no slide title - opec · title no slide title author n.guerer created date 9/6/2005 11:07:25 am
TRANSCRIPT
1
Organization of the Petroleum Exporting CountriesOrganization of the Petroleum Exporting Countries
Oil prices:Oil prices:to the sky or to the sky or stabilisationstabilisation??
Dr Adnan Shihab-EldinActing for the Secretary General
Energy flow in the NorthNordic Energy Conference
Alfred Berg ABN AMRO30 August 2005Oslo, Norway
2
OPEC StatuteOPEC Statute
Article 2B: “The Organization shall devise ways and means of ensuring the stabilisation of prices in international oil markets, with a view to eliminating harmful and unnecessary fluctuations.”
Article 2C: “Due regard shall be given at all times to the interests of the producing nations and to the necessity of securing: a steady income to the producing countries; an efficient, regular and economic supply of petroleum to consuming nations; and a fair return on their capital to those investing in the petroleum industry.”
Interest of producing countries: owners of natural resourcesInterest of consumers & global economyInterest of investors: IOCs & NOCs
3
0
20
40
60
80
100Ja
n-80
Jan-
81Ja
n-82
Jan-
83Ja
n-84
Jan-
85Ja
n-86
Jan-
87Ja
n-88
Jan-
89Ja
n-90
Jan-
91Ja
n-92
Jan-
93Ja
n-94
Jan-
95Ja
n-96
Jan-
97Ja
n-98
Jan-
99Ja
n-00
Jan-
01Ja
n-02
Jan-
03Ja
n-04
Jan-
05
0
20
40
60
80
100Average Nominal Real**/ inflation & exchange-rate adjusted.(Base: August 2005=100, US$/b)
Although reaching historical highs in nominal terms, the real value is far below historical highs
The price of oil: distinguishing between nominal and real, (US$/b)
The price of oil: distinguishing between nominal and real, (US$/b)
4
Oil taxes & export revenues: who gets what?
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
United Kingdom
Italy
Germany
France
Japan
Canada
USA
Crude CIF Price Industry Margin Tax
Who gets what from a liter of oil in the G7?2004
5
Oil taxes & export revenues: who gets what?
Avg 2000-04 and 2004
254
324349
312
0
100
200
300
400
Bill
ion
US$
G7 Oil Taxes Revenue OPEC Oil Export Revenue
6
Revenues of major international oil companies*Revenues of major international oil companies*
603
805 752 806
977
1,232
0
250
500
750
1,000
1,250
1,500
1999 2000 2001 2002 2003 2004 2005#-30
-15
0
15
30
45
60Revenues % change in revenues % change in ORB price
(billion US$) (%)
* It includes top five IOCs, namely ExxonMobil, BP, Shell, ChevronTexaco, Total, which constituted ~39% of the total oil companies' revenues in 2003, and 55% of the revenues if the NOCs (>50% state-owned) are excluded.
# 1st half 2005.
7
OPEC Reference Basket Price (US$ / b)
OPEC Reference Basket Price (US$ / b)
57.3
16
22
28
34
40
46
52
58
Jan Feb Mar Apr May May Jun Jul Aug Sep Oct Nov Dec
2004
2005
Main reasons behind the rise in prices in 2005: •Continued strength in oil demand led by respectable performance of the world economy •Increasing market anxiety over capacity tightness with geopolitical tensions: focusing more on downstream with growth in refining capacity lagging behind demand•Oil production problems due to technical, political & natural reasons•Continuous bottlenecks at refineries running practically full capacity •Persistent volatility coupled by activities in Futures market
8
World economic & oil demand growthWorld economic & oil demand growth
Strong economic growth in DCs (e.g, China, India): growing faster than the world with increasing share in global GDPGlobalization processRobust oil demand growth (particularly in Asia)Capacity adjustment across the supply chain, in particular downstream; conversion refining capacity
0.0
0.5
1.0
1.5
2.0
2.5
3.0
72-05 87-05 94-05 03-05
aagr %avg growth (mb/d)
Oil demand growth Rates of Economic Growth (real terms, at 1995 purchasing power parity)
0
1
2
3
4
5
6
7
8
9
10
OECD DCs China World
2004 2005
2006 2007
Twenty Year Average Growth Rate
9
Strong growth in Chinese oil demand Strong growth in Chinese oil demand
1.50
2.50
3.50
4.50
5.50
6.50
7.50
8.50
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
%
USA: 25.7%China: 8.1%Japan: 6.5%Germany: 3.2%India: 3.0%
China’s share in world oil consumption (%)
• China has become the second largest oil consumer.
10
Strong growth in Chinese oil demand Strong growth in Chinese oil demand
0
3
6
9
12
15
18
21
24
27
India
China
Brazil
UK
USA
Oil demand, barrels per capita per year
Per capita oil demand ratios
India ChinaBrazil 6 3UK 14 7USA 34 16
Structural change in the economy - growing faster than the rest of the world, fueled by strong growth in oilLong-way to go: in line with rising per capita income levels, low per capita oil demand is yet to approach levels of other countries!
11
Overloading of Refining IndustryOverloading of Refining Industry
*/Asia = Japan, South Korea, China, India and Singapore. For some Asian countries May is estimated.
Shrinking Refining Spare Capacity in key refinery regions
0
1
2
3
4
5
6
7
8
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
mb/d
EU15 & Norway USA Asia*
0
1
2
3
4
5
6
7
8
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
mb/d
EU15 & Norway USA Asia*
75
80
85
90
95
100
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
%
EU15 & Norway USA Asia*
Increasing refinery utilization ratesin major consuming regions
Inadequate past investment and increasingly stringent product specifications have resulted in a lack of effective global refining capacity;Shrinking Refining Spare Capacity in key refinery regions leading to persistent operational bottlenecks, now running at close 100% in major consuming regions
12
Persistent price volatilityPersistent price volatility
WTI prices vs. US crude commercial oil stocks
R2 = 0.69
0
10
20
30
40
50
60
70
255 270 285 300 315 330 345 360
1994 - 2003 2004Jan 2005 - August 2005 Linear (1994 - 2003)
(US
$/b)
(million barrels)
Recent observed stocks-price relationship does not fit into historical trendUS stocks doesn't support current higher oil price
13
Persistent price volatilityPersistent price volatility
growing use of oil futures as a form of financial instrumentNYMEX hit a record high in 2005 surpassing the record in 2004.The average volume of contracts rose in 2005 to 237 million contracts compared to 179 million contracts in 2003OPEN interest also shows a higher record in 2005 of 792 million contracts compared to 542 million contracts in 2003
WTI futures contracts at NYMEX (million bbls)
0
100
200
300
400
500
600
700
800
900
2003 2004 20050
50
100
150
200
250
300
NYMEX volume traded OPEN interest (outstanding)NYMEX volume traded: cum. chg. OPEN interest (outstanding): cum. chg.
14
Persistent price volatilityPersistent price volatility
R2 = 0.8
10
20
30
40
50
60
70
100 150 200 250 300 350NYMEX daily average volume traded (mb)
US$
/b
18 August 2005
R2 = 0.8
10
20
30
40
50
60
70
100 150 200 250 300 350NYMEX daily average volume traded (mb)
US$
/b
18 August 2005
NYMEX daily oil average volume traded vs. WTI price
15
The price of oil: distinguishing between nominal and real
The price of oil: distinguishing between nominal and real
OPEC R. Basket price in real and nominal terms (Base: 2005 = 100, US$/b)
0
10
20
30
40
50
60
70
80
90
1970
1975
1980
1985
1990
1995
2000
2005
Nominal Real**/inflation & exchange-rate adjusted.
Despite another significant rise in prices so far this year, no visible impact on economic growth.
16
OPEC crude oil production, 2002-2005(based on secondary sources, mb/d)
OPEC crude oil production, 2002-2005(based on secondary sources, mb/d)
25.4
27.0
29.1
30.0
3.7
4.6
1.6
21
23
25
27
29
31
2002 2003 2004 2005*0
1
2
3
4
5IraqOPEC-10OPEC-11 cumulative change
Note: OPEC production excludes OPEC NGL & non-conventional oil (estimated to be 4.2mb/d in 2005).* / As of August 2005, OPEC production is assumed to be at July level of 30.2 mb/d.
Call of OPEC 28.928.3
26.9
17
OECD commercial oil stocks OECD commercial oil stocks
In fact, without prompt OPEC actions, it is hard to imagine what the market would be today!
Days of forward coverClosing levels (mb)
2300
2400
2500
2600
2700
2800
2900
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Avg. 00-04
2004
2005
Min-Max range: 1994-2004
Avg.00-04
2004
48
50
52
54
56
58
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2000-2004 Max/Min
2005
18
Source of non-OPEC supplyyear-on-year change, mb/d
Source of non-OPEC supplyyear-on-year change, mb/d
While growth in non-OPEC supply up to 2003 were exceeding that of demand, since then had been significantly below demand growthNon-OPEC supply is expected to increase as a result of the start-up of new projects particularly in deepwater in Latin America, West Africa, GOM and AsiaRussia is expected to increase, but at much lower rates
1.1
0.7 1.00.8
-0.7
-0.2
0.3
0.8
1.3
1.8
2000 2001 2002 2003 2004 2005 2006*-0.7
-0.2
0.3
0.8
1.3
1.8
C h i n a OECD Pacific OECD W.Europe OECD N.America
Total DCs Fsu- ex Russia Net Non-OPEC
Russia
Last 3y avg: 0.9
Last 10y avg: 0.8
Last 20y avg: 0.4
19
Source of non-OPEC supplyyear-on-year change, mb/d
Source of non-OPEC supplyyear-on-year change, mb/d
With currently observed slowing pace of Russian oil supply growth (e.g., policy measures, change in required technology), indications points to production levels to oscillate around 9.5-10.5 mb/d towards the end of the decade.
Russian oil supply growth
0
100
200
300
400
500
600
700
800
900
Jan-
04Fe
b-04
Mar-0
4Ap
r-04
May-
04Ju
n-04
Jul-0
4Au
g-04
Sep-
04Oc
t-04
Nov-
04De
c-04
Jan-
05Fe
b-05
Mar-0
5Ap
r-05
May-
05Ju
n-05
Jul-0
5Au
g-05
Sep-
05Oc
t-05
Nov-
05De
c-05
mb/
d
-1%0%1%2%3%4%5%6%7%8%9%10%11%
y-o-
ygro
wth,
%
Volume % growth
20
World oil demand & supply balance(mb/d)
World oil demand & supply balance(mb/d)
1Q05 2Q05 3Q05 4Q05 2005 05/04 1Q06 2Q06 3Q06 4Q06 2006 06/05
Demand (a) 83.6 81.9 83.4 85.7 83.6 1.6 85.3 83.3 84.9 87.3 85.2 1.6
Supply 83.9 84.6 84.7 85.7 84.7 1.8 Non-OPEC (b) 50.3 50.5 50.3 50.9 50.5 0.7 51.2 50.9 51.2 52.7 51.5 1.0 OPEC NGL (c) 4.1 4.2 4.2 4.3 4.2 0.2 4.4 4.5 4.6 4.7 4.5 0.3 OPEC Crude oil 29.5 29.9 30.2 30.5 30.0 0.9
a-(b+c) 29.2 27.1 28.8 30.5 28.9 0.6 29.7 27.9 29.1 29.9 29.2 0.3
Balance (d) 0.3 2.8 1.4 0.0 1.1
Seasonal stock chg.: ('00-'04) -0.7 0.9 0.3 -0.6 -0.7 0.9 0.3 -0.6Stock change (e) OECD commercial -0.1 1.3 OECD SPR 0.1 0.1 Oil in Water 0.2 0.0Remaining to Balance (d-e) 0.0 1.4
21
30.3
33.1 33.9
38.7
35
24
27
30
33
36
39
42
Jan-03 Jan-04 Jan-05 end 2005 2006 201024
27
30
33
36
39
42Capacity additionCapacityCapacityProduction
40.0
32
Note: OPEC production as of 2005 reflectsestimated required OPEC volumes.
(mb/d) Jan 04 Jan 05 End 05 2006
Production capacity 30.8 31.6 33.1 33.9Addition to capacity 0.4 0.9 1.5 0.7Production* 28.2 29.3 30.0Spare capacity (vol) 2.6 2.4 3.1Spare capacity (%) 8.4 7.4 9.4
*/ End 05 production is based on estimated required OPEC volumes.Note: Net capacity increase for Iraq is expected to be 0.5 - 1.0 mb/d by 2010.
Accelerated production capacity expansion plans
OPEC production capacity & additions(mb/d)
OPEC production capacity & additions(mb/d)
NGL: 3.7 mb/d
NGL: 4.5 mb/d
NGL: 6.4 mb/d
22
Expected cumulative growth in OPEC capacity,non-OPEC supply and refinery capacity
Expected cumulative growth in OPEC capacity,non-OPEC supply and refinery capacity
0
2000
4000
6000
8000
10000
12000
2004
2005
2006
2007
2008
2009
mb/d
0
2000
4000
6000
8000
10000
12000
Non-OPEC OPEC CapacityRefinery Capacity
23
Growth in world oil supply versus demandand refinery capacity
Growth in world oil supply versus demandand refinery capacity
-2000
-1000
0
1000
2000
3000
2003
2004
2005
-2000
-1000
0
1000
2000
3000
Non-OPEC OPEC OPEC Capacity
Demand Refinery Capacity
24
Oil Demand Outlook, mb/dOil Demand Outlook, mb/dReference 2010 2015 2020 2025 OECD 50.7 52.0 53.0 53.9 DCs 33.8 39.2 45.1 51.3 Transition economies 5.3 5.6 5.9 6.1 Total World 89.9 96.8 104.0 111.3
High scenario 90.8 99.1 108.0 Low scenario 88.7 93.4 97.6
“Dynamics-as-usual”: observed patterns, no new strong policy drivesOil demand increases by an average of 1.5 mb/d annuallyFour-fifths of the increase in demand of 28 mb/d over the period 2005–2025comes from developing countries Transportation continues to be the dominant source of growth (~60 %)Many uncertainties: GDP, technology, policy – substantial downside risksIssue of security of demand
25
Regional oil demand & net import requirements (mb/d)
Regional oil demand & net import requirements (mb/d)
26 2729
1310 12
0
10
20
30
40
2005 2015 2025Oil demand Oil import requirements
North Americamb/d
2530
38
31
23
16
0
10
20
30
40
2005 2015 2025Oil demand Oil import requirements
Asiamb/d
16 17 171412
10
0
10
20
30
40
2005 2015 2025Oil demand Oil import requirements
Europe mb/d
7
-25
-32
-44
9
-50
-40
-30
-20
-10
0
10
2005 2015 2025Oil demand Oil import requirements
OPEC mb/d 10
3 5 5
-8-10 -10
-20
-10
0
10
20
2005 2015 2025Oil demand Oil import requirements
FSU mb/d
(mb/d)2005 2015 2025 2005 2015 2025
North America 25 27 29 10 12 13Latin America 5 6 7 0 0 1Europe 16 17 17 10 12 14FSU 4 5 5 -8 -10 -10Asia 23 30 38 16 23 31 China 7 10 13 3 6 10M.East & Africa 3 4 5 -3 -3 -2OPEC 7 9 10 -25 -32 -44
Oil Demand Net Oil Import Req.
M.East OPEC contribution to world oil trade is expected to increase from ~30% to ~40% in 2025.
26
A Prospective Depletion Curve for the World's Conventional and Non-Conventional Oil to 2075
0
20
40
60
80
100
120
140
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070
C onvent io nal N on- C o nvent io nal ( current recoverab le)f urt her nc Impro ved reco very A dd it io n
data modeled
Milli
on b
/d
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Cummulative production
Remaining reserves
Reserves growth
Undiscovered
650 bn barrels (10% of 7 Gb OIP)
3400 bn barrels recoverable resource
Recoverable resource
Conventional Oil Non-Conventional Oil
~ 50
% o
f O
IP
27
World oil supply: cumulative production & reserve growth
World oil supply: cumulative production & reserve growth
Thomas Ahlbrandt, USGS, ‘Global Perspective on Petroleum Resources with a Middle East / North Africa Focus’, 2005.
28
Investment in OPEC Member CountriesInvestment in OPEC Member Countries
Numerous possibilitiesExtent of IOC involvement varies, from large to little or
noneCombination/partnership — IOCs + NOCs
AgreementsFair and workable
Open and transparentIncentives for investorAssurances for owner
Commitment to long-termMany uncertainties, which can be costly
Increasing attention on downstream
International oil companies (IOCs) National oil companies (NOCs)
29
Uncertainties:pose a challenge to investment levels!
Uncertainties:pose a challenge to investment levels!
Drivers of uncertainties over future supply and demand growth and future scale of investment that will be required
The world economy
Energy policies impacting supply/demand
Technology developments
Oil price path
30
0
5
10
15
20
25
30
35
NorthAmerica
LatinAmerica
Africa Europe FSU MEGulf
AsiaPacific
$ bi
llion
20.119.8
2.9
14.8 12.5 13.7
30.3
* Gasoline, Jet Kerosene and Distillate
increasing demand for lighter productslimited flexibility
Average Global Crude Slate2004 2015
API 33.36 33.12% SULPHUR 1.17 1.27
significant investment requirements (> $130 billion over the next decade)
Downstream challengesDownstream challenges
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2000
2001
2002
2003
2004
2005
(mb/
d)Light products Oil Demand Growth
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2000
2001
2002
2003
2004
2005
(mb/
d)Light products Oil Demand Growth
31
World refining capacity expansion 2004-20101000 b/d
World refining capacity expansion 2004-20101000 b/d
570
973
650
1178 1110
1370
1450
-100
300
700
1100
1500
1900
2004 2005 2006 2007 2008 2009 2010
Capacity increase
Range (exc. OPEC est.)Lag in investment will allow capacity build up only as of 2007
32
Continued cooperation & genuine dialogue: underlying consensus on handling major issues of mutual concern for the benefit of all.
International Energy Forum; International Energy Agency; EU-OPEC Energy Dialogue; Euro-Mediterranean Dialogue;EU-Gulf Cooperation Council; Asian Oil and Gas Ministers Round Table; Non-OPEC at OPEC Conferences; OPEC & Non-OPEC experts meetings …
Recalling the active role of Norway: contributions towards market stability efforts & enhancing producer-consumer dialogue, technology & environmentEffective engagement on all interrelated issues:
Security of supply and demandPrice stabilityEnergy policiesMultilateral issuesTechnology (e.g., cleaner oil technologies, CO2 capture combined with EOR)
Dialogue and cooperationDialogue and cooperation
33