Non-OPEC oil output growth slows to a trickle

By Jane Merriman

LONDON (Reuters) - Oil production from countries outside OPEC is stagnating despite a more than sixfold rise in oil prices since 2002, driven partly by the failure of non-OPEC producers to deliver a lot more oil.

A Reuters survey of 12 analysts put the consensus forecast for non-OPEC oil supply in 2008 at 49.56 million barrels per day (bpd), down from 50.36 million bpd estimated in the previous

poll in March.

The poll points to supply growth from producers outside the Organization of the Petroleum Exporting Countries of 0.67 percent in 2008 versus 2007, which compares with growth of about 1.4 percent estimated in the previous poll.

Annual non-OPEC supply growth in 2008 is averaging 680,000 bpd, according to the International Energy Agency's latest Oil Market Report.

But biofuels contributed 425,000 bpd of this total, making non-OPEC oil growth just 255,000 bpd.

"Non-OPEC production will continue to struggle to grow in the next few years, and the growth in non-conventional fuels, which account for almost 90 percent of our estimated non-OPEC supply this year, is not going to help," said Giovanni Serio, energy analyst at Goldman Sachs.

Poor non-OPEC growth has played a part in driving oil to record peaks above $130 a barrel.

More oil is needed to satisfy fast-growing demand from emerging markets such as the Middle East, China and India.

With the exceptions of Saudi Arabia, the United Arab Emirates and Kuwait, OPEC is pumping almost as much as it can.

Outside the producer group, Russia, the world's second biggest exporter, has failed to deliver expected output growth and supply from other producers outside OPEC such as Mexico have proved disappointing.

New projects will eventually come on stream, such as in Brazil and the Caspian, but these will take time, analysts say.

SOARING COSTS

The cost of exploration and development of new oil projects has soared and other obstacles such as tax and politics, as well as lack of investment by big international oil companies have contributed to non-OPEC's sluggish performance.

Mature production areas such as the North Sea are seeing more rapid declines.