As always, the New Year offers a time for taking stock and making forecasts. After a 2016 beset by overproduction and low prices, this year promises stability and a regained balance of supply and demand.
Over the last few months, sinking prices have created a host of challenges for OPEC members, driving them to set a global production limit of 32.5 million bpd, a 1.2 million bpd cut. Non-OPEC members, led by Russia, also joined the agreement. The latter state has agreed to cut its output by 300,000 bpd. Analysts and experts in the sector are therefore showing confidence for the coming year, in spite of political uncertainties like elections in three major European states (Germany, France and the Netherlands), the inauguration of Donald Trump as US president and the possible start of Brexit talks.
Meanwhile, China’s first "carbon-to-liquids" shipments have docked at Yinchuan, in the autonomous region of Ningxia Hui. The innovative project promises an annual capacity of over 4 million t of oil derived from China’s abundant coal supply. Although that is a drop in the bucket of China’s demand of 610 million t per year by 2020, coal-to-liquid is considered a milestone for the country’s energy security efforts and in the economic restructuring of Ningxia. The project employs a liquefaction process that involves gasification of the coal using a mixture of carbon monoxide and hydrogen. The resulting syngas is then converted into liquid hydrocarbons. In such a way, China can convert its resources to meet its growing energy needs from more sustainable sources.