Petroleum Geopolitics at the beginning of the 21 st century JP. Favennec Director - Center for Economics and management Institut français du pétrole 26 th Annual Conference International Association for Energy Economics New Challenges for Energy Decision Makers Prague, 4-7 June 2003
PETROLEUM WORLDWIDE IN 2000
WORLD PRIMARY ENERGY CONSUMPTION 9 000 8 000 7 000 6 000 Mtoe Electricity* Gas 5 000 4 000 Oil 3 000 2 000 1 000 Coal 0 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 * Nuclear and hydroelectricity Source : BP Statistical Review
PROJECTED WORLD DEMAND FOR ENERGY GToe (10 9 toe) 1960 2001 Scenarios 2020 A1 B C1 Oil 1,0 3,5 4,7 3,8 3,0 Gas 0,4 2,2 3,6 3,2 3,1 Coal 1,3 2,3 3,7 3,4 2,3 Nuclear 0,0 0,6 0,9 0,9 0,7 SUB TOTAL 2,7 8,5 12,9 11,3 9,1 Other Renewable energies 0,6 2,1 2,5 2,3 2,6 TOTAL 3,3 10,6 15,4 13,6 11,7 Source: United Nations, BP Stat. Review, WEC & IFP-CEG
WORLD RESERVES (1.1.2002) (10 9 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 Possibles 2800 R/P = 40 (4) Yet to be discovered Proven 143 100 Enhanced recovery 100 LIQUID HYDROCARBONS NATURAL GAS In place R/P = 62 Probable Proven 120 140 600 80 (3) NON- CONVENTIONAL OIL R/P = 216 Proven 501 COAL + LIGNITE R/P = 65 39,5 (2) 22,7 (1) URANIUM Source : BP Statistical Review, CEA, IFP / DSEP
DOMINANT POSITION OF SAUDI ARABIA IN THE WORLD OIL RESERVES (Proven oil reserves as at 1st january 2003) Canada 14,8% CIS 6.5% TOTAL : 166 Gt USA 1.9% Mexico & others Latin America countries 2.8% Venezuela 6.4% N. Africa 3.5% Europe 1.5% Iraq 9.3 % Kuwait 7.8% Iran 7.4% Indonesia 0,4% W. Africa 2.8% Saudi Arabia 21.8% UAE 9.8%* Oceania 2.8% * incl. South Yemen - Oman -Qatar - Bahrein Source: Oil & Gas Journal
CRUDE OIL PRODUCTION 2001 1200 Mt Mt 4000 1000 1076 3585 3500 OPEC 3000 800 657 NON OPEC 2500 600 2000 400 91% 424 379 354 370 324 1500 1000 200 50% 64% 41% 500 0 Middle East North Am. Latin Am. FSU 18% Asia/Austr Africa Europe 1 2 3 4 5 6 7 TOTAL 1 World 0 Source: BP Statistical Review
OIL RESERVES ESTIMATES Proven reserves in billion barrels To be IEA* 02 BP 02 OGJ 02 OGJ 03 discovered (IEA)* Saudi Arabia 221 262 259 259 136 Canada 7 5 180 Russia 137 49 49 60 115 Iraq 78 113 113 113 51 Iran 76 90 90 90 67 UAE 59 98 98 92 10 Kuwait 55 97 94 94 4 United States 32 30 22 22 83 Venezuela 30 78 78 78 24 Libya 25 30 30 30 9 China 25 24 24 18 17 Mexico 22 27 27 13 23 Nigeria 20 24 24 24 43 Kazakhstan 20 8 5 9 25 Norway 16 9 9 10 23 Algeria 15 9 9 9 10 Total 15 countries 831 953 935 1101 640 World total 1050 1032 1213 * US geological survey origin
MIDDLE EAST AND CASPIAN AREA Reserves (range) billion barrels Main oil areas Source : IEA et BP
CRUDE PRICE VARIATION 90 $ 80 $ 2002 70 60 (1875) Rockefeller (1911) Dissolution of Standard Oil $ current 50 40 30 Period of control by Rockefeller (1928) Achnacarry agreement (1979) Iranian revolution (1973) Yom Kippur war (1990) Iraq/ Kuwait war 20 (1960) Foundation of OPEC 10 0 1861 1873 1885 1897 1909 1921 1933 1945 1957 1969 1981 1993 1861-1944: USA average, 1945-1985: Arabian Light posted at Ras Tanura, 1986-2002: Brent Spot 2002 Source : BP Stat. Review
ACHNACARRY : DOMINATION OF THE SEVEN SISTERS Source : Glasgow Evening news
OPEC DOMINATION : 1960-1986 1st OPEC conference, Bagdad, Septembre 10-14 1960 Source : OPEP
MARKETS : THE LEADING FORCE Source : Analyse financière
CRUDE OIL PRICE 40 $/b (monay of day) 35 30 Iran/Iraq war OPEC quotas Netback contracts Kuwait crisis Cold winter Tension on gasoline 11 th sept. 25 20 Nationalization of oil fields OPEC domination 2nd OIL SHOCK 3rd OIL SHOCK 15 10 5 0 1st OIL SHOCK Yom Kippur war Iranian revolution Interventions of the American Funds OPEC Quotas Asian crisis Agreement Venezuela Mexico Saudi Arabia 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 Source : Platt s
THE WORLD S 10 LARGEST NET OIL EXPORTERS IN 2002 Country Net export volume (mn b/d) 1 - Saudi Arabia 7.07 2 - FSU 5.59 3 - Norway 3.08 4 - Venezuela 2.43 5 - Iran 2.33 6 - UAE 2.05 7 - Nigeria 1.86 8 - Mexico 1.73 9 - Kuwait 1.58 10 - Iraq 1.54 Source : IEA
THE MAIN PLAYERS 1 - The USA Large consumption, large imports 2002 Consumption 19.7 mb/d Production 8.1 mb/d Crude oil imports 9.1 mb/d Products 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) Canada 1426 406 335 UK Norway 442 Iraq 1490 Mexico 1195 Venezuela 567 Nigeria Saudi Arabia 1521 Source : EIA, Petroleum Supply Monthly, march 2003
THE MAIN ACTORS 2 - Russia Russia is back 1998 Oil production 6.07 mb/j Oil exports 3.54 mb/j 2002 Oil production 7.66 mb/j Oil exports 5.05 mb/j Increase in oil production thanks to improved efficiency of oil companies devaluation of the rouble Potential for production increase Russia : a route for Caspian exports?
CIS Crude oil million b/d Production Consumption Surplus 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 12.5 12.2 11.5 10.4 9.1 8.2 7.4 7.3 7.2 7.4 7.4 7.5 8.0 8.6 9.4 9.0 8.8 8.4 8.0 6.9 5.5 4.7 4.4 3.8 3.7 3.6 3.5 3.4 3.4 3.7 3.5 3.4 3.1 2.4 2.2 2.7 2.7 2.9 3.4 3.7 3.8 4.0 4.6 5.2 5.7 Source: IEA & BP Stat. Review
CASPIAN AREA Source : Totalfinaelf Proven oil reserves : 30 billion barrels Proven gas reserves : 200 Tcf But how to ship the oil and the gas?
Limited and declining production (United Kingdom, Norway - not a member of EU) Main imports : THE MAIN ACTORS 3 - European Union North Africa 16% Rest of the world 4% Mexico + USA 2% Venezuela 2% South America 1% West Africa 8% CIS 36% Middle East 31% Stagnant consumption Very dependant upon imported energy
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 links with Al Quaïda Saudi Arabia criticize the USA for Israël support
Oil imports forecasts - China (Mt) 2001 2010 2020 Demand 258 375 425* Local production 170 175 190 Deficit 89 200 235 * 5-7% of world demand 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