POLL-Non-OPEC oil squeezed by price fall and credit crunch

By Jane Merriman

LONDON, Nov 27 (Reuters) - Non-OPEC oil supply growth, anaemic even with oil at more than $100 a barrel, looks set to shrivel if prices stay at $50 or below for a prolonged period.

Producers outside the Organization of the Petroleum Exporting Countries face a double blow - falling prices, but also scarce and expensive finance because of the credit crunch.

A Reuters survey of 11 analysts put the consensus forecast for non-OPEC oil supply in 2009 at 49.8 million barrels per day, up about 400,000 bpd from the expected supply in 2008.

The 2009 consensus is down from a Reuters' poll in July, which forecast 2009 non-OPEC output at 50.3 million bpd, 470,000 up on 2008.

"Lower oil prices and more difficult access to credit will tend to lead companies to cut back on growth," said Costanza Jacazio, analyst at Barclays Capital.

"This does not help support growth in supply from non-OPEC."

Oil has fallen almost $100 a barrel from a record peak of more than $147 in July. It touched its lowest in three and a half years last Friday at $48.25 a barrel.

If prices stay low or fall further this could have a major impact on non-OPEC production, much of which is high-cost.

"The downward risk to supply comes in stages," said Adam Sieminski, oil analyst at Deutsche Bank.

He said there was already curtailment in investment levels as oil pierced the $65 a barrel mark used by many companies for long-term planning purposes.

"If oil prices should sink below $40, some production activity will be halted due to inability of operators to cover their cash costs," he said.

"The longer oil stays below $40-$50 a barrel, the more damage will be done as the impact of negative cash flow ripples through the industry."

PROJECTS

The International Energy Agency highlighted in its World Energy Outlook 2008, published earlier this month, that outside OPEC, production has already peaked in most countries and would peak in most others before 2030.

Biofuels are likely to make up a sizeable part of any increase in non-OPEC supply, because of sluggish growth in conventional oil.

There are new projects coming onstream next year in non-OPEC countries.

BP Plc's Thunder Horse field in the U.S. Gulf of Mexico, for example, is expected to reach full capacity by the end of 2009. Brazil is another area with a lot of potential.

"But with all these cases, we need to be cautious," said Lawrence Eagles, head of commodities research at JP Morgan.

"New projects tend to be subject to delay and setbacks."

Mature areas such as Mexico and the North Sea have been declining more rapidly than originally expected.

"We continue to expect sharp declines in Mexico, UK and Norway," said Jacazio. "Marginal operating costs in the North Sea are lower than ($50), but certainly at prices below $50 a lot of spending starts to be cut off, which tends to impact field productivity."

Big problems exist in Russia, the world's second biggest exporter, where output is projected to fall year-on-year in 2008 for the first time since 1998.

Merrill Lynch, for example, forecasts Russian production at 10.08 million barrels per day in 2007, 10 million bpd in 2008 and 9.9 million in 2009.

High export taxes and transport costs, plus falling oil prices have made it tough for Russian producers to make money.

Prime Minister Vladimir Putin has said export duties will be adjusted monthly to make sure they are in tune with current oil prices.

Delays making these adjustments led Russian exporters to cut November export volumes.

"Between the low oil price and the credit crunch and companies cutting back, it does not bode well for Russian production," said Mike Wittner, energy analyst at Societe Generale. "Russia is a really mature area and needs investment to keep it steady."

The following table is a list of non-OPEC and Former Soviet Union (FSU) oil forecasts in millions of barrels per day.

Non-OPEC supply FSU supply

2009 2008 2009 2008 Barclays 48.7 49.1 12.65 12.63 CGES 50.16 49.09 13.02 12.78 Credit Suisse 50.2 50.23 12.83 12.87 Deutsche Bank 51.48 51.02 13.24 12.98 EIA 49.2 48.71 12.86 12.60 Goldman Sachs 49.7 49.50 13.00 12.80 IEA 50.27 49.68 13.03 12.78 JP Morgan 48.00 47.40 --------------- Merrill Lynch 50.00 49.70 12.90 12.80 OPEC 50.40 49.70 12.92 12.70 Societe Generale 50.00 49.60 12.90 12.70

Average 49.83 49.43 12.94 12.76

- The estimates represent recently published forecasts

- NOTE: Differences and totals may show a small variation due to rounding. (Editing by James Jukwey)