A rise in oil production from the Caspian, Africa and North America will ease Opec's burden in meeting world oil demand in 2007, but an anticipated supply surge may not materialise.
Producers outside Opec may pump enough new oil next year to meet growth in world demand, unlike this year or in 2005, according to the International Energy Agency, as new fields come on stream.
"Opec is going to be challenged in 2007 by the fact that high oil prices have created an environment that encourages more supply and less demand," said Adam Sieminski, chief energy economist at Deutsche Bank.
A jump in output may ease oil prices that at $60 a barrel, triple those in early 2002, are too high for consuming countries. But setbacks, from rig shortages to hurricanes in the Gulf of Mexico, have delayed new supply in recent years.
Countries outside Opec, including second-largest exporter Russia, pump about 60 percent of the world's supply but hold only a quarter of its proven reserves.
When output lags, the pressure falls on the Organisation of the Petroleum Exporting Countries, which sets supply limits for 10 members, to meet global demand of about 85 million bpd.
Expectations of non-Opec growth in 2007 vary widely. The IEA and Opec forecast at least 1.7 million barrels per day, enough to supply Spain. Barclays Capital predicts growth of 850,000 bpd.
Even so, the IEA, an adviser to 26 industrialised countries, warns that supply can undershoot its estimate by 300,000 bpd to 400,000 bpd a year - enough to tighten the world market.
"Theoretically, we should see an improved supply picture next year," said Lawrence Eagles, head of the IEA's Oil Industry and Markets Division. "But adjusting that for supply and demand risks, the market could be more finely balanced."
Supply risks are rising as companies such as Royal Dutch Shell Plc and BP Plc tap oil in tougher places, like offshore Sakhalin Island in Russia's Far East and in the Gulf of Mexico.
Mature regions like the UK North Sea are seeing a sharp decline in output of around 10 percent a year, offsetting growth in other countries. Leading oil-price bull Barclays Capital's growth forecast reflects the bank's view that supply in Norway, Mexico, the UK and United States will decline more rapidly than others expect.
"We are less optimistic about those parts of the world," said Kevin Norrish, analyst at Barclays. "People have tended to be overly optimistic on the decline rates there."
Opec, however, expects demand for its oil to fall next year. The group's economists expect average daily demand for Opec crude to drop by 700,000 bpd from 2006 if non-Opec supply rises and world demand meet expectations.
Some Opec members have said the group may need to lower supply for a second time in two years at a meeting on December 14 in Nigeria, to prop up prices. London-based forecaster the Centre for Global Energy Studies agrees, expecting non-Opec supply to grow next year by 1.3 million bpd led by the former Soviet Union (FSU), Latin America and Africa.
While Latin America is the area of most uncertainty since deepwater projects in Brazil often fall behind schedule, Opec will need to take oil off the market, said Julian Lee of the CGES. "On paper, the projects in the FSU providing incremental supply look fairly certain," Lee said. "None of them seems particularly flakey. Africa is also looking fairly solid." "Based on our numbers, we certainly see the need for Opec to cut production."
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