• 4 minutes China 2019 - Orwell was 35 years out
  • 7 minutes Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 11 minutes Trump will capitulate on the trade war
  • 14 minutes Glory to Hong Kong
  • 9 mins China's Blueprint For Global Power
  • 22 mins ABC of Brexit, economy wise, where to find sites, links to articles ?
  • 3 hours Bloomberg: shale slowing. Third wave of shale coming.
  • 4 mins Yesterday Angela Merkel stopped Trump technology war on China – the moral of the story is do not eavesdrop on ladies with high ethical standards
  • 14 hours Boring! See Ya Clowns, And Have Fun In Germany
  • 4 hours Brexit agreement
  • 2 mins Disenfranchised people are angry people - map of global electoral systems
  • 19 hours Crazy Stories From Round The World
  • 17 hours the future
  • 14 hours 5 Tweets That Change The World?
  • 1 hour Erdogan Holds All The Cards ... 3.6 Million Of Them
  • 2 hours Spain Is On The Edge...Clashes Between Catalonia And "Madrid"
  • 18 hours Climate Protesters Blocking Roads etc...
Alt Text

The Pipeline Lifeline For Texas Oil

Thanks to the addition of…

Alt Text

Greed Or Incompetence: What’s Behind The California Power Cuts?

California’s electricity shutoffs are highlighting…

Alt Text

China Makes A Move On OPEC's No.2

China has refocused its attention…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

The Surprise Winners Of The Oil Price Rally

Common sense would tell you that the biggest winners in a price rally of a commodity would be the biggest producers of the commodity that is rallying. This is certainly true for the latest oil price development, but some of the winners might surprise you, as listed by Nomura.

The asset manager and advisor said in a recent report that there were five clear-cut winners from the rally. The winners, in addition to Russia and Saudi Arabia, included Malaysia, Nigeria, and Colombia. These last three are not among the biggest producers and exporters of crude oil, but a set of factors including the state of each country’s economy, idiosyncratic factors, and what Nomura calls the scope of policy responses have combined to determine the winners.

Malaysia, for instance, pumped almost 660,000 bpd in March this year, which is not a lot compared to what Russia has been pumping in the last few years, but it did help Malaysia maintain its position as a net oil exporter. Oil exports, according to Nomura, contribute 0.3 percent of GDP, again a tiny amount. Yet as a whole, the local oil industry contributes between 20 and 30 percent of GDP. What’s more, Malaysia exports LNG, and that contributes 2.6 percent to GDP. Since LNG pries are tied to oil markets, any increase in the latter results in an increase in the former with a delay of a few months.

Colombia is a different case. The country suffered a severe blow from the 2014 oil price collapse, struggling with a budget deficit like so many other producers, and was less successful at handling it. The country has a lot of undeveloped reserves, and higher oil prices could make it possible to start developing them and reverse a consistent decline in oil production over the last two years.

This would be nothing out of the ordinary for any oil producer, but Colombia has the additional problem of falling oil reserves and no new discoveries since 1992. When prices are low, explorers tend to make very selective investments, but now that Brent is close to US$65 a barrel, Colombia has the chance to attract fresh investments in its oil reserves, whose recoverable portion was estimated at 1.673 billion barrels at the end of last year.

Related: Don’t Back U.S. Shale To Keep Oil Prices Down

What about Nigeria? Nigeria was let off the quota hook that OPEC imposed on most of its other members last year in a bid to push up prices. Now that they are up, Nigeria will likely be joining the cuts, which most industry watchers expect will be extended until the end of 2018.

Nigeria last month produced 1.738 million bpd of crude oil, which is close to its stated target for capping of 1.8 million bpd – an amount equal to the combined cut OPEC and its partners agreed to take off markets last year.

Now, a lot of what Nigeria produces in the Niger Delta is shipped abroad. The country is the second-largest oil exporter in Africa after Angola. But it is plagued by challenges, chief among them being very high production costs that the government, no matter how hard it has tried, has failed to reduce significantly. That’s why Nigeria is a clear-cut winner of the last price rally, as are all higher-cost producers that have seen production growth stumble because of low prices.

In the losers’ corner, of course, are the importers, which have been having a blast since late 2014, but now might have to take it a bit easier until the latest heat-up in the Middle East blows over.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment
  • rk on November 14 2017 said:
    A complete contradiction here " the country has a lot of undeveloped reserves " and next paragraph " Columbia has the problem of falling oil reserves and no new discoveries since 1992 "

    Why?

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play