Transcript Ramon Espinasa

Towards Hemispheric
Hydrocarbon Cooperation
Ramón Espinasa
Consultant. Integration, Trade and Hemispheric Issues
Division. Integration and Regional Programs Department
Inter-American Development Bank
Andean Development Corporation
Washington, D.C.
January 2002
United States: Consumption and Production
20000
Consumption
18000
14000
12000
10000
Production
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
8000
1970
MBD
16000
United States: Consumption and Production 2020
25000
Trend 85-00
Trend 70-00
20000
15000
Production
10000
2020
2018
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
5000
1970
MBD
Consumption
United States: Consumption, Production and Imports
20000
Consumption USA
18000
16000
Extra Hemispheric Imp.
14000
Andean Community Imp.
12000
NAFTA Imp.
10000
Production USA
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
8000
United States: Consumption, Production and Imports 2020
25000
Extra Hemispheric Imp.
15000
Andean Community Imp.
NAFTA Imp.
10000
2020
2018
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
5000
1970
MBD
20000
United States Oil Balance - Overall
United States Oil Balance - Overall
• United States oil imports have increased threefold over the
last fifteen years, from 3.5 up to 10.5 MBD.
United States Oil Balance - Overall
• United States oil imports have increased threefold over the
last fifteen years, from 3.5 up to 10.5 MBD.
• United States oil imports may grow between 1 and 9 MBD
if the consumption and production trends of the last thirty
and fifteen years persist over the next twenty.
United States Oil Balance - Overall
• United States oil imports have increased threefold over the
last fifteen years, from 3.5 up to 10.5 MBD.
• United States oil imports may grow between 1 and 9 MBD
if the consumption and production trends of the last thirty
and fifteen years persist over the next twenty.
• United States extra hemispheric oil imports have increased
fivefold over the last fifteen years from 1 up to 5 MBD.
United States Oil Balance - Composition
United States Oil Balance - Composition
• The composition of United States imports is as follows:
50% extra hemispheric sources; 30% NAFTA countries
and 20% Andean Pact countries.
United States Oil Balance - Composition
• The composition of United States imports is as follows:
50% extra hemispheric sources; 30% NAFTA countries
and 20% Andean Pact countries.
• If exports from NAFTA and Andean Community countries
into the United States were not to increase and the
consumption and production trends remain constant, extra
hemispheric oil imports will increase between 6 and 14
MBD and become between 55% and 75% of total U.S.A.
oil imports.
LAC: Consumption and Production
12000
10000
8000
6000
4000
Consumption
2000
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
0
1970
MBD
Production
2020
2018
2016
2014
2012
2010
2008
14000
2006
2004
2002
2000
1998
1996
10000
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
MBD
LAC: Consumption and Production 2020
16000
Trend 70 - 00
12000
Production
8000
6000
Consumption
4000
2000
LAC Oil Balance - Overall
• Net LAC oil exports have increased two fold over the last
fifteen years from 2 to 4 MBD.
LAC Oil Balance - Overall
• Net LAC oil exports have increased two fold over the last
fifteen years from 2 to 4 MBD.
• If consumption and production trends remain constant,
LAC net exports are to increase 50% over the next twenty
years up to 6 MBD.
LAC Oil Balance - Overall
• Net LAC oil exports have increased two fold over the last
fifteen years from 2 to 4 MBD.
• If consumption and production trends remain constant,
LAC net exports are to increase 50% over the next twenty
years up to 6 MBD.
• This implies increasing production by 6 MBD, 4 MBD to
supply domestic consumption in LAC countries and 2
MBD for additional exports.
LAC Oil Balance - Vis a vis the United States
• LAC exports are nowadays 30% of United States total oil
imports.
LAC Oil Balance - Vis a vis the United States
• LAC exports are nowadays 30% of United States total oil
imports.
• Assuming the totality of additional LAC exports were to
supply the United States market LAC share of imports
would increase to 50% in the slow import growth scenario
and drop below 30% in the fast import growth scenario.
LAC Oil Balance - Vis a vis the United States
• If LAC countries were to increase their share of United
States import market to at least 50% even in the fast import
growth scenario, exports into the U.S. should increase by
6MBD.
LAC Oil Balance - Vis a vis the United States
• If LAC countries were to increase their share of United
States import market to at least 50% even in the fast import
growth scenario, exports into the U.S. should increase by
6MBD.
• To reach a 50% share in the United States fast import
growth scenario, oil production in the LAC countries
should increase twofold over the next twenty years from
10 MBD up to 20 MBD.
LAC Oil Balance - Scenarios
• Two oil production growth scenarios emerge for LAC
countries:
LAC Oil Balance - Scenarios
• Two oil production growth scenarios emerge for LAC
countries:
– Trend Growth: The last thirty years trend remains constant and
production grows by 6 MBD over the next twenty. LAC will not be
able to keep a 30% share if he U.S. import market keeps growing
as it has been for the last fifteen years.
LAC Oil Balance - Scenarios
• Two oil production growth scenarios emerge for LAC
countries:
– Trend Growth: The last thirty years trend remains constant and
production grows by 6 MBD over the next twenty. LAC will not be
able to keep a 30% share if he U.S. import market keeps growing
as it has been for the last fifteen years.
– Fast Growth: LAC oil production grows faster over the next
twenty years than the trend of the last thirty. Production grows by
10 MBD and the share of LAC exports in the U.S. import market
grows up to at least 50%.
LAC and the United States: Reserves
160000
LAC
140000
120000
100000
80000
60000
40000
United States
20000
0
1
2
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
LAC: Reserves 1970 - 2000
160000
140000
120000
100000
80000
60000
40000
20000
0
United States and LAC: Production, Reserves and P/R ratio
United States
Production
Reserves
Million Barrels per year
Billion Barrels
2800
21000
P/R
13.3%
United States and LAC: Production, Reserves and P/R ratio
Production
Reserves
P/R
Million Barrels per year
Billion Barrels
United States
2800
21000
13.3%
LAC
3500
148000
2.4%
United States and LAC: Production, Reserves and P/R ratio
Production
Reserves
Million Barrels per year
Billion Barrels
United States
2800
21000
13.3%
LAC
3500
148000
2.4%
LAC
5700
148000
3.9%
TREND Growth Scenario
P/R
United States and LAC: Production, Reserves and P/R ratio
Production
Reserves
P/R
Million Barrels per year
Billion Barrels
United States
2800
21000
13.3%
LAC
3500
148000
2.4%
LAC
5700
148000
3.9%
7100
148000
4.8%
TREND Growth Scenario
LAC
FAST Growth Scenario
Reserves, Production and P/R ratio
• LAC oil reserves are seven times the United States
reserves, 148 vs. 21 mMB.
Reserves, Production and P/R ratio
• LAC oil reserves are seven times the United States
reserves, 148 vs. 21 mMB.
• LAC oil reserves have increased in 120 mMB over the last
thirty years, from 27 up to 148 mMB, in the mean time the
region has produced 74 mMB.
Reserves, Production and P/R ratio
• LAC oil reserves are seven times the United States
reserves, 148 vs. 21 mMB.
• LAC oil reserves have increased in 120 mMB over the last
thirty years, from 27 up to 148 mMB, in the mean time the
region has produced 74 mMB.
• United States intensity of production is more than fivefold
that of the LAC region (13.3% vs. 2.4%).
Reserves, Production and P/R ratio
• Trend Growth Scenario: LAC countries may increase
production by 2/3 or 6 MBD and their P/R ratio will still
be less than 1/3 that of the United States.
Reserves, Production and P/R ratio
• Trend Growth Scenario: LAC countries may increase
production by 2/3 or 6 MBD and their P/R ratio will still
be less than 1/3 that of the United States.
• Fast Growth Scenario: LAC countries may increase
production twofold up to 10 MBD, and their P/R ratio will
be slightly more than 1/3 that of the United States.
Investment and Total Expenditures, and Growth Effect
Trend Growth
Scenario
Investment
Total
Growth
Expenditure
Expenditure
Effect
Billion $
Billion $
% GDP
162
12%
120
Investment and Total Expenditures, and Growth Effect
Trend Growth
Investment
Total
Growth
Expenditure
Expenditure
Effect
Billion $
Billion $
% GDP
120
162
12%
200
271
20%
Scenario
Fast Growth
Scenario
Services Expenditure and Growth Effect
Trend Growth
Scenario
Services Expenditure
Growth Effect
Billions $
% GDP
32
3.5%
Services Expenditure and Growth Effect
Trend Growth
Services Expenditure
Growth Effect
Billions $
% GDP
32
3.5%
54
6.0%
Scenario
Fast Growth
Scenario
Investment Financing
• Investment required to increase production capacity
between 6 and 10 MBD in the LAC region over the next
twenty years fluctuates between 120 and 200 mM$.
Investment Financing
• Investment required to increase production capacity
between 6 and 10 MBD in the LAC region over the next
twenty years fluctuates between 120 and 200 mM$.
• Tapping into such financial resources requires a major
effort in terms of developing mutual trust among
governments, companies, local and international financial
markets.
Investment Financing
• Investment required to increase production capacity
between 6 and 10 MBD in the LAC region over the next
twenty years fluctuates between 120 and 200 mM$.
• Tapping into such financial resources requires a major
effort in terms of developing mutual trust among
governments, companies, local and international financial
markets.
• Multilateral agencies have a role to play managing country
risk, increasing mutual trust between companies and
governments and developing local capital markets.
Investment and Services Expenditures and Growth Effect
• Investment and operational expenditure to produce
between 6 and 10 MBD together with the expenditure of
oil fiscal revenue associated to that production, will induce
a LAC region GDP growth of between 12% and 20% over
the next twenty years.
Investment and Services Expenditures and Growth Effect
• Investment and operational expenditure to produce
between 6 and 10 MBD together with the expenditure of
oil fiscal revenue associated to that production, will induce
a LAC region GDP growth of between 12% and 20% over
the next twenty years.
• Oil services expenditure associated to both increasing
capacity and producing between 6 and10 MBD in the LAC
region will fluctuate between 32 and 54 mM$ over the next
twenty years.
Investment and Services Expenditures and Growth Effect
• Investment and operational expenditure to produce
between 6 and 10 MBD together with the expenditure of
oil fiscal revenue associated to that production, will induce
a LAC region GDP growth of between 12% and 20% over
the next twenty years.
• Oil services expenditure associated to both increasing
capacity and producing between 6 and10 MBD in the LAC
region will fluctuate between 32 and 54 mM$ over the next
twenty years.
• Oil services expenditures will have an overall GDP
growth effect on the LAC region of between 3.5% and 6%
over the next twenty years.
Conclusions
Towards Hemispheric Hydrocarbon Cooperation
• United States shows both a growing oil domestic supply
deficit and a growing dependence on extra hemispheric
sources of supply, with security of supply consequences.
Conclusions
Towards Hemispheric Hydrocarbon Cooperation
• United States shows both a growing oil domestic supply
deficit and a growing dependence on extra hemispheric
sources of supply, with security of supply consequences.
• LAC countries have the reserves to supply the United
States oil deficit. Investment and operational expenditures
to develop such reserves will have an important economic
growth effect impact on the LAC region.
Conclusions
Towards Hemispheric Hydrocarbon Cooperation
• Deepening Western Hemisphere Energy Integration
whereby LAC countries significantly increase oil supply to
the United States and the U.S. exports oil producing goods
and services and finances oil investment in LAC is strategy
where both parties win. The United States win in security
of supply and the LAC countries win in economic growth.
Conclusions
Key questions
• What are the obstacles to larger private investment in the
oil sector in Latin America and the Caribbean?
Conclusions
Key questions
• What are the obstacles to larger private investment in the
oil sector in Latin America and the Caribbean?
• Why market mechanisms on their own are not able to
stimulate such investment? What is the role of Multilateral
Institutions in solving this problem?
Conclusions
Key questions
• What are the obstacles to larger private investment in the
oil sector in Latin America and the Caribbean?
• Why market mechanisms on their own are not able to
stimulate such investment? What is the role of Multilateral
institutions in solving this problem?
• How to organize the development of the oil sector in order
to integrate both environmental and social development?