intertanko athens tanker event 11 april 2005 odd anker hassel director, cera confidential ©2005,...
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INTERTANKOAthens Tanker Event
11 April 2005
Odd Anker Hassel
Director, CERA
CONFIDENTIAL©2005, Cambridge Energy Research Associates, Inc., 55 Cambridge Parkway, Cambridge, Massachusetts 02142No portion of this presentation may be reproduced in any form without prior written consent
The New Oil Market Paradigm—How High, How Long?
4
HIGH OIL PRICES:
Sustainable or a Speculative Bubble? The Answer Depends on the Lens Used to Evaluate Price
Source: Cambridge Energy Research Associates.50305-1
Four Lenses
Inventory Levels Value of the Dollarand Inflation
Spare ProductionCapacity
Refining Margins
5
Source: Cambridge Energy Research Associates.40920-11
The Global Oil MarketThe Six Key Driving Forces to Watch
Economic Growth China
Iraq
And a lensto watch
them through:
TheEnvironment
andSustainable
DevelopmentRussia OPEC and Saudi Arabia
Do they control production?
India
6
World Oil Demand Growth Driven Mainly by Economic Growth
Source: Cambridge Energy Research Associates.
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2001 2002 2003 2004 2005 2006
AnnualAveragePercentChange
Real GDP Growth Oil
DemandGrowth
7
Source: Cambridge Energy Research Associates.Notes: Mexico is included in Latin America. South Korea is included in OECD Asia Pacific.40403-8_0314
Changes in Oil Demand by Region(volume change from previous year in million barrels per day)
.83
1.64
2.53
2.011.87
Total World
2002
2003
2004
2005
2006
Europe
.00
.20 .19 .17.13
OECDAsia Pacific
-.04
.15
-.16
.10 .05
Non-OECDAsia Pacific(excl. China)
.21 .27.35
.30 .31
Latin America
-.02-.11
.21 .11 .12
China
.28
.41
.92
.55 .55
Middle East
.17 .20.33 .29 .24
Eurasia
.10 .08 .07 .06 .06
Africa
.08 .04 .05 .06 .05
North America
.15
.39.58
.37 .34
8
China Oil Demand Growth
6.57%
7.86%
8.32%16.95%
9.62%
4,000
5,000
6,000
7,000
8,000
9,000
2002 2003 2004 2005 2006 2007
kbd
Growth
Source: Cambridge Energy Research Associates.
The Supply Response
10
Annual Change in World Oil Demand and Non-OPEC Production
Source: Cambridge Energy Research Associates.
CERA projectionHistorical
-0.2
0.2
0.6
1.0
1.4
1.8
2.2
2.6
1999 2000 2001 2002 2003 2004 2005 2006
World Oil Demand
Non-OPEC Production
Million
Barrels
per Day
11
Shifts in World Liquid Capacity(million barrels per day)
Canada
3.4 3.5 3.82.8
North Africa
4.7 5.0 5.5
4.0
West Africa
5.4 5.86.9
4.3
Western Europe
6.4 6.3 6.66.9
Russia and others
9.4 9.7 10.2
6.5
Caspian Area
1.9 2.12.9
1.3
Far East
7.9 8.1 8.17.8
Middle East
27.728.8
30.5
26.5
Sakhalin Area(included in Russia)
0.05 0.07 0.30.03
Latin America
10.5 10.9 11.610.4
United States
7.6 7.5 7.47.8
20002004200520072010
33.1
8.3
0.54.3
10.9
6.2
8.5
5.6
4.7
7.2
12.4
Source: Cambridge Energy Research AssociatesUpdated January 200540916-11
12
Composition of Total Liquids Capacity in 2004 and 2010: Increased Shares of Light and Heavy Liquids
Source: Cambridge Energy Research Associates.50115-1
Heavy7%
Medium59%
Light34%
In 2010:101.5 mbd Capacity
Heavy9%
Medium55%
Light36%
In 2004:85 mbd Capacity
Light > 34 API
Medium 27 to 33.9 API
Heavy < 26.9 API
13
Refining CapacityWhat has Changed?
14
• Asia Pacific—mainly China—needs significant additional capacity
• Western European refinery capacity generally adequate, but poorly-configured to meet demand
• US refinery capacity growth resumes in 2005 and 2006
Are We Running Out of Refinery Capacity? Capacity Challenges Differ in Each Region
Source: Cambridge Energy Research Associates.
15
Source: Cambridge Energy Research Associates.
Relative Change in Refining Margins and the Price of Crude OilMargins have exerted positive influence on the price of crude oil
100
120
140
160
180
200
220
2000 2001 2002 2003 2004
100 = 1990–1999
Average
Refining Margins(USGC 3-2-1crack spread)
Crude OilPrice (WTI)
In 2004 the crude price increased 34 percent.
Margins jumped 41 percent.
16
Significant Refinery Capacity Additions Needed to Meet Long-term Asia Pacific Demand Growth
Source: Cambridge Energy Research Associates.
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
1990 1995 2000 2005 2010 2015
MillionBarrels
perDay
Demand*
Refinery CDU
Capacity
5 mbd of new capacity needed by 2015
(equivalent to 15 large refineries)
17
Oil Supply and DemandThe Global Perspective
Source: Cambridge Energy Research Associates.20708-3
Russia
China
Caspian RegionWest Africa
Coastal States
India
Brazil
Venezuela
Supply Growth
Demand Growth
Supply and Demand growth
Canada
US
MiddleEast
If you have any questions about this presentation orCERA in general, please feel free to contact
Odd Anker HasselDirector
BeijingOakland, CAWashington, DC
Cambridge, MA
Calgary
Mexico City
São Paulo
Paris
OsloMoscow
55 Cambridge ParkwayCambridge, Massachusetts 02142, USA
www.cera.com