oil and gas : short & medium term outlook and long term ...eneken.ieej.or.jp/data/5507.pdf ·...

© OECD/IEA 2014 © OECD/IEA 2014

IEEJ, 30 May 2014

Keisuke Sadamori, Director, IEA

Oil and Gas : Short & Medium Term Outlook and Long Term Uncertainty

IEEJ : June 2014. All Rights Reserved.

© OECD/IEA 2014

The new oil paradox: High supply, high prices

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

1Q10 1Q11 1Q12 1Q13 1Q14

mb/d

Other North America Total

Total Non-OPEC Supply, y-o-y Change

85

90

95

100

105

110

115

120

Apr 13 Jul 13 Oct 13 Jan 14 Apr 14

$/bblCrude Futures

Front Month Close

NYMEX WTI ICE Brent

Source: ICE, NYMEX

•Non-OPEC Supply remains exceptionally high • Annual growth of 1.8 mb/d in 1Q14 and April • Forecast growth of 1.5 mb/d for 2014 as a whole •US crude supply to exceed 8 mb/d in 2014 reaching 8.6 mb/d in 4Q14 •US NGL supply to exceed 2.8 mb/d in 4Q14 •Total US liquids (exc. biofuels & processing gains) 11.3 mb/d April 2014 •Total US liquids >11 mb/d for the first time since at least the 1980s

•Yet oil prices also remain exceptionally elevated


© OECD/IEA 2014

Global demand inches upwards…

Global oil demand grows as the economic recovery gains momentum

But inter-fuel competition rises, including in the transport sector

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2011 2012 2013 2014

Global demand growth (mb/d)


© OECD/IEA 2014

… and rebalances across regions US resilience offsets China slowdown

Chinese economic slowdown dampens demand

Fuel switching out of oil

But from a high base

Chinese demand up 2% y-o-y to 10.2 mb/d in March

OECD demand swung back into growth in 2013

US demand grew by 1.3% y-o-y to 19 mb/d in February

Demand also rising in other non-OECD economies

1,950

2,450

2,950

3,450

JAN APR JUL OCT JAN

kb/d China: Gasoil/Diesel Demand

Range 09-13 2013

2014 5-year avg

8,100

8,300

8,500

8,700

8,900

9,100

9,300

JAN APR JUL OCT JAN

kb/d US 50: Motor Gasoline Demand

Range 09-13 2013

2014 5-year avg


© OECD/IEA 2014

OPEC faces production hurdles…

OPEC’s real production challenges are internal not external (shale)

Production back near 30 mb/d in April, up 405 kb/d

But supply down nearly 1 mb/d on the year

Libyan production still at 220 kb/d in April

28.5

29.0

29.5

30.0

30.5

31.0

31.5

32.0

Jan Mar May Jul Sep Nov Jan

mb/d OPEC Crude Production

2011 2012 2013 2014


© OECD/IEA 2014

... but must ramp up production to meet demand

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14

World Demand 89.3 89.5 90.7 91.3 90.4 90.8 92.1 92.4 91.3 92.1 93.6 94

Non-OPEC Supply 53.5 52.9 53 54.2 53.9 54.2 55 55.8 55.7 56.1 56.3 56.8

OPEC NGLs 6.1 6.1 6.2 6.2 6.3 6.3 6.4 6.3 6.4 6.4 6.6 6.6

OPEC Crude 31.3 31.7 31.5 30.7 30.5 30.9 30.6 29.8 30

Stock Ch. & Misc. 1.6 1.2 0 -0.2 0.3 0.6 -0.2 -0.4 0.8

Call on OPEC + Stock Ch. 29.7 30.5 31.4 30.9 30.2 30.3 30.8 30.2 29.2 29.6 30.7 30.7

27.5

28

28.5

29

29.5

30

30.5

31

31.5

32

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14

mb

/d

Call on OPEC + Stock Ch. OPEC Crude Production


© OECD/IEA 2014

Ukraine gas transit still vital – Nord Stream only alternative with excess capacity

37

53 6

20

13

18

24

29

Azerbaijan 4

Iran 9

30

41

30

27 7

Major physical flows in 2013 in bcm

LNG 5

LNG 1 LNG 6

4

Russian gas exports to Europe


© OECD/IEA 2013

The engine of energy demand growth moves to South Asia

Primary energy demand, 2035 (Mtoe)

China is the main driver of increasing energy demand in the current decade, but India takes over in the 2020s as the principal source of growth

4%

65%

10%

8%

8% 5%

OECD

Non-OECD Asia

Middle East

Africa

Latin America

Eurasia

Share of global growth 2012-2035

480

Brazil 1 540

India

1 000 Southeast

Asia

4 060

China

1 030

Africa

2 240 United States 440

Japan

1 710

Europe 1 370

Eurasia

1 050 Middle East


© OECD/IEA 2013

A mix that is slow to change

Growth in total primary energy demand

Today's share of fossil fuels in the global mix, at 82%, is the same as it was 25 years ago; the strong rise of renewables only reduces this to around 75% in 2035

500 1 000 1 500 2 000 2 500 3 000

Nuclear

Oil

Renewables

Coal

Gas

Mtoe

1987-2011

2011-2035

the strong rise of renewables only reduces this to around 75% in 2035


© OECD/IEA 2013

World energy demand by fuel

Demand increases for all forms of energy, with gas growing the most; the share of fossil fuels in the world’s energy mix falls from 82% to 76% in 2035

1 000

2 000

3 000

4 000

5 000

1980 1990 2000 2010 2020 2030 2035

Mtoe Oil Coal Gas

Biomass

Nuclear

Hydro Other renewables


© OECD/IEA 2013

Change in world energy demand by fuel & scenario, 2011-2035

There are striking differences in demand for fossil fuels across scenarios, while global demand for renewable energy increases strongly in all cases

-1 500

-1 000

-500

0

500

1 000

1 500

2 000

Coal Oil Gas Nuclear Hydro Bioenergy Other renewables

Mtoe Current Policies Scenario

New Policies Scenario

450 Scenario


© OECD/IEA 2013

Emissions off track in the run-up to the 2015 climate summit in France

Cumulative energy-related CO2 emissions

Non-OECD countries account for a rising share of emissions, although 2035 per capita levels are only half of OECD

Non-OECD

OECD

200

400

600

800 Gt

1900 -1929

1930 -1959

1960 -1989

1990 -2012

2013 -2035

OECD

Non-OECD

Total emissions 1900-2035

51%

49%


© OECD/IEA 2013

China becomes the largest consumer of oil by 2030, as OECD oil use drops; demand is concentrated in transport, where diesel use surges by 5.5 mb/d, & petrochemicals

China becomes the largest consumer of oil by 2030, as OECD oil use drops;

Oil demand by region sector

Oil use grows, but in a narrowing set of markets

75

80

85

90

95

100

105

2012 2035

mb/d

China

India

Middle East

Other

Transport Petrochemicals Other sectors

OECD

Diesel

Gasoline

Other

80

85

90

95

100

105

2012 2035

mb/d

Transport Petrochemicals Other sectors

Diesel

Gasoline

Other

, & petrochemicals


© OECD/IEA 2013

Two chapters to the oil production story

Contributions to global oil production growth

The United States (light tight oil) & Brazil (deepwater) step up until the mid-2020s, but the Middle East is critical to the longer-term oil outlook

-2 0 2 4 6 8

Rest of the world

United States

Brazil

Middle East

mb/d

2013-2025

2025-2035


© OECD/IEA 2013

2035 Middle East crude oil exports by destination

Ever-growing crude trade between the Middle East & Asia

N. America’s imports diminish as it becomes more self-sufficient, Europe’s decrease with falling demand, and Middle East exports are drawn increasingly to Asia

6.3

North America

China

Other Asia

India

Europe


© OECD/IEA 2013

More oil bypassing the refining system and new capacity in growing non-OECD markets piles pressure on existing refiners, especially in Europe

Oil demand Oil processed by refineries

New refinery capacity China

India

Middle East

Other

Turbulent times for the refining sector

Refinery capacity and operation

More oil bypassing the refining system

75

80

85

90

95

100

105

2012 2035

mb/d Oil bypassing refineries

Existing spare & excess

capacity

Spare & excess

capacity

with 10 mb/d at risk of closure by 2035

70

65


© OECD/IEA 2014 17

Non-OECD oil demand increasing

17

Growing importance of consuming countries outside IEA

91.3 million barrels per day

101.4 million barrels per day


© OECD/IEA 2013

Gas growth strongest in emerging markets

Natural gas demand

The biggest absolute increases in demand are in China & the Middle East, where gas use overtakes that of the European Union before 2020

100 200 300 400 500 600 700 800

Japan

India

China

Russia

European Union

Middle East

United States

2035

2011

bcm


© OECD/IEA 2013

A new diversity in gas supply

Change in annual natural gas production

Natural gas production increases in every region of the world between 2011 and 2035, with the exception of Europe

-30 0 30 60 90 120 150 180 210 240

Algeria

Iran

Turkmenistan

Brazil

Iraq

Qatar

Australia

Russia

United States

China

2011-2020

2020-2035

bcm


© OECD/IEA 2013

Regional Gas Price Disparity


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Electricity generation in non-OECD countries has only begun to rise

Electricity generation by source

2 000

4 000

6 000

8 000

10 000

1990 2035

TWh

OECD

2011 1990 2035

Non-OECD

2011

Coal Renewables Gas Nuclear Oil


© OECD/IEA 2013

Impact of gas prices increase on the merit order (Europe)


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Impact of gas prices increase on the merit order (US)


© OECD/IEA 2014

Displacing coal in Asia will not be that easy

COAL AND GAS PRICES. IMPLIED CO2 PRICE TO TRIGGER FUEL SWITCHING


© OECD/IEA 2014

The power sector is fundamental to the energy outlook of Southeast Asia

ASEAN incremental electricity generation by fuel, 2011-2035

-100 0 100 200 300 400 500 600 700

Oil

Nuclear

Gas

Renewables

Coal

TWh


© OECD/IEA 2014

Over the long term, the power generation mix is set to change

Global electricity generation by source, 2010-2035

2 000

4 000

6 000

8 000

10 000

12 000

14 000

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

TWh

Coal Renewables

Gas

Nuclear

Oil

Source: IEA World Energy Outlook 2012

© OECD/IEA 2014


© OECD/IEA 2014

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Japan

Brazil

India

France

Sweden

ERCOT

NW Europe

Italy

Great Britain

Germany

Iberia

Ireland

Denmark

Wind 2012 PV 2012 Additional Wind 2012-18 Additional PV 2012-18

VRE share of total annual electricity output

Note: ERCOT = Electricity Reliability Council of Texas, United States Source: IEA estimates derived in part from IEA Medium-Term Renewable Energy Market Report 2013.

Large-scale integration accomplished today, but more to come

Instantaneous shares reaching 60% and above

Case studies

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© OECD/IEA 2014

Interaction is key

Properties of variable renewable energy (VRE)

Flexibility of other power system components

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Variable

Uncertain

Non-synchronous

Location constrained

Modularity

Low short-run cost

sec

yrs

1 km

100s km

Grids Generation

Storage Demand Side


© OECD/IEA 2014

Carbon Intensity of supply is stuck

The political will to make meaningful progress at a global scale has yet to be demonstrated


© OECD/IEA 2014

Systems thinking and integration

Today’s energy system paradigm is based on a unidirectional energy delivery philosophy

A sustainable electricity system is a smarter, multidirectional and integrated energy system that requires long-term

planning for services delivery


© OECD/IEA 2014

Thank you [email protected]

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Contact : [email protected]

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http://www.iea.org/

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