Smoke And Mirrors - A Look At CERA's Pathetic Predictive Powers - ASPO USA

[hatrack]

EDIT

The NPD (Norwegian Petroleum Directorate) figures are from January 2007. The IEA has not yet fully taken this into account, which may indicate future IEA revisions. As to comparing with CERA it is more realistic for Norway than on a Global basis, as CERA will hardly claim any spare capacity in Norway. As we can see, even with CERA’s August downward revisions, they are far from reality. Again they have this mystical upturn in 2010 compared with their 2005 report. From the table we can see that in two years, from 2004 to 2006, instead of having a growth in production of 230,000 bpd, Norway has seen a drop in production of 410,000 bpd. A total error of 640,000 b/d in less than two years ! For 2007 NPD expects 2.6 million b/d in liquids production and in 2010: 2.4 million b/d. By then the gap to CERA has grown to 750,000 b/d.

Those that pay CERA good money to get access to their data should ask themselves: CERA claims to have all this detailed field-by-field data which makes their forecasts so trustworthy. What is the value of this field-by-field data when they can be this much wrong in such a short time, in the country in the world with the best field-by-field data available in the public domain? When they are this wrong in Norway, is there any reason to believe they are less off the mark in Angola or Kazakhstan? Should I really spend good money on their reports, and why should I rely on them?

EDIT

If you look at the 5-year IEA forecast published in July last year on page 7 you can see that in 2010 we are set to have a spare capacity of 6.8 million b/d. That sounds comforting and should guarantee lower oil prices. However looking at 2006 in the same table we see that the spare capacity for 2006 was 4.2 million b/d. This is more than reported in the monthly reports. Most of the extra is stock change. It is not clear if it includes all stock change or only what exceeds what is necessary to keep stocks at level days of forward coverage. Regardless it looks too high and one may wonder if it also includes some of IEA’s infamous “missing barrels”. What they say in reality is that spare capacity over the next 4 years will grow with 2.6 million b/d, provided everything goes as planned. And we already know that the rest of 2006 definitely did not go as IEA expected in July.

Interestingly enough the figure for non-Opec production 2010 was reduced from 56 million b/d in the July 5-year outlook to 53.4 million b/d in the 2006 World Energy outlook. Demand was reduced only with 400,000 b/d in the same period. It seems that the 2.6 million b/d build in spare capacity from here to 2010 stated in their July report is already reduced to 400,000 b/d. And this is assuming all goes well as per IEA’s expectations. With IEA’s track record for overestimating supply growth it is surprising that this has not created a reasonable level of panic among energy decision makers.

EDIT

http://www.energybulletin.net/26474.html