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JP. FavennecDirector - Center for Economics and management
Institut français du pétrole
Petroleum Geopoliticsat the beginning of the 21st century
26th Annual ConferenceInternational Association for Energy EconomicsNew Challenges for Energy Decision Makers
Prague, 4-7 June 2003
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
PETROLEUM WORLDWIDE IN 2000
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
WORLD PRIMARY ENERGY CONSUMPTION
Source : BP Statistical Review
* Nuclear and hydroelectricity
Electricity*
Gas
Oil
Coal
Mtoe
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
PROJECTED WORLD DEMAND FOR ENERGY
Source: United Nations, BP Stat. Review, WEC & IFP-CEG
1960
1,0
0,4
1,3
0,0
2,7
0,6
3,3
2001
3,5
2,2
2,3
0,6
8,5
2,1
10,6
A1 B C1
Scenarios 2020
4,7
3,6
3,7
0,9
12,9
2,5
15,4
3,8
3,2
3,4
0,9
11,3
2,3
13,6
3,0
3,1
2,3
0,7
9,1
2,6
11,7
Oil
Gas
Coal
Nuclear
SUB TOTAL
Other Renewable energies
TOTAL
GToe (109toe)
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
WORLD RESERVES (1.1.2002)
COAL +LIGNITE
(109 toe)
(1) Quantities which can be recovered at a reasonable cost(2) Quantities which can be recovered at a higher cost(3) Recoverable(4) R/P: Proven Reserves/Production ratio
NON-CONVENTIONAL
OIL
Proven
Yet to bediscovered
Enhancedrecovery
In place
LIQUIDHYDROCARBONS
NATURALGAS
URANIUM
Probable
Possibles 2800
ProvenProven
22,7 (1)39,5 (2)
600
501
140
120
143
100100
80
R/P = 40 (4)
R/P = 62
R/P = 216
R/P = 65
(3)
Source : BP Statistical Review, CEA, IFP / DSEP
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
DOMINANT POSITION OF SAUDI ARABIA IN THE WORLD OIL RESERVES
Source: Oil & Gas Journal
CIS6.5%
Iraq9.3 %
Iran 7.4% Indonesia
0,4%
Oceania2.8%
Saudi Arabia21.8%
Europe1.5%
N. Africa3.5%
W. Africa2.8%
Venezuela6.4%
* incl. South Yemen - Oman -Qatar - Bahrein
TOTAL : 166 Gt
UAE9.8%*
Kuwait7.8%
Canada14,8%USA1.9%
(Proven oil reserves as at 1st january 2003)
Mexico & others LatinAmerica countries2.8%
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
CRUDE OIL PRODUCTION 2001
Source: BP Statistical Review
0
200
400
600
800
1000
1200
1 2 3 4 5 6 7MiddleEast
FSUNorthAm.
LatinAm.
AfricaAsia/Austr Europe
OPEC
NON OPEC
91%
50% 64%
18%
Mt
0
500
1000
1500
2000
2500
3000
3500
4000
1
1076
657
424354 370379
324
3585
TOTALWorld
Mt
41%
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
OIL RESERVES ESTIMATES
To beIEA* 02 BP 02 OGJ 02 OGJ 03 discovered (IEA)*
Saudi Arabia 221 262 259 259 136Canada 180Russia 137 49 49 60 115Iraq 78 113 113 113 51Iran 76 90 90 90 67UAE 59 98 98 92 10Kuwait 55 97 94 94 4United States 32 30 22 22 83Venezuela 30 78 78 78 24Libya 25 30 30 30 9China 25 24 24 18 17Mexico 22 27 27 13 23Nigeria 20 24 24 24 43Kazakhstan 20 8 5 9 25Norway 16 9 9 10 23Algeria 15 9 9 9 10Total 15 countries 831 953 935 640World total 1050 1032* US geological survey origin
Proven reserves in billion barrels
7 5
11011213
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
MIDDLE EAST AND CASPIAN AREA
Reserves(range)billion barrels
Main oil areas
Source : IEA et BP
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003 Source : BP Stat. Review
CRUDE PRICE VARIATION
0
10
20
30
40
50
60
70
80
90
1861 1873 1885 1897 1909 1921 1933 1945 1957 1969 1981 1993
$
(1875) Rockefeller
Period ofcontrol by
Rockefeller
(1911) Dissolutionof Standard Oil
(1928) Achnacarryagreement (1973) Yom
Kippur war
(1979) Iranianrevolution
(1990) Iraq/
Kuwaitwar
(1960) Foundationof OPEC
$ 2002
$ current
1861-1944: USA average, 1945-1985: Arabian Light posted at Ras Tanura, 1986-2002: Brent Spot2002
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
ACHNACARRY : DOMINATION OF THE SEVEN SISTERS
Source : Glasgow Evening news
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
OPEC DOMINATION : 1960-1986
Source : OPEP
1st OPEC conference, Bagdad, Septembre 10-14 1960
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
MARKETS : THE LEADING FORCE
Source : Analyse financière
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
Source : Platt ’s
CRUDE OIL PRICE
0
5
10
15
20
25
30
35
40
71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03
$/b (monay of day)
Yom Kippur war
1st OIL SHOCK
Nationalizationof oil fields OPEC
domination
Iranianrevolution
2nd OILSHOCK
Iran/Iraqwar OPEC
quotas
Netbackcontracts
3rd OILSHOCK
Kuwaitcrisis
Interventionsof the
American Funds
OPECQuotas
Asiancrisis
Cold winter
Tensionon gasoline
Agreement VenezuelaMexico
Saudi Arabia
11th
sept.
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
Source : IEA
THE WORLD’S 10 LARGEST NET OIL EXPORTERS IN 2002
1 - Saudi Arabia 7.072 - FSU 5.593 - Norway 3.084 - Venezuela 2.435 - Iran 2.336 - UAE 2.057 - Nigeria 1.868 - Mexico 1.739 - Kuwait 1.58
10 - Iraq 1.54
CountryNet export volume
(mn b/d)
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
THE MAIN PLAYERS
1 - The USA
Large consumption, large imports
2002 Consumption 19.7 mb/dProduction 8.1 mb/dCrude oil imports 9.1 mb/dProducts imports 2.5 mb/d
Between 1989 and 2002 :
- Energy consumption increased by 2% p.a.- Oil consumption increased by 1% p.a.- but oil production decreased by 2.3% p.a.- Oil imports increased by 70%
Middle East oil : large requirements
USA / Russia : a strong relationship ?
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
CRUDE OIL IMPORTS IN THE USA IN 2002(Thousands barrels per day)
Source : EIA, Petroleum Supply Monthly, march 2003
Canada
Mexico
Venezuela
Norway
UK
Iraq
Saudi Arabia
Nigeria
335
406
442
567
1521
1195
1490
1426
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
THE MAIN ACTORS
2 - Russia
Russia is back
1998 Oil production 6.07 mb/jOil exports 3.54 mb/j
2002 Oil production 7.66 mb/jOil exports 5.05 mb/j
Increase in oil production thanks toimproved efficiency of oil companiesdevaluation of the rouble
Potential for production increase
Russia : a route for Caspian exports ?
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
Source: IEA & BP Stat. Review
CIS
Crude oil
198819891990199119921993199419951996199719981999200020012002
12.512.211.510.49.18.27.47.37.27.47.47.58.08.69.4
9.08.88.48.06.95.54.74.43.83.73.63.53.43.43.7
3.53.43.12.42.22.72.72.93.43.73.84.04.65.25.7
million b/d Production Consumption Surplus
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
CASPIAN AREA
Proven oil reserves : 30 billion barrels Proven gas reserves : 200 TcfBut how to ship the oil and the gas ?
Source : Totalfinaelf
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
Limited and declining production (United Kingdom, Norway - not a member of EU)
Main imports :
Stagnant consumption
Very dependant upon imported energy
THE MAIN ACTORS
3 - European Union
CIS 36%
Middle East31%
South America 1%Venezuela 2%
Mexico + USA2%
Rest of the world 4%
NorthAfrica 16%
West Africa 8%
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
THE MAIN ACTORS
4 - Middle East / Saudi Arabia
Middle East : Iraq, Iran, Kuwait, UAE, Saudi Arabia
Kuwait and UAE linked to Saudi Arabia
Iran and Iraq : "Axis of evil"
USA and Saudi Arabia : a necessary alliance
but : the US criticize Saudi Arabia for conservatism and linkswith Al QuaïdaSaudi Arabia criticize the USA for Israël support
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
* 5 - 7% of world demand
Oil imports forecasts - China (Mt)
2001 2010 2020Demand 258 375 425*Local production 170 175 190Deficit 89 200 235
THE MAIN ACTORS
5 - China
Chinese energy policy :development of local production
strategic reserves
foreign technology and capital
strategic investments abroad in upstream
26th Annual Conference - International Association for Energy EconomicsNew Challenges for Energy Decision Makers - Prague, 4-7 June 2003
KEY ISSUES
US Policy
The role of Irak
Evolution of Israel - Palestine conflict
Potential of production of Russia
Future of OPEC