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© OECD/IEA - 2007
Investing in & Financing the Hydrocarbon Sector to
Enhance Global Energy Security:
Findings from the World Energy Outlook 2007
UNECE Energy Week, 28th November 2007
Trevor MorganSenior Economist
International Energy Agency
© OECD/IEA - 2007
Outline
� Global energy outlook in a business-as-usual world
� Implications for investment & energy security
� Impact of policy action to achieve a more secure & cleaner global energy system
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WEO-2007: Scope & Approach
� Focus on China & India
� Scenario approach� Reference Scenario
� High Growth Scenario (China/India)
� Alternative Policy Scenario
© OECD/IEA - 2007
Global Energy Outlook in a Business-as-Usual World
© OECD/IEA - 2007
Reference Scenario:
World Primary Energy Demand
Global demand grows by more than half over the next quarter of acentury, with oil remaining the single most importa nt fuel
0
2
4
6
8
10
12
14
16
18
1980 1990 2000 2010 2020 2030
billion tonnes of oil equivalent
Other renewablesBiomassHydroNuclearGasOilCoal
0
2
4
6
8
10
12
14
16
18
1980 1990 2000 2010 2020 2030
billion tonnes of oil equivalent
Other renewablesBiomassHydroNuclearGasOilCoal
© OECD/IEA - 2007
Reference Scenario:
Increase in World Primary Energy Demand, 2005-2030
China & India will contribute about 45% of the incr ease in global energy demand to 2030 on current trends
0%
20%
40%
60%
80%
100%
Coal Oil Gas Nuclear Hydro Rest ofrenewables
Total
Rest of the world
India
China
© OECD/IEA - 2007
Reference Scenario:
World Primary Oil Demand
Oil demand increases most rapidly in China, India & other developing countries
0
20
40
60
80
100
120
1980 1990 2000 2010 2020 2030
mb/d
Other developing countries
Middle East
India
China
Transition Economies
OECD
© OECD/IEA - 2007
Reference Scenario:
World Oil Production
0
20
40
60
80
100
120
2005 2010 2015 2020 2025 2030
mb/d
40%
44%
48%
52%
56%
market share
Total OPEC Non-OPEC non-conventional oil
Non-OPEC conventional oil
Non-OPEC conventional oil plateaus by around 2015, with OPEC providing the bulk of additional oil supply
© OECD/IEA - 2007
China sees the biggest jump in oil imports in absol ute terms, but North America remains the largest importer
Reference Scenario:
Net Oil Trade
-20 -10 0 10 20 30 40
OECD North America
China
OECD Europe
OECD Pacific
India
Rest of developing Asia
Latin America
Africa
Transition economies
Middle East
mb/d
2006
2030
© OECD/IEA - 2007
Reference Scenario:
Increase in Primary Natural Gas Demand, 2005-2030
Volume increases in gas demand are biggest in the r egions with the largest remaining reserves
250
MiddleEast
Trans.economies
OECDN.
America
OECDEurope
China LatinAmerica
Rest of Asia
AfricaPacific
India
20%
13%12% 11%
10% 10% 9%
7%
5%4%
0
50
100
150
200
300
350
400
OECD
billion cubic metres
% Share of increase in world primary natural gas demand, 2005-2030
© OECD/IEA - 2007
17%3%
Reference Scenario:
Net Natural Gas Imports
All gas-importing regions become more dependent on imports, as demand outstrips indigenous production
0
100
200
300
400
500
600
OECD North America
OECD Europe
OECD Pacific
China India
billion cubic metres
200520152030
43%
54%
67%
3%
8%
16%
68%57%
45%
21%
54%
0%
55%
17%22%
% share of imports in primary demand
0
100
200
300
400
500
600
OECD North America
OECD Europe
OECD Pacific
China India
billion cubic metres
200520152030
43%
54%
67%
8%
16%
68%57%
45%
21%
54%
0%
55%22%
% share of imports in primary demand
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Implications for Investment & Energy Security
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Implications for Investment & Energy Security
� The threat to the world’s oil & gas security is real & growing
� The share of transport in total oil use rises in all regions, reducing demand flexibility
� Doubts about adequacy of investment
� OECD & developing Asian oil & gas imports grow further
� Imports from a small number of producers – notably in OPEC Middle East – increase sharply
�Growing reliance on strategic transport channels exacerbates risk of a severe supply disruption
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Most oil & gas investment goes to the upstream, to compensate for decline at existing fields & to meet demand gro wth
Reference Scenario:
Cumulative Investment in Energy-Supply Infrastructure, 2006-2030
Gas
19%Coal
3%
Electricity
53%Oil
24%
Biofuels
1%
Other
Refining
73%
22%5%
Exploration and
development
LNG chain
Transmission
and distribution
55%
37%
8%
$5.4 trillion
$11.6 trillion
$4.2 trillion
$0.6 trillion
Exploration and
development
Total investment = $21.9 trillion (in $2006)
© OECD/IEA - 2007
Global Oil Supply Prospects to 2015
� Uncertain whether all planned capacity will be built & all investment needed will occur
� Current capacity plans are insufficient
�OPEC plans to add 11.4 mb/d & non-OPEC producers 13.6 mb/d by 2012
�Demand in Reference Scenario rises by 9.5 mb/d between by 2012
�Capacity additions insufficient to offset decline in output at existing fields & meet demand growth
� A supply crunch in the next few years cannot be ruled out
© OECD/IEA - 2007
OPEC Share of World Oil Supply
The increasing concentration of production in OPEC and other major exporters will increase their market dominanc e
2030
30%
35%
40%
45%
50%
55%
2006 2015
Reference Scenario
High Growth Scenario
Reference Scenario
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The “Dire Straits”: Oil Export Flows from the Middle East
Rising reliance on Middle East oil will increase fl ows through vulnerable chokepoints – heightening the risk of a s upply disruption
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Policies to Achieve a More Secure & Cleaner Global Energy System
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Mapping an Alternative Energy Future
� The Alternative Policy Scenario analyses impact of government policies under consideration
� >1 400+ different policies worldwide to
� Improve efficiency in energy production & use
� Increase reliance on non-fossil fuels
�Bolster output of oil & gas in net importing countries
� Macroeconomic, population & oil/gas price assumptions are as per the Reference Scenario
© OECD/IEA - 2007
Alternative Policy Scenario:
Global Primary Fossil-Fuel Demand
Oil demand is cut by 14 mb/d by 2030 compared with the Reference Scenario, but still increases
0
500
1 000
1 500
2 000
2 500
Coal Oil Gas
Mtoe 1 849 Mtce
1 154 Mtce
14.0 mb/d
17.6 mb/d
608 bcm
1 316 bcm
0
500
1 000
1 500
2 000
2 500
Coal Oil Gas
Mtoe
Savings compared with the Reference ScenarioAlternative Policy Scenario
1 849 Mtce
1 154 Mtce
14.0 mb/d
17.6 mb/d
608 bcm
1 316 bcm
© OECD/IEA - 2007
Alternative Policy Scenario:
Increase in Net Oil Imports
In contrast to the Reference Scenario, oil imports in all OECD regions peak & then begin to decline before 2030
-2
0
2
4
6
8
10
12
14
16
18
OECD
North America
OECD
Europe
OECD
Pacific
Developing
Asia
mb/d
Reference ScenarioAlternative Policy Scenario
© OECD/IEA - 2007
Alternative Policy Scenario:
Global Energy-Related CO2 Emissions
Global emissions grow less than half as fast as in the ReferenceScenario, stabilising in the 2020s
10
15
20
25
30
35
40
45
50
1980 1990 2000 2010 2020 2030
billion tonnes (Gt)
Reference Scenario 42 Gt
Alternative Policy Scenario
34 Gt
19%
27 Gt
© OECD/IEA - 2007
Implications for Global Climate
� Reference & High Growth Scenarios trends are consistent with dramatic climate effects�Atmospheric concentration of greenhouse gases would
rise to 850 - 1 130 ppm of CO2-equivalent
� Implies a rise in global average temperature of more than 4.9 - 6.1ºC above pre-industrial levels
� Increase in concentration & temperature is much less marked in the Alternative Policy Scenario�Concentration rises to 550 ppm & temperature by c.3ºC
� Our 450 Stabilisation Case is very ambitious�Would require early retirement of energy-related capital
on a large scale & at high cost
�Would hinge on much stronger policy action than
currently envisaged
© OECD/IEA - 2007
Summary & Conclusions
� Absent new policies, oil & gas demand – driven by transport & power sector – will grow further
� Middle East OPEC will meet most incremental needs, heightening worries about energy security
� Oil market prospects hinge on investment & decline rates, which remain uncertain
� Policies currently being considered would go significant way to cutting imports & emissions
� Many policy actions are triple-win, bringing joint energy-security, climate & economic benefits
© OECD/IEA - 2007
Thank you!
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