As delivered at the 5th Annual Atlantic Council Energy & Economic Summit

1. Global Energy Outlook
Atlantic Council
Energy & Economic Summit
Carlos Pascual
Special Envoy and Coordinator for
International Energy Affairs
Bureau of Energy Resources
U.S. Department of State
November 22, 2013
1

2. U.S. Oil Import Dependence
Oil Supply and Demand
Oil Imports
14
70%
12
60%
10
50%
8
25
40%
Consumption
2012 Imports
= 40%
2006 Imports
= 60%
Million barrels per day
20
15
Biofuels
Tight Oil
10
Other Onshore
5
Offshore
2001
Other
2005
2009
20%
Share of consumption
(right axis, %)
2
10%
0
0
1997
30%
Volume (left axis, Mb/d)
4
Alaska Crude, other
Crude, Onshore L48
1993
6
2013
0%
1993
1997
2001
2005
Source and Notes: EIA, Short Term Energy Outlook (2012). Figures for 2012-13 are projections.
2009
2013
2

3. Oil Prices continue to fluctuate around $110
Brent Crude Oil Price
130
$/barrel
120
110
100
90
80
70
Source: EIA, November 2013
3

4. Oil Supply Disruptions Elevated Since Early 2011
Oil Supply Disruptions
3.5
Million barrels per day
3.0
2.5
Libya
2.0
Iraq
Iran
1.5
Nigeria
1.0
Yemen
Syria
0.5
Sudan / S. Sudan
Other Non-OPEC
Source: EIA, October 2013
Sep 2013
Jul 2013
May 2013
Mar 2013
Jan 2013
Nov 2012
Sep 2012
Jul 2012
May 2012
Mar 2012
Jan 2012
Nov 2011
Sep 2011
Jul 2011
May 2011
Mar 2011
Jan 2011
0.0
4

5. Declining need for OPEC crude in 2013
Evolution in the Market’s Need for OPEC Crude Oil
31.0
Reduce
Call
Increase
Call
Million barrels per day
30.5
30.0
Other
29.5
U.S.
2013 Call on
OPEC crude is
0.4 Mb/d less
than the 2012
Call and 0.7
Mb/d less than
2012 OPEC
Production
29.0
28.5
2012 OPEC 2012 Call
Production on OPEC
Crude
Source: EIA, August 2013
Falling OPEC NGLs Non-OPEC Rising non- 2013 Call
OECD
supply
supply
OECD
on OPEC
Demand
growth
growth
Demand
Crude
5

6. Challenge to Energy Governance
Total Primary Energy Consumption
(quadrillion Btu)
900
Total Non-OECD
Total OECD
United States
China
India
800
700
600
500
400
300
200
100
0
2005
Source: EIA, IEO 2013
2010
2015
2020
2025
2030
2035
2040
6

7. U.S. gas imports continue to fall
Gas Supply and Demand
Gas Imports
120
800
0.18
2012 Imports = 7%
700
0.16
Consumption
100
0.14
600
Billion Cubic Meters
2005 Imports = 17%
500
Shale
Gas
80
0.12
Tight Gas
0.10
400
60
0.08
300
Lower 48 Onshore
Conventional
40
Volume (left axis, bcm)
0.06
0.04
20
Share of Consumption
(right axis, %)
200
100
0
1993
Lower 48 Offshore
Conventional
Coalbed Methane
Alaska
1997
0.02
0
2001
Source and Notes: EIA, AEO 2013
2005
2009
2013
0.00
1993
1997
2001
2005
2009
2013
7

8. Global Gas Markets
World LNG Estimated November 2013 Landed and Hub Prices ($US/mmbtu)
Production
(bcm)
2008
2035
Russia
662
881
Iran
130
279
Turkmenistan
71
136
Canada
175
192
United States
575
779
Norway
102
127
Australia
45
155
Qatar
78
260
Indonesia
74
119
Nigeria
32
119
Algeria
82
168
Latin America
Total
148
292
NBP $10.75
UK $10.66
Lake Charles $3.15
Henry Hub $3.58 Spain
$10.90
Belgium $10.40
China $15.25
Altamira $16.40
Source: IEA, FERC, media and industry estimates.
Japan and
South
Korea
$15.65
India $13.75
Rio de Janeiro
$14.65
Bahia Blanca
$15.65
Reserves (bcm)
Mozambique
2825
Tanzania
565
Israel
407
8

9. LNG Export Capacity Growth
1,000
900
800
Export Volume (BCM)
700
600
500
2018:
Australia: Browse
(16.6), Bonaparte (2.8), Shell (4.1)
Indonesia: Tangguh (5.2), Abadi
(3.45)
Israel: Levant LNG (13.8)
Mozambique: Mozambique LNG
1, 2 (13.8)
USA: Sabine Pass Phase 2
(12.42), Lake Charles (22.1)
2011 Top Ten LNG
Exporters
1. Qatar: 30%
2. Malaysia: 11%
3. Indonesia: 10%
4. Australia: 9%
2016:
5. Nigeria: 7% Australia: Gorgon T2
6. Algeria: 6% (7.2), Prelude
(5.0), Wheatstone (12.3)
7. T&T: 6%
USA: Sabine Pass Phase 1
8. Russia: 4%
(12.42)
9. Oman: 3%
10. Egypt: 3%
2020
Australia: Gorgon T4 (7.2), Australia (15.8),
Brunei (5.52),
Iran LNG (13.3),
Mozambique (27.6),
Nigeria (46.23),
Papua New Guinea (16.56),
Russia (62.1),
USA (146.6)
Tanzania (13.8)
FID
Planned
2013:
Algeria: Skikda (5.5)
400
300
200
100
2015:
2014:
Algeria: Gassi Touil (5.5)
Australia: Queensland Curtis (11.7) Australia: Gladstone (10.8), Gorgon
Libya: Marsa-el-Brega (3.0)
T1 (7.2), Australia Pacific (12.42)
Papua New Guinea:
Indonesia: Dongi Senoro (2.8)
Hides (9.0)
Qatar: Debottlenecking (10.8)
2017:
2019:
Australia: Gorgon T3 (7.2),
Cameroon: Cameroon
Icthys (11.6)
LNG (4.8)
Canada: Kitimat (6.9), BC LNG (2.8)Canada: Shell LNG (16.6)
Equatorial Guinea: EGLNG (6.1)
9
Papua New Guinea: PNG (4.1)
Peru: Peru LNG (4.1)
USA: Freeport (18.2)
Country: Facility (volume in bcm)
Sources: PIRA
2012
2013
2014
2015
2016
2017
2018
2019
9
2020

10. LNG Is Integrating Gas Markets
Pipeline and LNG Trade as a Share of Global Gas Consumption
25%
20%
Annual growth rate 2001-12:
- Global gas consumption 2.8%
- Global gas trade 5%
- LNG trade 8.1%
LNG
Pipeline
15%
10%
5%
0%
Data source: BP Statistical Review 2013
10

11. Diverging Gas Prices, Spot Deals Lead Growing
LNG Trade
Price ($/mmbtu)
LNG Imports (bcm)
18
350
300
Asia-Pacific Long-Term
LNG
Europe Long-Term LNG
250
U.S. Long-Term LNG
10
200
Asia-Pacific Spot LNG
8
150
16
14
The share of
consumption in major
markets met by LNG
imports rises from 8% to
12
6
100
4
Europe Spot LNG
U.S. Spot LNG
Asia (average spot)
50
2
U.K. (NBP)
Data source: EIA, PIRA
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
-
U.S. (Henry Hub)
11

12. Asia’s Role in Global Gas Consumption
China
India
Other Emerging Asia
Japan
OECD Asia, ex Japan
ROW
trillion cubic meters per annum (tcm)
5
1.6 tcm
growth to
2035
4
3
Bcm
2
2010
2020
2035
OECD Asia
206
236
China
110
304
544
India
1
182
64
92
178
219
264
389
3,307
3,943
4,955
Other Asia
World
0
2010
Source: EIA
2015
2020
2025
2030
2035
12

13. Natural Gas: Infrastructure and Policy
Sources: EIA, IEA, Industry Sources
13

14. China: Natural Gas Infrastructure and Policy
Kazakhstan (5-10 bcm)
Russia (38 bcm)
Uzbekistan (5-10 bcm)
Turkmenistan (65 bcm)
Natural Gas Pipeline
Crude Oil Pipeline
Refined Product Pipeline
Sources: PetroChina, Industry Sources
Myanmar (12 bcm)
14

15. Russia: Natural Gas Infrastructure and Policy
Billion Cubic Meters
Russian Gas Exports and Projected Export Capacity
2012
Exports
Pipeline
Capacity
Pipeline to
Europe
(130)
Pipeline
to FSU
(56)
Yamal 1 Blue Nord Stream
(33) Stream 1 & 2
(55)
(16)
Sakhalin-2 (13)
Shtokman (12)
Yamal LNG (20)
LNG
Capacity
0
50
100
LNG – Including
Re-exports
(14.8)
Ukrainian GTS
(142.5)
Belarusian Other
GTS
(19.5)
(44.5)
Central Asia
Center
(80)
Yamal 2
(15)
South
Stream
(63)
Altai*
(30)
Vladivostok (6.8)
Pechora (6)
De-Kastri (6)
150
200
250
300
350
400
450
500
Shtokman Field Yamal Fields
Oil Pipelines
Gas Pipelines
Priority Gas Pipelines
Halted Gas Pipelines
Primarily Gas
Consumer
Kovykta Field
Sakhalin
Island
Oil & Gas
Consumer
Primarily Oil
Consumer
Chayanda Fields
Oil & Gas
Competitors
Sources: RIA NOVOSTI, AEI, Gazprom, BP Statistical Review (2013)
15

16. Framework for Analysis
Infrastructure
•
•
•
•
•
Regasification capacity
Storage
Connecting pipelines
Transnational pipelines
Tanker availability
Market Elements
• Wholesale price deregulation
• Separate gas marketing from
transit (unbundling)
• Third party access
• Regasification
• Pipelines
• Storage
• Market players
• Regulatory capacity
• Relax destination clauses
• Market-based indexation
Risk and Finance
• Transit security
• Infrastructure finance and
capital markets
• Storage & Pipelines
• Regasification
• Liquefaction
• Commodity trade and
financial markets
• Contract requirements
Market Data
• Natural gas demand
• Natural gas production
• Import volumes
• Pipeline
• LNG
• Prices
• Production
• Import
• Wholesale
• Retail
16

17. Europe Gas Trade 2012-2018
LNG Terminals
● Existing or Under Construction
● Proposed
Gas Flows
• Pipeline
• LNG
Trinidad and
Tobago, others
OECD Europe Gas Demand
2012: 513 bcm
2018: 525 bcm
LNG Imports
2012: 66 bcm
2018: 81 bcm
Pipeline Imports
2012: 185 bcm
2018: 195 bcm
Data source: Gas Infrastructure Europe and IEA Medium-Term Gas Market Report 2013
17

18. Eurasian gas infrastructure and gas discoveries
Selected natural gas
fields
Country
Field
name
Estimated
Recoverable
reserves
(bcm)
Cyprus
Aphrodite
196
Israel
Mari-B
42
Dalit
14
Tamar
280
Leviathan
540
Tanin
33.6
Karish
50.4
Palestinian Gaza
Territories Marine
Shah
Azerbaijan Deniz
Romania Domino 1
South Stream
SCPX
TANAP
TAP
28
84
42-84
Source: BP, South Stream, IEA, Economist, EIA
Shah Deniz
Aphrodite
(Cyprus)
Leviathan
(Israel)
Tamar
(Israel)
18