WORLD ENERGY OUTLOOK 2005
Center for Strategic & International Studies Washington, 15 November 2005
WORLD ENERGY OUTLOOK 2005
Middle East & North Africa Insights Chief Economist Dr. Fatih Birol INTERNATIONAL ENERGY AGENCY INTERNATIONAL ENERGY AGENCY
Global Energy Trends: Reference Scenario
INTERNATIONAL ENERGY AGENCY
International Energy Price Assumptions The assumed oil-price path in the Reference Scenario has been revised upwards from WEO-2004, in response to the results of detailed analysis of investment prospects: Average IEA crude oil import price, which averages $5 less than WTI, is assumed to ease from a recent peak of over $60 to $40 in 2010 rebounding to $65 in 2030 in nominal terms
In next few years, crude oil production capacity additions, new refinery investments & slower demand growth is expected to drive down prices But limited spare refining capacity, the rising cost of nonMENA crude projects and producer price targets/quotas could temper that decline Higher oil prices result in lower oil-demand, that reaches 115 mb/d in 2030 – 6 mb/d less than in WEO-2004 INTERNATIONAL ENERGY AGENCY
World Primary Energy Demand 18 000 16 000 14 000 Oil
Mtoe
12 000 10 000
Gas
8 000 6 000
Coal
4 000 2 000 0 1970 1971
INTERNATIONAL ENERGY AGENCY
Other renewables
1980
1990
2000
2010
2020
Nuclear Hydro 2030
Oil and gas together account for more than 60% of the growth in energy demand between now and 2030 in the Reference Scenario
Energy-Related CO2 Emissions by Region
2030
2003
India 4%
Other 11%
India 6%
M ENA 6%
Other 16% MENA 8%
China 16%
China 19% T ransition economies
11%
OECD 52%
Transition e conomie s
OECD 42%
9%
24 Gt
37 Gt
Global emissions grow by just over half between now and 2030, with the bulk of the increase coming from developing countries INTERNATIONAL ENERGY AGENCY
OECD Oil Demand Growth by Sector, 1999-2004 2.0 1.5
mb/d
1.0 0.5 0.0 -0.5
Power generation
Industry
Transport
Other
-1.0
INTERNATIONAL ENERGY AGENCY
In the OECD, the transport sector accounted for almost all the oil demand growth
World Light Oil Product Demand & Crude Oil Quality 32.5
50.0
32.0
45.0
31.5
40.0
31.0
35.0
30.5
API
mb/d
55.0
30.0 30.0 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 World Light Oil Product Demand
INTERNATIONAL ENERGY AGENCY
Average Crude Oil Quality
Oil quality will fall while light product demand will rise a key challenge for the refining industry
World Oil Production Shifts Away from OECD
10.2 mb/d
2.2 mb/d
20.2 mb/d 30.9 mb/d
13.5 mb/d OECD MENA Other NCO
41.2 mb/d 50.5 mb/d
29.0 mb/d
2004
2030
Global oil production climbs from 82 mb/d in 2004 to 115 mb/d in 2030; OECD share falls from 25% to 12% INTERNATIONAL ENERGY AGENCY
MENA Share in World Oil and Gas Reserves & Production, 2004
Proven oil reserves
Oil production
Proven gas reserves
Gas production
0%
INTERNATIONAL ENERGY AGENCY
20%
40%
60%
80%
MENA share of global oil & gas reserves is much higher than its share of current production, suggesting strong potential for growth
MENA Energy Trends
INTERNATIONAL ENERGY AGENCY
MENA Crude Oil & NGL Production by Country
50
mb/d
40
30
20
10
0 1970 Iran
INTERNATIONAL ENERGY AGENCY
Iraq
1980 Kuwait
1990
2000
Other Middle East
2010 Saudi Arabia
2020 UAE
2030 North Africa
MENA’s share of world oil production rises from 35% in 2004 to 44% in 2030 in the RS, with Saudi production rising to over 18 mb/d
MENA Net Oil Exports
INTERNATIONAL ENERGY AGENCY
MENA plays an increasingly important role in international trade, its net exports surging from 22 mb/d in 2004 to 39 mb/d in 2030
MENA Natural Gas Exports
Billion cubic metres
INTERNATIONAL ENERGY AGENCY
MENA becomes the world’s leading gas exporter, with most of the increase in exports meeting surging European & US LNG demand
MENA Oil Exports through the “Dire Straits”
INTERNATIONAL ENERGY AGENCY
Much of the additional oil and LNG exports from MENA in the future will be shipped through just three maritime routes
Saudi Arabia’s Oil Production by Source in the Reference Scenario 20
16
mb/d
12
8
4
0 1970
1980
1990
2000
2010
2020
Currently producing fields
Fields awaiting development
Reserve additions and new discoveries
Total production
2030
Based on its reserves and global demand trends, Saudi oil production is projected to reach 18 mb/d in 2030 INTERNATIONAL ENERGY AGENCY
Iran’s Oil Balance in the Reference Scenario 8
mb/d
6
4
2
0 1970
1980
1990
Net exports
2000
2010
2020
2030
Domestic demand
Iran oil production reaches 6.8 mb/d in 2030, but exports increase less rapidly due to strong growth in domestic demand INTERNATIONAL ENERGY AGENCY
Oil Production Outlook in Iraq in the Reference Scenario 8
mb/d
6
4
2
0 1970
1980
1990
2000
2010
2020
Currently producing fields
Fields awaiting development
Reserve additions and new discoveries
Total production
2030
Oil production in Iraq is expected to reach around 3 mb/d in 2010 and 8 mb/d in 2030, provided that stability and security are restored INTERNATIONAL ENERGY AGENCY
Algeria’s Natural Gas Balance in the Reference Scenario 250
200
bcm
150
100
50
0 1971
1990
2003
Domestic demand
2010
2020
2030
Net exports
Gas exports, mainly to Europe, are set to reach 144 bcm in 2030, more than double the current level – both via LNG and via pipelines INTERNATIONAL ENERGY AGENCY
MENA Oil & Gas Export Revenues
2004
Other MENA 7%
2030
Saudi Arabia 35%
Algeria 6%
Qatar 5%
Iraq 6%
Algeria 10% Libya 6% Kuwait 9%
UAE 11% Iran 11%
$313 billion (2004)
INTERNATIONAL ENERGY AGENCY
Saudi Arabia 32%
Other MENA 2% Qatar 6%
Libya 7%
Kuwait 10%
Iraq 16% Iran 11%
UAE 10%
$635 billion (2004)
MENA hydrocarbon revenues double by 2030 - the share from gas almost triples to 13%
Total MENA Energy Investment, 2004-2030 Other North Africa Libya Egypt Kuwait Iraq Algeria UAE Qatar Other Middle East Iran Saudi Arabia 0
50
100 150 200 billion dollars (2004) Oil
Gas
250
300
350
Electricity
About $1.5 trillion, or $56 billion per year, of investment are needed to expand capacity & replace facilities that are retired INTERNATIONAL ENERGY AGENCY
Implications of Deferred Investment
INTERNATIONAL ENERGY AGENCY
Deferred Investment Scenario How would global energy markets evolve if investment MENA upstream oil industry grew slower than in the Reference Scenario? Investment is assumed to remain constant at its share of historical GDP in each country MENA oil production is lower compared to the Reference Scenario, and the gap is widening over time Oil prices are driven higher - an increase of 32% over the Reference Scenario in 2030 - dragging up gas, coal and electricity prices MENA gas production is also lower compared to the Reference Scenario due to Reduced global gas demand & call on MENA gas Lower associated oil/gas output
INTERNATIONAL ENERGY AGENCY
MENA Crude Oil Production (including NGLs) 60 50
mb/d
40 30 20 10 0 1970
1980
Reference Scenario
INTERNATIONAL ENERGY AGENCY
1990
2000
2010
Deferred Investment Scenario
2020
2030 Difference
MENA’s share of global oil production falls from 35% in 2004 to 33% in the DIS. Saudi production reaches 14 mb/d in 2030
MENA Net Natural Gas Exports 500
400 206 bcm
300 bcm
116 bcm
200
24 bcm
100
0 2003
2010
Reference Scenario
INTERNATIONAL ENERGY AGENCY
2020
2030
Deferred Investment Scenario
MENA gas exports are much lower in the DIS, as higher gas prices & lower GDP choke off demand in the main importing regions
World Alternative Policy Scenario
INTERNATIONAL ENERGY AGENCY
Oil/Gas Demand in the Reference and Alternative Policy Scenarios 6000
140 120
5000
12.1 mb/d
500 bcm
4000
80 3000 60 2000
40
1000
20 0
0 Oil
2004
INTERNATIONAL ENERGY AGENCY
bcm
mb/d
100
2030 Reference Scenario
Gas 2030 Alternative Scenario
Oil & gas demand in the Alternative Scenario are both 10% lower in 2030 due to significant energy savings and a shift in the energy mix
Global Energy-Related CO2 Emissions in the Reference and Alternative Policy Scenarios 40 000
million tonnes of CO2
35 000
30 000
25 000
20 000 1990
2000
Coal
INTERNATIONAL ENERGY AGENCY
Oil
2010
Gas
2020
Alternative Policy Scenario
2030
Reference Scenario
In 2030, CO2 emissions are 16% lower than in the Reference Scenario, but are still more than 50% higher than 1990
Difference in Cost of Oil Consumption in the Alternative and Deferred Investment vs. Reference Scenario, 2005-2030 8 000 6 000
billion dollars (2004)
4 000 2 000
Deferred Investment Additional oil cost
Alternative Scenario Additional investment in energy efficiency
0 -2 000
Net savings
-4 000
Savings in oil cost
-6 000 -8 000
In the Alternative Scenario, the cost of additional investments in energy efficiency are more than offset by savings in fuel cost INTERNATIONAL ENERGY AGENCY
Key Messages If governments stick with current policies, global energy needs will be more than 50% higher in 2030 than today In any plausible scenario, MENA oil & gas resources will be critical to meeting the world’s growing appetite for energy Countries like Saudi Arabia, Iran, Iraq and Algeria will play key roles
Further underinvestment in oil and gas would drive up prices & depress global GDP growth, eventually harming producers too Major importing countries are already considering more vigorous policies to curb demand growth & reduce reliance on oil and gas Continued need for dialogue between producers and consumers to find mutually beneficial outcomes INTERNATIONAL ENERGY AGENCY
WORLD ENERGY OUTLOOK 2005
Middle East & North Africa Insights Chief Economist Dr. Fatih Birol INTERNATIONAL ENERGY AGENCY INTERNATIONAL ENERGY AGENCY
Global Energy Trends: Reference Scenario
INTERNATIONAL ENERGY AGENCY
International Energy Price Assumptions The assumed oil-price path in the Reference Scenario has been revised upwards from WEO-2004, in response to the results of detailed analysis of investment prospects: Average IEA crude oil import price, which averages $5 less than WTI, is assumed to ease from a recent peak of over $60 to $40 in 2010 rebounding to $65 in 2030 in nominal terms
In next few years, crude oil production capacity additions, new refinery investments & slower demand growth is expected to drive down prices But limited spare refining capacity, the rising cost of nonMENA crude projects and producer price targets/quotas could temper that decline Higher oil prices result in lower oil-demand, that reaches 115 mb/d in 2030 – 6 mb/d less than in WEO-2004 INTERNATIONAL ENERGY AGENCY
World Primary Energy Demand 18 000 16 000 14 000 Oil
Mtoe
12 000 10 000
Gas
8 000 6 000
Coal
4 000 2 000 0 1970 1971
INTERNATIONAL ENERGY AGENCY
Other renewables
1980
1990
2000
2010
2020
Nuclear Hydro 2030
Oil and gas together account for more than 60% of the growth in energy demand between now and 2030 in the Reference Scenario
Energy-Related CO2 Emissions by Region
2030
2003
India 4%
Other 11%
India 6%
M ENA 6%
Other 16% MENA 8%
China 16%
China 19% T ransition economies
11%
OECD 52%
Transition e conomie s
OECD 42%
9%
24 Gt
37 Gt
Global emissions grow by just over half between now and 2030, with the bulk of the increase coming from developing countries INTERNATIONAL ENERGY AGENCY
OECD Oil Demand Growth by Sector, 1999-2004 2.0 1.5
mb/d
1.0 0.5 0.0 -0.5
Power generation
Industry
Transport
Other
-1.0
INTERNATIONAL ENERGY AGENCY
In the OECD, the transport sector accounted for almost all the oil demand growth
World Light Oil Product Demand & Crude Oil Quality 32.5
50.0
32.0
45.0
31.5
40.0
31.0
35.0
30.5
API
mb/d
55.0
30.0 30.0 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 World Light Oil Product Demand
INTERNATIONAL ENERGY AGENCY
Average Crude Oil Quality
Oil quality will fall while light product demand will rise a key challenge for the refining industry
World Oil Production Shifts Away from OECD
10.2 mb/d
2.2 mb/d
20.2 mb/d 30.9 mb/d
13.5 mb/d OECD MENA Other NCO
41.2 mb/d 50.5 mb/d
29.0 mb/d
2004
2030
Global oil production climbs from 82 mb/d in 2004 to 115 mb/d in 2030; OECD share falls from 25% to 12% INTERNATIONAL ENERGY AGENCY
MENA Share in World Oil and Gas Reserves & Production, 2004
Proven oil reserves
Oil production
Proven gas reserves
Gas production
0%
INTERNATIONAL ENERGY AGENCY
20%
40%
60%
80%
MENA share of global oil & gas reserves is much higher than its share of current production, suggesting strong potential for growth
MENA Energy Trends
INTERNATIONAL ENERGY AGENCY
MENA Crude Oil & NGL Production by Country
50
mb/d
40
30
20
10
0 1970 Iran
INTERNATIONAL ENERGY AGENCY
Iraq
1980 Kuwait
1990
2000
Other Middle East
2010 Saudi Arabia
2020 UAE
2030 North Africa
MENA’s share of world oil production rises from 35% in 2004 to 44% in 2030 in the RS, with Saudi production rising to over 18 mb/d
MENA Net Oil Exports
INTERNATIONAL ENERGY AGENCY
MENA plays an increasingly important role in international trade, its net exports surging from 22 mb/d in 2004 to 39 mb/d in 2030
MENA Natural Gas Exports
Billion cubic metres
INTERNATIONAL ENERGY AGENCY
MENA becomes the world’s leading gas exporter, with most of the increase in exports meeting surging European & US LNG demand
MENA Oil Exports through the “Dire Straits”
INTERNATIONAL ENERGY AGENCY
Much of the additional oil and LNG exports from MENA in the future will be shipped through just three maritime routes
Saudi Arabia’s Oil Production by Source in the Reference Scenario 20
16
mb/d
12
8
4
0 1970
1980
1990
2000
2010
2020
Currently producing fields
Fields awaiting development
Reserve additions and new discoveries
Total production
2030
Based on its reserves and global demand trends, Saudi oil production is projected to reach 18 mb/d in 2030 INTERNATIONAL ENERGY AGENCY
Iran’s Oil Balance in the Reference Scenario 8
mb/d
6
4
2
0 1970
1980
1990
Net exports
2000
2010
2020
2030
Domestic demand
Iran oil production reaches 6.8 mb/d in 2030, but exports increase less rapidly due to strong growth in domestic demand INTERNATIONAL ENERGY AGENCY
Oil Production Outlook in Iraq in the Reference Scenario 8
mb/d
6
4
2
0 1970
1980
1990
2000
2010
2020
Currently producing fields
Fields awaiting development
Reserve additions and new discoveries
Total production
2030
Oil production in Iraq is expected to reach around 3 mb/d in 2010 and 8 mb/d in 2030, provided that stability and security are restored INTERNATIONAL ENERGY AGENCY
Algeria’s Natural Gas Balance in the Reference Scenario 250
200
bcm
150
100
50
0 1971
1990
2003
Domestic demand
2010
2020
2030
Net exports
Gas exports, mainly to Europe, are set to reach 144 bcm in 2030, more than double the current level – both via LNG and via pipelines INTERNATIONAL ENERGY AGENCY
MENA Oil & Gas Export Revenues
2004
Other MENA 7%
2030
Saudi Arabia 35%
Algeria 6%
Qatar 5%
Iraq 6%
Algeria 10% Libya 6% Kuwait 9%
UAE 11% Iran 11%
$313 billion (2004)
INTERNATIONAL ENERGY AGENCY
Saudi Arabia 32%
Other MENA 2% Qatar 6%
Libya 7%
Kuwait 10%
Iraq 16% Iran 11%
UAE 10%
$635 billion (2004)
MENA hydrocarbon revenues double by 2030 - the share from gas almost triples to 13%
Total MENA Energy Investment, 2004-2030 Other North Africa Libya Egypt Kuwait Iraq Algeria UAE Qatar Other Middle East Iran Saudi Arabia 0
50
100 150 200 billion dollars (2004) Oil
Gas
250
300
350
Electricity
About $1.5 trillion, or $56 billion per year, of investment are needed to expand capacity & replace facilities that are retired INTERNATIONAL ENERGY AGENCY
Implications of Deferred Investment
INTERNATIONAL ENERGY AGENCY
Deferred Investment Scenario How would global energy markets evolve if investment MENA upstream oil industry grew slower than in the Reference Scenario? Investment is assumed to remain constant at its share of historical GDP in each country MENA oil production is lower compared to the Reference Scenario, and the gap is widening over time Oil prices are driven higher - an increase of 32% over the Reference Scenario in 2030 - dragging up gas, coal and electricity prices MENA gas production is also lower compared to the Reference Scenario due to Reduced global gas demand & call on MENA gas Lower associated oil/gas output
INTERNATIONAL ENERGY AGENCY
MENA Crude Oil Production (including NGLs) 60 50
mb/d
40 30 20 10 0 1970
1980
Reference Scenario
INTERNATIONAL ENERGY AGENCY
1990
2000
2010
Deferred Investment Scenario
2020
2030 Difference
MENA’s share of global oil production falls from 35% in 2004 to 33% in the DIS. Saudi production reaches 14 mb/d in 2030
MENA Net Natural Gas Exports 500
400 206 bcm
300 bcm
116 bcm
200
24 bcm
100
0 2003
2010
Reference Scenario
INTERNATIONAL ENERGY AGENCY
2020
2030
Deferred Investment Scenario
MENA gas exports are much lower in the DIS, as higher gas prices & lower GDP choke off demand in the main importing regions
World Alternative Policy Scenario
INTERNATIONAL ENERGY AGENCY
Oil/Gas Demand in the Reference and Alternative Policy Scenarios 6000
140 120
5000
12.1 mb/d
500 bcm
4000
80 3000 60 2000
40
1000
20 0
0 Oil
2004
INTERNATIONAL ENERGY AGENCY
bcm
mb/d
100
2030 Reference Scenario
Gas 2030 Alternative Scenario
Oil & gas demand in the Alternative Scenario are both 10% lower in 2030 due to significant energy savings and a shift in the energy mix
Global Energy-Related CO2 Emissions in the Reference and Alternative Policy Scenarios 40 000
million tonnes of CO2
35 000
30 000
25 000
20 000 1990
2000
Coal
INTERNATIONAL ENERGY AGENCY
Oil
2010
Gas
2020
Alternative Policy Scenario
2030
Reference Scenario
In 2030, CO2 emissions are 16% lower than in the Reference Scenario, but are still more than 50% higher than 1990
Difference in Cost of Oil Consumption in the Alternative and Deferred Investment vs. Reference Scenario, 2005-2030 8 000 6 000
billion dollars (2004)
4 000 2 000
Deferred Investment Additional oil cost
Alternative Scenario Additional investment in energy efficiency
0 -2 000
Net savings
-4 000
Savings in oil cost
-6 000 -8 000
In the Alternative Scenario, the cost of additional investments in energy efficiency are more than offset by savings in fuel cost INTERNATIONAL ENERGY AGENCY
Key Messages If governments stick with current policies, global energy needs will be more than 50% higher in 2030 than today In any plausible scenario, MENA oil & gas resources will be critical to meeting the world’s growing appetite for energy Countries like Saudi Arabia, Iran, Iraq and Algeria will play key roles
Further underinvestment in oil and gas would drive up prices & depress global GDP growth, eventually harming producers too Major importing countries are already considering more vigorous policies to curb demand growth & reduce reliance on oil and gas Continued need for dialogue between producers and consumers to find mutually beneficial outcomes INTERNATIONAL ENERGY AGENCY
