Seatrade Middle East Maritime Energy Transportation

Seatrade Middle East MaritimeEnergy Transportation

Middle EastOil and Shipping

FAST FORWARD ! 5 December 2006

Peter M. SwiftManaging Director, INTERTANKO



TODAY

Seaborne Crude Oil Flows - 2005

Seaborne oil trade and Middle East oil production

Source:Source:INTERTANKO/FearnleysINTERTANKO/Fearnleys

'000bil tmmbd

0

6

12

18

2419

70

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

0

3,000

6,000

9,000

12,000

Middle East Oil Production - mbd

Tonne miles

World Oil Reserves by Country, as January, 2006 (billion barrels)

0 50 100 150 200 250 300Rest of World

UKIndonesia

EcuadorAngolaOmanIndia

AzerbaijanNorway

KazakhstanBrazil

AlgeriaMexico

QatarChina

United StatesNigeria

LibyaRussia

VenezuelaUAE

KuwaitIraqIran

CanadaSaudi Arabia

Source: EIA / Oil & Gas Journal, Vol. 103, No. 47 (December 19, 2005)

World Total =1,293 Billion Barrels

Share of World Oil Reserves, 2006

24%

7%

3%

58%

8%

Middle East

Western Hemisphere

Europe/ FSU

Asia &Oceania

Africa

Source: EIA

World Oil-Producing Regions - 2006 (mbd)

0

5

10

15

20

25

30

Middle East WesternHemisphere

Europe/FSU Africa Asia & Oceania

Source: EIA



FAST FORWARD !

Oil Demand – Established world

Courtesy: Braemar Seascope / Source: EIA

0

5

10

15

20

25

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

mill

ion

b/d

USA W Europe J apan FSU South Korea

Oil Demand – Emerging world

Courtesy: Braemar Seascope / Source: EIA

0

2

4

6

8

10

12

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

mill

ion

b/d

China India Other Asia Mid East

Crude Imports (m tonnes)

Source: Braemar Seascope

0

50

100

150

200

250

300

350

400

450

USA EU Japan Korea India China

2003 2004 2005 2010

Oil Consumption Potential


120 245573

925

1,468

2,098

3,5003,500

2,185

0

500

1,000

1,500

2,000

2,500

3,000

3,500

India China Brazil Mexico OECDEurope

Japan S.Korea

Canada USA

per c

apita

oil

cons

(kg)

0

200

400

600

800

1000

1200

1400

popu

latio

n (m

illio

n)

per capita oil conspopulation

Refinery Expansions: 2006-10*

TOTAL 8,212 kbd

*excluding RussiaSource: Braemar Seascope

587090100121136145

185250278300300313

400615

666896

1,7401,849

0 500 1,000 1,500 2,000

ThailandCanada

SpainSudan

MorocoOmanQatar

YemenIraq

VietnamEcuador

TaiwanBrazilSaudi

KuwaitUSAIran

IndiaChina

Indian oil consumption, production, refinery capacities

• Assumptions: According to the Indian Ministry of Oil, India is expected to increase product exports from some 0.4 mbd today to 1.9 mbd in 2012, Indian oil demand is expected to increase by 3%, which will result in an increase in crude oil imports from 2.3 mbd in 2007/08 to 4 mbd in 2012. (The distance from the Middle East to India is relatively short and this increased oil trade will only require some 10 VLCCs.)

Source: BP/INTERTANKO+:

1000 barrels per day

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

Refinery capacitiesConsumptionProductionCons. forecast

Refinery capacities

Oil Consumption

Forecast +3%

Indian refinery projects

India's Refining Expansion ('000 b/d)

Company Location Existing New Year Essar Oil Vadinar NA 200 2006 Nagarjuna Cuddalore NA 120 2008 ONGC Mangalore 240 60 2008 Reliance Jamnagar 660 540 2009 IOC Panipat 240 60 2009 IOC Paradip NA 300 2010 Hindustan Bhatinda NA 180 2010 Bharat Bina NA 120 2010 Total 1,580

CHINA: Crude oil import sources(‘000 tonnes)


0

5,000

10,000

15,000

20,000

25,000

Saudi Arabia Angola Iran Russia Oman

2002 2003 2004 2005

China Imports vs. Tanker Demand


0

50

100

150

200

250

2003 2004 2005 2010

m to

nnes

cru

de

0

5

10

15

20

25

m d

wt d

eman

d

m tonnes crudem dwt demand

Tanker deliveries, demolitions & phase-out

Source:Source:INTERTANKOINTERTANKO

m dwtm dwt

-20-15-10-505

10152025303540

92 94 96 98 00 02 04 06 08

Phase out*

Deliveries

Demolition

Net change

Net change

*1.6 m dwt is yearly added to phase out as conversions

+7%+6%+8%

Middle East - Oil and Shipping

• OPEC Middle East forecast oil production (IEA):– 29.1 mbd in 2005– 30.2 mbd in 2010– 34.9 mbd in 2015– 45.7 mbd in 2030

• Middle East refinery capacity– 7.179 mbd in 2006– 7.199 mbd in 2007 +0.020 mbd– 7.219 mbd in 2009 +0.120 mbd– 7.839 mbd in 2010 +0.710 mbd– 9.889 mbd in 2011 +0.710 mbd

• 1 mbd to the US, Cape/Suez requires 39 VLCCs • 1 mbd to Japan, Malacca requires 22 VLCCs

Prospects for Tanker Shipping

• Upside– Increased dependence on Middle East as from

2010 – more long haul– Declining North Sea production– Tanker phase out 2010

• Downside– High deliveries 2007 (+7%), 2008 (+6%), and

2009 (+8%)– New export refinery capacity in India and Middle

East, - positive for product tankers – negative for VLCCs

– Russian pipeline to China/east – Increased non-OPEC (W Africa/N America) oil

production in short term


Fast ForwardOn Tanker Issues ?

Key Issues for Tanker Shipping

• Maintaining the international governance structure for the shipping industry- support for IMO (& ILO)- “good” flag, class, PSC, etc.

• Promoting ability to self-regulate- based on “best practices”

• Environmental Challenges- oil in water, ballast water management, air emissions, ship demolition

• Availability of properly trained officers- supply, unfair treatment (MLC), criminalisation

“Good” Flag

Afghanistan x x xxAlbania xx x x x xx x x x x xXxx x x xxxx xxx xAlgeria xx x x x xx xx x x x x xx xxx x d x d x x xx xUkraine x x xx x xxx xxx x xx x xxx x x x x x xxUnited Arab Emiratesx x x x x xx x x x xx x x x x x xd x x xxx xUnited Kingdom xx x x xx x xx xxx x x xx x xx xx xxx xxxx xx d d x d d x x x x dxxx xx xUnited Rep. of Tanzaniaxx x x x xx x x x x x x x x xUnited States xx x x xx xx xxx x x x xx xx xx x x xx xx xxUruguay xx x xx x xx x x x xxx x x x xx x xUzbekistan xxVanuatu xx x x xx xx xxxx x x x xxx xxxx xx d x x d x x x x x xx xx xVenezuela xx x x x xx xx x x x x xxx x d x x d x x xViet Nam x x x xx xx xx x x x xx x x xx

BUILDERS

MANAGERS

EQUIIP SUP

CLASS

FINANCIERS

CARGO

BROKERS

P&I

HULL INSR

FLAG STATECOASTAL STATE

WATERWAYSPORTTERMINALSBUNKERERSPILOTS

TUGS

LABOUR

CREW

AGENTS

REPAIRERS

SALVORS

INCIDENT MGT

SHIPBREAKERS

EDUCATIONTRAINING DESIGN

OWNER OPERATOR

STAKEHOLDERS AGENCIES GOV IMO STATES LOCAL GOV

CARGO

Poseidon Challenge- commitment to continuous improvement- commitment to working with all partners

The Poseidon Challenge

- an invitation to Partners

Joint ITOPF-INTERTANKO Seminar

INTERNATIONAL SEMINAR ONTANKER SAFETY, POLLUTION

PREVENTION &SPILL PREPAREDNESS

Jumeirah Emirates Towers Hotel, Dubai6 December 2006

Registration from 0830Seminar commences @ 0900

ALL WELCOME !

THANK YOUwww.intertanko.com

www.shippingfacts.comwww.themaritimefoundation.com

http://www.shippingfacts.com/

Middle East NOCs69.6%

Africa NOCs6.6%

Russia NOCs6.8%

Latin America NOCs9.8%

Europe NOCs1.0%

Exxon/Mobil1.0%

Asia NOCs2.1%

BP0.9%

Chevron0.9%

Shell0.5%

ConocoPhillips0.6%

Investor owned oil reserves: ~ 4% of total

Ownership of Global Proved Oil Reserves(1.1 trillion barrels)

Source: EIA / National Commission on Energy Policy

0

2

4

6

8

10

12

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Middle East Rest of World

Source: EIA

World’s Excess Production Capacity is in the Middle East (mbd)

Share of World Natural Gas Reserves - 2006

35%

6%

42% 8%

8%

Middle East

Africa

Asia & Oceania

Europe/FSU

Western Hemisphere

Source: EIA

Middle East Expansion refinery projects

Source:Source:INTERTANKO/INTERTANKO/Petroleum EconomistINTERTANKO/INTERTANKO/Petroleum Economist

Middle East - expansion projects – 1000 barrels per day Country

Location Oil company

Current capacity

Planned Add. Planned Completion

Oman Mina al-Fahab

Oman Oil 85 105 20 2007

Iran Bandar Abbas

NIOC 220 320 100 2009

Iran Lavan Island NIO 30 50 20 2009 Kuwait Mina al

Ahmadi KPC 240 335 95 2010

Saudi Arabia

Ras Tanura Saudi Armco 550 660 110 Planned

Iran Abadan NIOC 335 385 50 Planned Total 1,460 1,855 395

Middle East New refinery projects

Source:Source:INTERTANKO/Petroleum EconomistINTERTANKO/Petroleum Economist

Middle East - new refinery projects – 1000 barrels per day Country Location Oil company Planned

capacity Planned

Completion Kuwait AL Zour KPC 615 2010 Lebanon Tripoli Zahrani Qatar Petroleum 150 2011 Saudi Arabia Jubail Total/Saudi Aramco 400 2011 Saudi Arabia Yanbu ConocoPhillips/ S. Aramco 400 2011 UAE Fu;airah, Ipic/ConocoPhillips 500 Planned Oman Duqm Oman Oil 200 Planned

Total 2,265



Future Shocks !

Future Shocks !

Political

Economic

Environmental / legislative

Other ??

Most Major Oil Market Disruptions Have Occurred in the Middle East

In Terms of Peak Oil Disruption Size, Million Barrels per Day

Source: EIA

More than One-Third of the World’s Seaborne Oil Trade is through the Persian Gulf

The Strait of Hormuz is the World’s Most Strategic Oil Chokepoint with flows in 2005 of more than 17 mbd

Source: EIA

World Oil Prices in Three Cases1980-2030 (2004 dollars / barrel)

0

20

40

60

80

100

1980 1995 2004 2015 2030

Low Price

High Price

Reference

Historical Projections

Source: EIA / International Energy Outlook 2006

Reported tanker incidents Jan-Nov 2006 : total 237

Source:Source:INTERTANKO/InformaINTERTANKO/Informa

14%

26%9%

32%19%

Collision

Grounding

Fire/Explosion

Hull & Machinery

Misc/unknownCollision

Groundings

Hull & Machinery (total 61:24 Engine;3 hull)

Miscellaneous

F & E

Type incident:



>>> Forward !

World Oil Consumption,2003, 2015, and 2030 (mbd)

0

10

20

30

40

50

60

70

North America OECD EuropeOECD Asia Non-OECD Europe and EurasiaNon-OECD Asia Middle EastAfrica Central & South America

2003 2015 2030

49

32

54

45

60 58OECD

Non-OECD


World Oil Consumption, 2003-2030(million barrels per day)

0

20

40

60

80

100

120

140

2003 2010 2015 2020 2025 2030

ElectricityTransportationIndustrialCommercialResidential

98104

118

9280

111


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Seatrade Middle East Maritime Energy Transportation