2 energy security, global growth and risk management dr. andrey p. vavilov member of the council of...
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2
ENERGY SECURITY, GLOBAL GROWTH AND RISK MANAGEMENT
Dr. Andrey P. VavilovMember of the Council of Federation of the Russian FederationIFS Academic DirectorCRIFES Scientific Advisor
March 2009
3
Global energy security risks
UNCERTAINTY risks
Reserve evaluation
Oil price volatility
Investment risks
Capital efficiencyand global growth
4
Global energy security risks
UNCERTAINTY risks
Reserve evaluation
Oil price volatility
Investment risks
Capital efficiencyand global growth
5
Global peak oil estimates
50
60
70
80
90
100
110
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
mm
bd
Peak expected in 2005
Peak estimated in 2015
Peak estimated in 2025
6
Shut down oil and gas projects in the Caspian Sea region
Companies and alliances Projects Results
Agip Kurdashi, Araz-Danizloss of expected 100
million tons of oil
Total, OEIC, Wintershall
Talysh-Daniz, Lankaran-Daniz
loss of expected 50 million tons of oil
ExxonMobil no dataloss of expected 40
million tons of oil
Chevron, Total, SOCAR Oguz ‘dry well’
Agip, Lukoil Karabakh no data
ВР Dan Ulduzu, Ashrafi no data
7
Oil reserves in unstable economies
Others75,5%
Countries with unstable regimes
24,5%
8
Global energy security risks
UNCERTAINTY risks
Reserve evaluation
Oil price volatility
Investment risks
Capital efficiencyand global growth
9
Rebased price fluctuations (2008 data)
0
20
40
60
80
100
120
140
160
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009
$/bb
l
1981, Iran-Iraq conflict75 $/bbl
1990, The first Iraq campaign66$/bbl
2008, Record high147,5 $/bbl
10
Nominal oil price fluctuations
0,00
20,00
40,00
60,00
80,00
100,00
120,00
140,00
160,00
1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009
$/bb
l
Average Nominal
1990, The first Iraq campaign,41$/bbl
1981, Iran-Iraq conflict,31,7$/bbl
2008, Record high,147,5$/bbl
11
UNCERTAINTY risks
Reserve evaluation
Oil price volatility
Investment risks
Capital efficiencyand global growth
Global energy security risks
12
UNCERTAINTY risks
Reserve evaluation
Oil price volatility
Investment risks
Capital efficiencyand global growth
Global energy security risks
13
Energy consumption vs. GDP in developed countries and China
0 0,2 0,4 0,6 0,8 1 1,2 1,4
Great Britain
France
Germany
Japan
USA
World
China
bbl/$1000
14
Savings and debt fluctuations in the US
0%
10%
20%
30%
40%
50%
60%
70%
80%
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
%
0
2
4
6
8
10
12
14
%
US public debt (part of GDP), the left scale
Savings in households ' incom es, the right scale
15
Decline in oil supply
Lower rate of return on capital
Growth of consumption
Low mobility of capital
Saving rates in Asia-Pacific countries
Oil dependency
Mechanism of oil dependency in the global growth model
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Is this a cooperative behavior?
COOPERATION
PRODUCER
Sales channelsdiversification
Control over reserves
Resource nationalism
17
Is this a cooperative behavior?
CONSUMER
Diversification of imports
Decline in imports
Financial protectionis
m
COOPERATION
PRODUCER
Sales channelsdiversification
Control over reserves
Resource nationalism
18
Conditions for global growth
GLOBALECONOMICGROWTH
COOPERATION
Consumer
Producer
19
Advantages of risk exchangeRUSSIA
Resource potential management
Foreign non-energy assets management
1. Participation in the global development2. Risk diversification3. Preconditions for technological advance4. Lower volatility of stock exchange indexes
Access to technology
20
Stock exchange index volatility
0
20
40
60
80
100
120
140
160Ja
n-0
5
Ap
r-0
5
Jul-
05
Se
p-0
5
De
c-0
5
Ma
r-0
6
Jun
-06
Au
g-0
6
No
v-0
6
Fe
b-0
7
Ma
y-0
7
Jul-
07
Oct
-07
Jan
-08
Ap
r-0
8
Jun
-08
Se
p-0
8
De
c-0
8
$/b
bl
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000Brent oil price
MIСEX oil and gas index
21
Center for
Research on
International
Financial and
Energy
Security
22
Dr. Andrey P. Vavilov
Member of the Council of Federationof the Russian Federation
IFS Academic Director
CRIFES Scientific Advisor
CRIFES www.econ.psu.edu/CRIFES/
IFS www.ifs.ru/en/