energy, industry, and the economy · mohn, k. and b. misund. 2011. shifting sentiments in oil and...
TRANSCRIPT
Energy, industry, and the economy
Macro lunch, NHHBergen, 11 November 2013
Klaus Mohn, professor of petroleum economics([email protected], UiS homepage, Twitter: @Mohnitor)
Global and national perspectives
My researchSelected publications
Hunnes, A., Kvaløy, O. og K. Mohn. 2012. An empirical study of performance appraisal and career opportunities. International Journal of Business and Management 7 (1), 22-35. Mohn, K. and B. Misund. 2011. Shifting sentiments in oil and gas investments: an application to the oil industry. Applied Financial Economics 21 (7), 469-479.Mohn, K. and P. Osmundsen. 2011. Asymmetry and uncertainty in capital formation: an application to oil investment. Applied Economics 43 (28), 4387-4401. Aune, F. R, Mohn, K., Osmundsen, P. and K. E. Rosendahl. 2010. Financial market pressure, tacit collusion and oil priceformation. Energy Economics 32 (2), 389-398.Mohn, K. 2009. Elastic Oil: A primer on the economics of exploration and production. In Bjørndal E. and Bjørndal, M. Energy, Natural Resource and Environmental Economics. London: Springer. Mohn, K. and B. Misund 2009. Investment and uncertainty in the international oil and gas industry. Energy Economics 31 (2), 240-248. Mohn, K. 2009. Autism in economics: a second opinion. Forum for Social Economics 39 (2), 191-208. Mohn, K. 2008. Efforts and Efficiency in Oil Exploration: A Vector Error-Correction Approach. The Energy Journal 30 (4), 53-78. Mohn, K. and P. Osmundsen. 2008. Exploration economics in a regulated petroleum Province. Energy Economics 30 (2), 303-320.Osmundsen, P., Mohn, K., Misund, B., and F. Asche. 2007. Is oil supply choked by financial markets? Energy Policy 35, 467-474.Osmundsen, P., Asche, F. Misund. B., K. Mohn. 2006. Valuation of international oil companies. Energy Journal 27 (3): 49-64.Osmundsen, P., Mohn K., Emhjellen. M., and F. Helgeland. 2005. Size and profitability in the international oil and gas industry. Jerome Davis (ed.) The Changing World of Oil. An Analysis of Corporate Change and Adaptation, London: Ashgate Publishing.
Mohn, Klaus. 2008. Investment behaviour in the international oil and gas industry: Essays in empirical petroleum economics. PhDthesis. University of Stavanger.
Energi, economics and the environmentThe energy trilemma: 3E sustainability
• Economic activity– Growth and employment
– Aspirations for welfare
• Energy for all– Reliability
– Affordability
• Environmental concerns– Local pollution
– Global warming
Globale energy outlookPressures are building, no resolution in sight
• The oil price is record high– Dampened activity and energy demand
– Higher investment and production
• The energy system is changing– Unconventional oil and gas
– Setback for nuclear energy
– Focus on energy efficiency
• The system is short on sustainability– Fossil fuels are heavily subsidised
– GHG emissions are yet to peak
– 1.3 bn people still lack electricity
– Water is increasingly scarce
From economic activity to energy demandCurrent instability – a source of risk
Kilde: IHS Global Insight, International Energy Agency og Statoil (Energy Perspectives 2013; projections).
Gradual greening of energy mixCO2 emissions could to peak around 2030
Global CO2 emissionsGiga tonnes
Sources: International Energy Agency (historical data, Statoil (2012; projections).
Global energy mixShare of total primary energy demand (%)
0
20
40
60
80
100
1990 2000 2010 2020 2030 2040Renewables Nuclear Gas Oil Coal
0
20
40
60
2010 2020 2030 2040
International bunkersOther non-OECDNon-OECD AsiaOECDIEA NPIEA CPIEA 450
Source: International Energy Agency (World Energy Outlook 2012).
20
22
24
26
28
30
32
34
36
38
2010 2015 2020 2025 2030 2035
450 Scenario
New Policies Scenario
What it takes to stop global warmingBreakdown of IEA’s 450 scenario
Global CO2 emissions 2010-2035NP scenario and 450 scenario compared
(Annual CO2 emissions; giga tonnes)2020 2035
Activity 2% 2%
End‐use efficiency 18% 13%
Power plant efficiency 3% 2%
Electricity savings 50% 27%
Fuel and technology switching in end‐uses
2% 3%
Renewables 15% 23%
Biofuels 2% 4%
Nuclear 5% 8%
CCS 4% 17%
Total (Gt CO2) 3.1 15.0
What will it take?CO2 abatement efforts and potential by source (%)
The oil price matters…… for consumer, producers, and politicians
Oil price reviewBrent blend, USD/bbl (2012 prices)
0
30
60
90
120
150
1970 1977 1984 1991 1998 2005 2012
• 4-fold increase since 2000– Late level 2 times historical avg.
• Impact on demand– Income effect
– Substitution effect
• Impact on supply– Conventionals (exploration,
development, production)
– Unconventionals
• New technologies• Policy response
Source: Reuters EcoWin, Rystad Energy.
0
50
100
150
200
250
300
350
2001 2003 2005 2007 2009 2011
RussiaEuropeNorth AmericaSouth AmericaAfricaMiddle EastAsiaAustralia
Offshore supply servicesby global region, USD bn (nominal)
0
20
40
60
80
100
120
0 10 20 30 40
Demand expectation
Global shale oil
Additions to long-term oil supplyStylised marginal cost by resource type (USD/bbl)
Shale shock to oil price formation?Potential implications for oil price formation
Sources: Source: US Department of Energy (EIA), various consultancies.
Additions to long-term oil supplyStylised marginal cost by resource type (USD/bbl)
0
20
40
60
80
100
120
0 10 20 30 40
Demand expectation
US shale oil
Demand setback
The oil price mattersDiminishing impulse from oil price change
Outlook for NCS oil and gas productionNPD forecast by year of release (mboepd)
0
1
2
3
4
5
6
2000 2005 2010 2015 2020
200120032005200720092011Actual
Source: Norwegian Petroleum Directorate.
-4
-2
0
2
4
6
2001 2003 2005 2007 2009 2011
2020 production (mmboepd)Average annual growth (%)
Outlook for NCS oil and gas productionNPD forecast by year of release (mboepd)
Investment choked by financial marketsWhere NPV may fail, Cash will prevail
Source: Enskilda Securities (Oil companies’ E&P budgets, 20 August 2013).
Industry changes and challengesA race between scarcity and innovation
• Innovation and cooperation• Changes in OPEC behaviour• Uncertainty over gas prospects• Break-up of monopoly in transport• Quality in capital allocation• Re-direction to Asia• Energy and climate policies
Source: Mitchell, John, Marcel, Valerie and Beth Mitchell. 2012. «What next for the oil and gas industry?». Chatham House. October 2012.
0
50
100
150
200
250
Finnmark: 500Troms: 900Nordland: 1 900
Oppland: 40Hedmark: 100
Vest-Agder: 6 200Aust-Agder: 2 700Telemark: 3 000Buskerud: 7 900Vestfold: 4 000
Akershus: 13 300Oslo: 4 600Østfold: 1 400
Nord-Trøndelag: 3 600Sør-Trøndelag: 8 100
Møre & Romsdal: 17 600Sogn & Fjordane: 1 500Hordaland: 46 500Rogaland: 80 000
Kilder: Ringvirkninger av petroleumsvirksomheten, Konkraft-rapport nr. 7 (http://www.konkraft.no), Vatne (2007).
Petroleumsrelatert sysselsetting 2012Totalt: ~ 220 000 personer
Mange arbeidsplasser i hele landetAnslagene varierer mellom 40000 og 220000
Under-leverandørerLeverandørerProsesseringOljeselskaper
0 5 10 15 20 25
Vestlandet
Sørlandet
Østlandet
Midt-Norge
Nord-Norge
Hele landet
SSB (2010)
Konkraft (2009)
Vatne (2007)
Finnmark: 500Troms: 900Nordland: 1 900
Oppland: 40Hedmark: 100
Vest-Agder: 6 200Aust-Agder: 2 700Telemark: 3 000Buskerud: 7 900Vestfold: 4 000
Akershus: 13 300Oslo: 4 600Østfold: 1 400
Nord-Trøndelag: 3 600Sør-Trøndelag: 8 100
Møre & Romsdal: 17 600Sogn & Fjordane: 1 500Hordaland: 46 500Rogaland: 80 000
Kilder: Statistisk sentralbyrå, Vatne (2007), Konkraft-rapport nr. 7 (http://www.konkraft.no), Vatne (2007).
Petroleumsrelatert sysselsetting 2012Totalt: ~ 220 000 personer
Mange arbeidsplasser i hele landetAnslagene varierer mellom 40000 og 220000
Research agendaThemes of relevance
• The global energy outlook• Is 3E sustainability feasible?• Policy requirements and implications
• Oil and gas market and industry outlook• Supply, demand, price formation• Industry dynamics & developments• Capital market interaction
• Oil and gas in the Norwegian economy• Industry activity• Macroeconomic challenges• Asset management• Policy design
Global energy outlook
«Energy markets in 2030»Oslo, 1 November 2013
Klaus Mohn, professor petroleum economics([email protected], UiS homepage, Twitter: @Mohnitor)
Thank you for your attention!