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OPEC Guide

OPEC achieves 98.5% of agreed cuts in January & February: Platts survey

March 6, 2017 - By Herman Wang, Eklavya Gupte in London

* Compliance led by Saudi Arabia, Angola
* Saudi output lowest since February 2015 at 9.85 million b/d
* Iraq most non-compliant, still 91,000 b/d above quota
* Exempt Libya output steady in February, Nigeria up 50,000 b/d

OPEC in February moved closer to full compliance with the landmark
production cut agreement signed late last year, as output in the month fell
from January levels to average 32.03 million b/d
, according to an S&P Global
Platts survey released Monday.

In all, taking an average of January and February production, the 10
members obligated to reduce output under the deal have achieved 98.5% of their
total combined cuts, according to the survey, up from 91% in January.

Saudi Arabia continued to show the strongest output discipline, with its
February production averaging 9.85 million b/d, the survey found, below its
allocation under the deal of 10.06 million b/d and its lowest output since
February 2015, according to the survey archives.

Its January and February combined average output of 9.92 million b/d was
140,000 b/d below its deal quota.

OPEC's cut compliance in January-February

The kingdom's overcompliance, along with Angola's, is helping compensate
for the overproduction others within OPEC, notably Iraq, Venezuela, and the
UAE, which have not cut down to their allocations under the deal.

Analysis continues below...

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Iraq remains 91,000 b/d above its quota despite lowering its February
output, Venezuela is 43,000 b/d above, and the UAE is 42,000 b/d above.

Saudi Arabia and Angola's output reductions also have mostly offset for
increases by exempt Libya and Nigeria since the deal began on January 1.

Libya's January and February average is 140,000 b/d above the agreement's
reference October levels, while Nigeria is producing 44,000 b/d above the
reference level.

Iran, which is allowed to boost production to 3.80 million b/d under the
deal as it recovers from western sanctions lifted in January 2016, had
February production of 3.75 million b/d, a 30,000 b/d increase from January.

Its January and February average is 3.73 million b/d.

Analysts have said Iranian production is unlikely to increase
significantly without further investment, much of which has been stymied by
remaining US sanctions, the threat of reimposing the previous sanctions on
Iran's oil sector by the US, and Iran's delays in releasing the full terms of
its revamped petroleum contract.

Still above ceiling

Under the agreement, OPEC pledged to cut 1.2 million b/d for six months
and freeze production at around 32.5 million b/d, including Indonesia, which
suspended its membership in November and is not included in the Platts survey
estimates for 2017.

OPEC as a whole averaged 32.11 million b/d in January and February,
according to the survey. Adding in Indonesia's typical 730,000 b/d of
production would take the producer group about 340,000 b/d above its ceiling.

Since the deal covers an average of January to June output,
month-to-month fluctuations are to be expected.

The Platts estimates were obtained by surveying OPEC and oil industry
officials, traders and analysts, as well as reviewing proprietary shipping

In concert with OPEC, 11 non-OPEC countries led by Russia have also
agreed to cut output by 558,000 b/d in the first half of 2017, with many of
those countries phasing in their reductions or relying on natural declines.

A five-country monitoring committee formed to enforce the deal is
scheduled to hold a ministerial meeting March 25-26 in Kuwait City.

The committee is chaired by Kuwaiti oil minister Essam al-Marzouq and
also includes ministers from OPEC members Algeria and Venezuela, along with
non-OPEC Russia and Oman.

Libya violence restarts

Angola saw its production rise slightly to 1.66 million b/d, as exports
rose and the country inaugurated a new grade Olombendo, with its first cargo
scheduled for lifting in mid-March.

But its overall average output for 2017 puts the country 29,000 b/d below
its allocation, second most among the 10 countries required to cut production.

Among the countries still above their allocations, Iraq saw its
production fall in February 80,000 b/d from January, as inclement weather
delayed some loadings from its southern port and an attack at the Bai Hassan
field slightly reduced output by the Kurdistan Regional Government.

Venezuela, beset by economic crisis, held its production steady at 2.01
million b/d. Survey participants said they expected Venezuela's production to
fall throughout the year, as the country has failed to keep pace with
necessary investments in declining fields.

The UAE saw its February output fall 30,000 b/d from January to 2.90
million b/d. Survey participants say they expect the country to become
compliance once its key export grade Murban undergoes maintenance starting
this month.

Meanwhile, exempt Libya saw production hold steady at 670,000 b/d, as
gains in the beginning of February were undone by power outages and
maintenance in fields.

Renewed violence in the country, as militia forces overran several key
eastern oil export terminals over the weekend, will impact March production,
with output as of Monday down to 600,000 b/d, according to state-owned
National Oil Corp.

Also-exempt Nigeria showed an increase of 50,000 b/d to 1.70 million b/d
in February, as production comes back online after recent attacks on
infrastructure in the Niger Delta, offsetting maintenance of Bonga grade crude
in the latter half of the month.

S&P Global Platts OPEC survey methodology

Since 1988, S&P Global Platts has published a monthly survey tracking OPEC crude oil production by country. The estimates are obtained through a review of proprietary shipping data, news reportage and surveys of knowledgeable sources.

Data reviewed include loading programs, export statistics and tanker tracking via Platts cFlow. Sources interviewed for the survey include national oil company or ministry officials; analysts at international agencies, think tanks, consultancies and banks; and traders. The sources remain confidential and are interviewed by a team of Platts oil news reporters -- typically led by Herman Wang, Platts OPEC correspondent, and Eklavya Gupte, Platts senior editor for Europe and Africa news.

The survey is typically published between the 5th and 10th of each month, and it measures oil output -- excluding condensates and NGLs.

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