hundred thousand additional barrels every day.

Rystad Energy is now raising its forecast for oil production in the North Sea by 330 thousand barrels per day to 2.96 million barrels per day in June 2020 and by 190 thousand barrels per day to 3.04 million barrels per day in July 2020.

“This will simply create another wave in the growing oil supply. The oversupply in the second quarter of 2020 is so huge that it will eventually close, as oil prices fall below short-term marginal costs and logistical problems arise,” says Milan Rudel , Analyst, Rystad Energy.

Exploration and production companies are trying to maintain oil flow amid the spread of coronavirus, while reducing other activities, including maintenance. Corporate renewal processes expand people-to-people contacts by expanding work teams. This, as a rule, leads to an increase in the number of people working on the platform, and more shifts.

“Given the situation, companies, for obvious reasons, are trying to reduce the risk of coronavirus by applying a version of social distance,” adds Rudel.

Although INEOS has not yet officially decided on a new Forties service date, apart from the announcement that it will be postponed until August 2020, the delay may well be in 2021. The baseline scenario implies a two-month delay until mid-August 2020.

Forties transports oil from British and Norwegian fields in the central North Sea to Cruden Bay in Scotland. In addition, it is expected that maintenance of the SAGE pipeline will be delayed along with maintenance of the Forties, as several Forties related fields supply gas to the SAGE system. Thus, we revise the maintenance forecast for oil flows with Grane, Alvheim, Flotta, Beryl and Gryphon.

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