Transcript WORLD ENERGY

WORLD
ENERGY
INVESTMENT
OUTLOOK
Dr. Fatih Birol
Chief Economist
Head, Economic Analysis Division
International Energy Agency / OECD
Global Strategic Challenges
 Security of energy supplies
 Threat of environmental damage caused by
energy use
 Uneven access of the world’s population to
modern energy
 Investment in energy-supply infrastructure
Global Energy
Investment Outlook
World Energy Investment
2001-2030
Total investment: 16 trillion dollars
E&D
72%
Refining
Other
13%
15%
E&D
55%
LNG Chain
8%
T&D and
Storage
37%
46%
Electricity
60%
Power
generation
54%
T&D
88%
Mining
12%
Shipping
and ports
Oil 19%
Gas 19%
Coal 2%
Production accounts for the majority of investment in the supply
chain – except for electricity
Energy Investment by Region
2001-2030
3,500
20
3,000
2,500
15
2,000
10
1,500
1,000
5
500
0
0
OECD
North
America
China
OECD
Europe
Other Asia
Africa
Russia
Middle East
OECD
Pacific
Other Latin
America
India
Other
transition
Brazil
economies
OECD Europe will account for around 15% of global energy
investment needs of $16 trillion
share in global investment (%)
cumulative investment (billion dollars)
4,000
Energy Investment Share in GDP
2001-2030
Russia
Africa
Other transition economies
Middle East
China
India
Other Asia
Latin America
World average
OECD
0
1
2
3
4
5
per cent
The share of energy investment in the economy is much higher in
developing countries and the transition economies than in the OECD
6
Global Oil Investment
World Oil Production
120
100
mb/d
80
60
40
20
0
1980
1990
2000
OPEC - Middle East
Non-OPEC
2010
2020
2030
OPEC - Other
Non-conventional oil
OPEC countries – mainly in Middle East – will account for almost
all the increase in world oil production to 2030
World Oil Investment
1,200
1,000
billion dollars
800
600
400
200
0
2001-2010
Exploration & development
Refineries
2011-2020
Non-conventional oil
Tankers
2021-2030
GTL
Pipelines
Upstream will continue to dominate oil investment, but the shares
of tankers and GTL increase over projection period
Oil Investment by Region
Asia
Latin America
Africa
Transition economies
Middle East
OECD
0
5
10
15
20
25
30
35
billion dollars per year
Exploration & development
Non-conventional oil
Refineries
Most investment outside the OECD will be needed in the Middle
East and the transition economies – mainly in the upstream
Oil Production and Capacity
Additions
250
200
mb/d
150
100
50
0
2000
Production
2030
Expansion to meet demand growth
2001-2030
Replacement to maintain capacity
The bulk of additions to crude oil production capacity will be
needed simply to maintain capacity
Investment
Uncertainties &
Challenges
Uncertainties & Challenges
 Opportunities and incentives to invest
 Oil prices and rates of return
 Investment regime and risk
 Access to reserves
 Role of NOCs
 Restrictions on foreign investment
 Licensing, fiscal and commercial terms
 Environmental regulations and ethical concerns
 Demand-side impact
 Impact on access to reserves and drilling costs
 Remaining resources and technology
 Iraqi production prospects
 Middle East production and investment policies
Global Upstream Oil and Gas
Investment & Crude Oil Price
150
35
25
100
20
15
50
$/barrel
10
5
0
0
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
billion dollars
30
Investment
WTI price (right axis)
Upstream investment is sensitive – with a lag of a year or so – to
movements in oil prices
Access to Oil Reserves
Iraq
10%
National
companies only
(Saudi Arabia,
Kuwait, Mexico)
35%
Concession
21%
Production
sharing
12%
Limited access National
companies
22%
1,032 billion barrels
Access to much of the world’s remaining oil reserves is restricted
Iraq Oil Investment Scenarios
60
cumulative investment (billion dollars)
2030
50
2030
40
2030
2020
30
20
2020
2020
2010
10
2010
201
0
0
2
3
4
5
6
7
8
9
10
production (mb/d)
Restoration of production capacity
Slow production expansion
Reference Scenario
Rapid production expansion
Iraq will need to invest around $5 billion to raise oil production
capacity to almost 4mb/d by 2010 in the Reference Scenario
Restricted Middle East
Oil Investment
Scenario
Restricted Middle East
Oil Investment Scenario
OPEC Middle East Share in Global Oil Supply
50
per cent
40
30
20
10
0
1970
1980
1990
2000
Restricted Investment Scenario
2010
2020
2030
Reference Scenario
OPEC Middle East’s share of global oil production is assumed to
remain flat at under 30% in Restricted Investment Scenario
OPEC Oil Revenues, 2001 - 2030
Restricted Investment vs Reference Scenario
billion dollars
12,000
10,000
8,000
6,000
OPEC
Reference Scenario
OPEC Middle East
Restricted Investment Scenario
Oil revenues in OPEC Middle East producers are substantially
lower in the Restricted Investment Scenario
Oil Concluding Remarks
 Global investment of $3 trillion needed in 2001-2030
 Investment more sensitive to decline rate than rate of
demand growth – most investment needed just to maintain
current production level
 Major uncertainties about opportunities and incentives to
invest, notably
 Access to reserves and production policies – OPEC (and Iraq)
 Oil prices
 Production costs and investment risks
 Lower investment in Middle East oil would raise global
investment needs, lower OPEC revenues & harm global
economy
 Enhanced consumer-producer dialogue to help facilitate
capital flows
Natural Gas Investment
Outlook
Gas E&D Investment & Incremental
Production
2001 - 2030
Incremental Production
E&D Investment
OECD
10%
Othe
20%
Transition
economies
18%
Other
32%
OECD
48%
Africa
9%
Middle East
8%
Transition
economies
15%
$ 1.7 trillion
Middle
East
23%
Africa
17%
2,767 bcm
OECD countries will account for almost half total upstream gas
investment, but only 10% of additional production
Net Inter-regional Trade
& Production
5,400
4,800
4,200
bcm
3,600
3,000
2,400
1,800
1,200
600
0
2001
Production
2010
LNG trade
2020
2030
Pipeline trade
A growing share of gas will be traded between regions, much of it
in the form of LNG
LNG Shipping Fleet
400
350
number of ships
300
250
200
150
100
}
50
0
in operation (2001)
Liquefaction project developers
Oil & gas companies
Projected
On order
in 2001
additions 2002-2030
LNG buyers
Ship owners
A 6-fold increase in LNG trade between 2002 and 2030 will call for
massive investment in new carriers
Indicative LNG Unit Capital Cost
700
dollars per tonne of capacity
600
500
400
300
200
100
0
Mid-1990s
Liquefaction
2002
2010
Shipping
2030
Regasification
The recent dramatic fall in LNG costs is expected to continue
Levelised Cost of LNG Imports
into US Gulf Coast
3.50
3.00
Henry-Hub average price, 19982002
$/MBtu
2.50
2.00
1.50
1.00
0.50
0.00
Trinidad
Upstream
Nigeria
Venezuela
Liquefaction
Shipping
Egypt
Qatar
Regasification
Lower capital costs are making LNG imports more economic – and
more competitive with domestic supply projects
Gas Investment Uncertainties
 Balance of risk and return – price is key
 Complexity of financing very large-scale projects –
especially in developing countries
 Access to reserves and fiscal regime – most new
investment will be private
 Impact of market reforms on investment risk – long-term
contracts will remain necessary
These factors could lead to shortfall in investment, supply
bottlenecks and higher prices in some cases
Electricity Investment
Outlook
Electricity Sector Investment by
Region
2001-2030
2,500
billion dollars
2,000
1,500
1,000
500
0
China
Other
Latin Africa
Asia America
Middle
East
US and European OECD
Canada Union Pacific
Other
OECD
Russia Rest of
TE
China will need more electricity investment than any other
country or region
Average Age of Power Plants
in the OECD
1,000
800
GW
600
400
200
0
<20 years
Fossil
>20 years
Nuclear
U.S. Privately Owned Utilities
Profit Margin
12%
10%
8%
6%
4%
2%
0%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Profit margins have fallen sharply in recent years
Electricity Investment
Uncertainties
in US
 Investment needs will increase over next 3 decades




Demand growth of 1.6%
Many old plants – including most nuclear reactors – will be retired
Shift to higher unit cost renewables
Tightening reserve margins
 Gas prices and capital costs of coal stations & renewables
are key drivers of future investment in generation
 Wind power will be primary renewable source – calling for
investment in voltage regulation & network reinforcement
 New capacity investment may be delayed as investors wait
to see what environmental policies – including possible
climate action – are enacted
 Higher investment costs for new capacity may delay
decommissioning of old plants and raise emissions
Power Generation Capacity
Additions in Developing Countries
1971-2000
1,200
1,000
GW
800
600
400
200
0
1971-1980 1981-1990 1991-2000 2001-2010 2011-2020 2021-2030
Developing countries will need to add increasing amounts of new
generating capacity over the next three decades
Electricity Investment as Share of
GDP
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
OECD
China
India
1991-2000
Indonesia
Russia
Brazil
Africa
2001-2010
Medium-term electricity sector investment needs will increase
relative to GDP in almost all non-OECD regions
Power Sector Private Investment in
Developing Countries
50
45
40
billion dollars
35
30
25
20
15
10
5
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Developing countries will need to reverse the slump in private
capital flows if projected investment is to be forthcoming
Energy Investment Challenge
 Total investment requirements are modest relative to world
GDP, but challenge differs by region
 Energy and financial resources are sufficient, but
increasing competition for capital and higher risk
 Capital needs are largest for electricity
 Half total energy investment is needed in developing
countries – where financing will be hardest
 Production accounts for the bulk of investment – more
than half just to replace old capacity
Broader Policy Implications:
“Wake-Up Call” for Governments
 Increasing emphasis on creating right enabling conditions
– and lowering barriers to investment
 Less direct intervention as lender or owner
 Governments should monitor and assess the need to
adjust regulatory reforms in network industries
 Policymakers need to ensure basic principles of good
governance are applied and respected – including costreflective pricing
 Fiscal and regulatory incentives to develop advanced
technologies – carbon sequestration, hydrogen, fuel cells,
advanced nuclear reactors, etc. – could speed their
deployment and dramatically alter energy investment
patterns and requirements to 2030