Asia and Global Oil & Gas Markets Asia and Global Oil & Gas Markets and Geopoliticsand Geopolitics
Mikkal E. HerbergMikkal E. HerbergThe National Bureau of Asian ResearchThe National Bureau of Asian Research
Independent Petroleum Association of AmericaIndependent Petroleum Association of America““Mid-Year Meeting and Executive Conference”Mid-Year Meeting and Executive Conference”
Naples, FloridaNaples, FloridaJune 14, 2006June 14, 2006
Asian Oil and Gas Trends to 2020Asian Oil and Gas Trends to 2020 Oil demand, imports will drive global marketOil demand, imports will drive global market
67% of recent growth, 50% of future growth67% of recent growth, 50% of future growth Economic growth, rising per capita incomesEconomic growth, rising per capita incomes Motorization, vehicle boomMotorization, vehicle boom Poor oil production prospectsPoor oil production prospects Weak demand management policiesWeak demand management policies
Largest future incremental natural gas marketLargest future incremental natural gas market China to account for 20% global energy demand China to account for 20% global energy demand
growth, largest incremental oil market (20-25% of growth, largest incremental oil market (20-25% of global growth)global growth)
India oil and gas demand growth second only to India oil and gas demand growth second only to ChinaChina
Energy security concerns growing, Asia-ME nexusEnergy security concerns growing, Asia-ME nexus Asia NOCs becoming serious competitors, partnersAsia NOCs becoming serious competitors, partners
Source: IEE Japan
Asia to Dominate Global Energy Demand Asia to Dominate Global Energy Demand GrowthGrowth
Source: IEE Japan
Oil and Coal Largest Shares, Gas Growing Oil and Coal Largest Shares, Gas Growing Rapidly from Low BaseRapidly from Low Base
Asia = 67% Global Oil Demand GrowthAsia = 67% Global Oil Demand Growth(MBD)(MBD)
WorldWorld AsiaAsia ChinaChina
19901990 1,2291,229 841841 -6 -619911991 -46-46 597597 158 158 19921992 733 733 963963 252 25219931993 -199-199 685685 251 25119941994 1,459 1,1091,459 1,109 232 23219951995 1,1271,127 993993 245 24519961996 1,5231,523 766766 282 28219971997 1,9171,917 843843 263 26319981998 446 -364446 -364 112 11219991999 1,6161,616 926926 370 37020002000 904904 808808 568 56820012001 501501 105105 46 4620022002 793793 579579 349 34920032003 1,2481,248 599599 412 41220042004 2,4642,464 1,1091,109 893893
15,714 10,55715,714 10,557 4,424 4,424
Source: BP
Asia Will Drive Oil Demand GrowthAsia Will Drive Oil Demand Growth 2002-20252002-2025
Africa 2.2
Latin America
5.1
Middle East 3.5
Other Asia 10.0
China9.0
Russia/FSU/E. Europe
2.1
W. Europe & Canada, 1.6
US 7.6
Source: DOE 2005
Total = 41 MMBD
Source: IEE Japan
China and India to Account for 70% China and India to Account for 70% of Asian Oil Demand Growthof Asian Oil Demand Growth
0
4,000
8,000
12,000
16,000
20,000
24,000
Asia’s Oil Demand Increasingly Met by Asia’s Oil Demand Increasingly Met by Imports from Outside the RegionImports from Outside the Region
Demand
Production
Imports
14.7
4.5
Source: BP
MB
D
Asia’s Future Oil Imports Will Grow byAsia’s Future Oil Imports Will Grow byMore than Current PG ExportsMore than Current PG Exports
21.2
26.9
33.6
39.8
6.8 6.1 5.03.8
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
2002 2010 2020 2030
MM
BD
Source: IEA WEO 2004
Imports2002 14.42030 36.0
Demand
Supply
Mid-East Oil Exports and AsiaMid-East Oil Exports and Asia(MMBD)(MMBD)
20012001 20202020 ChangeChange
Total ME Total ME 16.216.2 25.225.2 9.0 9.0AsiaAsia 9.4 9.4 16.8 16.8 7.4 7.4North AmericaNorth America 2.8 2.8 3.2 3.2 0.4 0.4Western EuropeWestern Europe 3.1 3.1 3.9 3.9 0.8 0.8OtherOther 0.9 0.9 1.3 1.3 0.4 0.4
Asia ShareAsia Share 58% 58% 67% 67%
Source: IEE Japan 3-04
60% of current ME oil exports go to Asia
80% of future export growth will go to Asia
China’s Oil Imports RisingChina’s Oil Imports Rising
Source: IEA WEO 2004
Cumulative Gas Demand GrowthCumulative Gas Demand Growth 2001-20302001-2030
0
100
200
300
400
500
600
BC
M
OECDNorth
America
OECDEurope
TransitionEconomies
Asia LatinAmerica
Africa Middle East
Asia’s gas demand to nearly triple by 2030
Source: IEA WEO 2004
Source: IEE Japan 3-04
Gas Demand Growth Strong Gas Demand Growth Strong Across the Asian RegionAcross the Asian Region
Total Asian Natural Gas Imports Nearly TripleTotal Asian Natural Gas Imports Nearly TripleLNG and Pipeline Supplies to Grow DramaticallyLNG and Pipeline Supplies to Grow Dramatically
2002200220302030
SE Asia to NE AsiaSE Asia to NE Asia 69 69 104 104Persian Gulf to NE AsiaPersian Gulf to NE Asia 29 29 57 57Alaska to NE AsiaAlaska to NE Asia 1 1 0 0SE Asia to ChinaSE Asia to China 0 0 10 10Persian Gulf to ChinaPersian Gulf to China 0 0 13 13Persian Gulf to IndiaPersian Gulf to India 0 0 44 44Russia to NE AsiaRussia to NE Asia 0 0 22 22Russia to ChinaRussia to China 0 0 19 19
Total Total 99 99 269269of whichof which
Persian GulfPersian Gulf 29 29 114 114RussiaRussia 0 0 41 41Southeast AsiaSoutheast Asia 69 69 114 114
Imports from outside region rise five-fold Outside import share rises from 29% to 58%
IEA WEO 2004
Some ConclusionsSome Conclusions
Asia, China to drive global oil demand, markets, pricesAsia, China to drive global oil demand, markets, prices Huge rise in gas consumption, thriving LNG, pipeline gas Huge rise in gas consumption, thriving LNG, pipeline gas
projects in Asiaprojects in Asia Asia only modest upstream oil play – India, SE Asia, E. Asia only modest upstream oil play – India, SE Asia, E.
Siberia; stronger upstream natural gas playSiberia; stronger upstream natural gas play Asia NOCs inflating prices in global E&P marketAsia NOCs inflating prices in global E&P market NOCs changing competitive landscape for IOCsNOCs changing competitive landscape for IOCs China, Asia to become big players in global energy China, Asia to become big players in global energy
geopoliticsgeopolitics Persian GulfPersian Gulf Central AsiaCentral Asia RussiaRussia IEAIEA
BackgroundBackground
Source: IEE Japan
Source: IEE Japan