Petroleum Geopolitics at the beginning of the 21 century · Petroleum Geopolitics at the beginning of the 21st century 26th Annual Conference International Association for Energy

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


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


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)


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


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%


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%


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


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


ACHNACARRY : DOMINATION OF THE SEVEN SISTERS

Source : Glasgow Evening news


OPEC DOMINATION : 1960-1986

Source : OPEP

1st OPEC conference, Bagdad, Septembre 10-14 1960


MARKETS : THE LEADING FORCE

Source : Analyse financière


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.


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)


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 ?


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


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 ?


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


CASPIAN AREA

Proven oil reserves : 30 billion barrels Proven gas reserves : 200 TcfBut how to ship the oil and the gas ?

Source : Totalfinaelf


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%


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


* 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


KEY ISSUES

US Policy

The role of Irak

Evolution of Israel - Palestine conflict

Potential of production of Russia

Future of OPEC

Documents

Petroleum Geopolitics at the beginning of the 21 century · Petroleum Geopolitics at the beginning of the 21st century 26th Annual Conference International Association for Energy