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Abstract energy geopolitics

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Abstract energy geopolitics

  1. 1. Energy Geopolitics and EasternMediterranean Michael J. Economides Petroleum Production Engineering • PROF. M. J. ECONOMIDES©2011
  2. 2. The Continuous Energy Crisis of the 21st Century Oil almost $150, then fell to below $40… headlines rule … “crisis” OPEC has little excess capacity “behind the valve”, Venezuela, Nigeria, Iraq China still grows in economy and ener Oil went over $100 (predicted for late 2010 - early 2011 in March 2010.) Middle East is the exclamation mark! Will be back over $100 soon. NATURAL GAS • PROF. M. J. ECONOMIDES
  3. 3. Energy Geopolitics • PROF. M. J. ECONOMIDES
  4. 4. Oil & Gas Remain as Primary Energy SourcesTotal Energy Other Energy Wind & SolarMBDOE MBDOE MBDOE400 60 3.0 Growth Rate Growth Rate 1980-2003, % 2003-2030, % Wind & Solar350 1.6 1.7 50 2.5300 1.4 40 2.0250 Other 1.7 Biomass,200 30 MSW 1.5 Wind 1.5 1.2 2.7 Coal 11.1150 2.2 1.5 20 1.0 Gas100 2.2 5.9 Nuclear 0.8 10 0.5 50 1.0 Oil 1.5 2.2 Hydro 2.1 Solar 9.5 0 0 0.0 80 90 00 10 20 30 80 90 00 10 20 30 80 90 00 10 20 30
  5. 5. Energy Geopolitics • PROF. M. J. ECONOMIDES
  6. 6. There are no alternatives to hydrocarbon energy sources in the foreseeable future
  7. 7. Energy Geopolitics • PROF. M. J. ECONOMIDES
  8. 8. NATURAL GAS • PROF. M. J. ECONOMIDES
  9. 9. LNG Tanker Underway Photo Courtesy of BP
  10. 10. Globalization of Natural Gas Trade Source: International Energy Agency and our own work
  11. 11. 20-YR LNG EXPORTCONTRACT WITH BG ANDMORE TO COME $5.25 BILLION PROJECT WILL ALLOW TRANSIT OF LONGER AND WIDER SHIPS
  12. 12. Energy Geopolitics The Axis of Energy Militants •Iran •Venezuela •Russia under Putin •The quagmire that is Iraq •ChinaNATURAL GAS • PROF. M. J. ECONOMIDES
  13. 13. NATURAL GAS • PROF. M. J. ECONOMIDES
  14. 14. NATURAL GAS • PROF. M. J. ECONOMIDES
  15. 15. Russia under Putin •Bright spot in oil is gone •Re-Sovietization •Corruption •Total control of press •Investment climate has cooled down •Production is bound to declineNATURAL GAS • PROF. M. J. ECONOMIDES
  16. 16. NATURAL GAS • PROF. M. J. ECONOMIDES
  17. 17. NATURAL GAS • PROF. M. J. ECONOMIDES
  18. 18. CanKeep the Lights On? NATURAL GAS • PROF. M. J. ECONOMIDES
  19. 19. NATURAL GAS • PROF. M. J. ECONOMIDES
  20. 20. Energy: China’s Choke Point NATURAL GAS • PROF. M. J. ECONOMIDES
  21. 21. China will probably lead NATURAL GAS • PROF. M. J. ECONOMIDES
  22. 22. A Plan for Cyprus and Eastern  Mediterranean Oil and Gas Michael J. Economides March 2012
  23. 23. Overriding Philosophy• Investment not welfare giveaways• Control money influx to keep prices down• Common Cypriots benefit from: – Direct investment through the IPO – Through local companies participating in  exploration and production – Jobs through re‐investments
  24. 24. Levant Basin Prospect Area
  25. 25. Bulk Estimates• Israel, total recoverable:  50 Tcf• Eastern Mediterranean:  200 Tcf  – USGS estimate• My own analog for Cyprus: 50‐75 Tcf
  26. 26. What is a Tcf?• Trillion cubic feet• One billion thousand cubic feet (million Btu)• 50 Tcf, means that ultimate recovery 50  Billion MBtu, at $8 translates to $400 billion  from just the gas• Cyprus needs about 100 million scf per day  for electricity. 1 Tcf will provide 27 years of  electricity.
  27. 27. Levantine Basin
  28. 28. Sequence of NOC events• Cyprus NOC is launched immediately – Search for CEO (difficult to find at the required  level) – likely a foreigner – politically problematic  – if Cypriot, will be inexperienced – will need  advising – Need to staff NOC. Thematic coverage in E&P• Legal framework of NOC – Cyprus oil and gas law – Types of agreements
  29. 29. Use Norway Model with Petrobras  Modification• 70 percent of NOC owned by Cyprus  Sovereign Fund – Council of Ministers, Board  of Directors• 30 percent into an IPO on the basis of just  the Aphrodite results. London, New York and  Cypriot Stock Exchanges. Should raise $10  billion, minimum – Use the funds to finance infrastructure and  participate actively in oil and gas development
  30. 30. Sequence of Development Events• Facilitate the immediate construction of 8 in.  gas pipeline from Israel’s Tamar (under fast  development) to transport 100 MMScf/d,  enough for 600 MW of electricity production.  (About $500 million) Delek is interested• Cyprus targets its zones for commercial  development, not for gas for own use
  31. 31. Sequence of Developments (Cont.)• Unitize with Israel, facilitate aggressively  their LNG development from Leviathan ,  three trains, about 20 MTPA (about 3 Bcf/d) ,  two 36 in. pipelines – Estimated costs $15‐ $20 billion from  development banks (China Development Bank?) – Significant security implications for decades – Neutralizes Turkey

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