linked global energy outlook 050210
TRANSCRIPT
Global Energy Outlook 2010-2030
Emerging Markets, Challenges, Opportunities & Winning Strategies for Energy Companies and GE
By Shahzad ParachaBy Shahzad Paracha
2009 Review
Primary Energy Consumption Growth
Global oil consumption Growth • First Decline since 1993
• Global Oil Production Growth +0.4%
• Oil production outside OPEC -1.4% or 610K b/d, the largest decline since 1992
Global Refining Capacity Additions• Led by Asia Pacific (China)
Refining Capacity Utilization • Consistent Decline since 2003
2
+7.2%China
-2.8%USA
-0.6%
+2.8%
85%
Global Natural Gas Consumption
• Below 10 years Historical Average
• Middle East led Above Average 3.1% growth BUT China led..............
Global Gas Production above 10 years Average (3%)
• Output Led by USA
• 10 times than 10 year Average
Natural Gas
• Highest Share of energy consumption
• LNG & LPG share 15%
• 2020 LNG & LPG Demand/Share 30%
Other Fuels:
Global Coal consumption growth
• Worlds fastest growing fuel
• China with 43% consumption share led with 7% growth equivalent to 85% global growth
Renewable Energy Stronger Growth
• Wind & Solar Capacity rise of 30% & 70%
• Driven by 50% rise in USA Wind Capacity surpassing Germany3
+2.5%
+16%
+3.5%
+7.5%
+24.1%
+3.1%
World Primary Fuel Mix 2009
4EIA – September’09
5
6
Total Proved Oil Reserves & Segmentation
Total Proved Oil Reserves Distribution of Proved Oil Reserves (%)
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Total Proved Gas Reserves & Segmentation
Total Proved Gas Reserves Distribution of Proved Gas Reserves (%)
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Reserves to Production Ratios (R/P)
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Global Coal Demand & Supply
ProductionMillion Tonnes Oil Equivalent
ConsumptionMillion Tonnes Oil Equivalent
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Opportunities & Challenges
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Global Supply & Demand Challenges
Surplus Reserves in Middle East, Russia & Africa.
Cost US$ 15 Trillion in Infrastructure: Exploration,
Production & Transportation
Oil Reserves
1. S. Arabia (20% of Global Oil Reserves)
2. Canada
3. Iraq
4. Iran
Gas Reserves & Producers
1. Russia
2. Iran
3. Qatar
4. S. Arabia
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• Major Oil Exporters:
S. Arabia (15% of Total Exports & 2. Russia
• Gas Reserves & Producers (GR&P):
Top 4 constitutes 60% of Total GR&P.
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50 % Global Energy Demand Growth by 2030• Met by 80% Fossil Fuel & 20% Alternatives with
Total Global Investments of 52%, 24% & 21% in Power, Oil & Gas sectors
LPG & LNG Demand Share 40% including UK & EU
• Developing Countries Growth Twice Vs Developed Ones
• 5Bln New Energy Consumers & New development
Escalating demand, rising oil & gas prices, tight refining capacity inducing:
• Cost reductions
• Improvement in Production
• Investment in New Technology for
Improved Margins & Revenue Growth
Global & Regional
Power & Gas
• Efficient technology installation in Power generation
- 52% of Total investments
• Future gas supply assessment, Storage Capacities &
role of LNG & Gas to liquid (GTL)
1. W. Europe supplier, Norway with 45% EU gas reserves
2. Investments in EU (UK focus) Gas Storage Capacities
3. 30% Global & EU LNG Supply Growth by 2020
Upstream (E&P)• High % of Total Oil & Gas Investments
• Increase volume from existing reserves
• Reduce cost of producing reserves
• Partnering & role of NOC’s
• Cost effective technological solutions from suppliers
Refining (Including Petrochemicals)• Environmental compliance investments
• Capex upgrade investment decisions
• Constantly changing global markets
• Cost reduction programs to Improve NIAT due to potential declining margins.
Retail
• Eroding margins in mature markets (later stage of market development)
• BRICS : 135% demand growth by 2030
• Early Stage Markets
India, China, Russia
• Transitional Markets
Brazil
Opportunities
Urbanization
High population & demand growth
Double Digit Fuels market development
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NOC’s Control 80% of global oil reserves
50% in Top 100 companies
High margins & prices inducing:
• Fund growth strategy
• Investment in new technology from service firms like General Electric
Access to Reserves Strategy
• Transition from PSA’s to PSC’s for high ROI and control on reserves
Opportunities & Challenges
• Acquisition of downstream assets
1. Maximize value/barrel
2. Economic diversification
3. Drive domestic industry growth
Raised training & recruitment budges to improve talent pipeline by 2030
• Saudi Aramco allocated $50M pear year
15* IOC’s: International Oil Companies
NOC’s: National Oil Companies
Moving Forward
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Upstream Strategy
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Regional fit for purpose strategy development
• Minimize over–investment in capacity utilization
• Practice for high ROI:
1. Stringent fuel specifications
2. Degradation of crude oil quality
3. High capacity utilization (>90%)
• Appropriate Investments in Projects with Positive NPV on right - Oil prices in range $70-95 in 2010-2012.
• Weighted Average Cost stands $45/boe
• High Payback Investments costing $65/boe
• Capacity additions by building green-field refineries
• Expansion in attractive alternative energy
• US$ 1 Trillion investment by 2030
• Penetration in LNG emerging markets
• US$250 Bln investment to fuel 100% growth by 2020
Downstream Strategy
Regional market entry strategy development.
BRIC emerging economies market development.
Fuel & Non-Fuel Opportunities (Mature Markets): Low Fuel Margins, Efficiency Index & 30% network rationalization 1998-2008
Current Forecourt CR penetration 17% of CR industry.
Target high margin CR & capitalize projected £30 Billion industry by 2020.
Customer centric retailing with RCVP development & implementation:
• BSP, VFM, customer loyalty/penetration, Sales density (£/sqm), Avg transaction value, shopper marketing
• Desired Customer Experience Offer:• Store concepts, formats, branding, channel management
• Site & network operations, CRM, Supply chain management
• Card Payment & terminals, huge gap in demand vs actual
• Locations : Store footprints on consumer insight not property deals
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30% Global & Regional LNG Demand Growth by 2020
EU: 10% & BRIC’s: 50%
IOC’s focus on Global & Regional LNG acquisitions
Gas Supplier Qatar meets 30% of EU, US & Russia demand.
Will meet 20% of UK Gas demand from 2011
UK - 2nd Largest Gas Markets in EU
1999 – 2009 Average demand growth 6%
Gas Fired Power Generation to drive Gas demand till 2020
UK Gas Supply 2016 Proportion:
Domestic production 20%, Imports 80% (Norway 35%, LNG 35%, Continent 10%)
Current Gas Imports 40%
UK Supply Cover Storage
15 days Vs 100 in France & SC/AC only 4%
Investments In Gas Storage :
From 2010-2020 : 14 bcm (SC/AC - 11%)
• Will lead Supply Cover Storage – 45 days
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Regional & UK Gas Demand & Storage
AnnualConsumption (bcm)
Storage Capacity (bcm)
Storage capacity/ Annual consumption (%)
UK 99 4 4
Germany 101 9 19
Italy 86 13 15
France 46 11 25
Few Other Opportunities for Oil, Gas Utilities & Service Companies
Investments by Oil & Gas companies in Upstream generating Order Intake for Vetco Business
Predominantly Surface (On-shore) AND Subsea (Off-shore) Drilling & Production
Gas Fired Plants Roll-out for Electricity Generation using Combined Cycle Turbines
Coal Fuelled Carbon Capture Storage (CCS) Plants Roll-out from 2030 *
• Current Efficiency 35% to rise to 55%
• Potential to Meet 25% of UK Gas / Energy Demand
Oil Refineries :
IOC’s divestments of EU Assets (Less Margins & 1% Growth) and investments in BRIC’s
Alternative Energy:
Huge UK Government Stimulus Packages for 34% CERT by 2020* (Slide 19)
Concentrated Solar Panel (CSP) Market:
$20 Bln Global Industry
Double digit growth in ALL Markets 2010-2030
Wind Farms (On and Off-Shore) –More Potential as costs cheaper
Solar Plants (Farms)
20* In US Coal accounts for 50% Power Generation but Generates 80% Emissions
* CERT-Carbon Emission Reduction Target