Oil Market Dynamics,
Paradigms and Performance
___________________________________________________________________________...
Dynamics of Petroleum
Markets
Oil Sector Performance
and Institutional
Frameworks
1
3
A New World
Energy Paradigm
2
The Pe...
1 Dynamics of Petroleum Markets
Commodity Prices
Supply
A
DemandB
C
0
20
40
60
80
100
120
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
...
0
20
40
60
80
100
120
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
...
-
50
100
150
200
250
ene-96
jul-96
ene-97
jul-97
ene-98
jul-98
ene-99
jul-99
ene-00
jul-00
ene-01
jul-01
ene-02
jul-02
ene...
-
50
100
150
200
250
ene-96
jul-96
ene-97
jul-97
ene-98
jul-98
ene-99
jul-99
ene-00
jul-00
ene-01
jul-01
ene-02
jul-02
ene...
-
50
100
150
200
250
ene-96
jul-96
ene-97
jul-97
ene-98
jul-98
ene-99
jul-99
ene-00
jul-00
ene-01
jul-01
ene-02
jul-02
ene...
-
50
100
150
200
250
ene-96
jul-96
ene-97
jul-97
ene-98
jul-98
ene-99
jul-99
ene-00
jul-00
ene-01
jul-01
ene-02
jul-02
ene...
1. Oil prices increased threefold in nominal terms and twofold in real terms in the years
after 2002 compared to very stab...
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
19...
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
19...
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
19...
(3,000)
-
3,000
6,000
9,000
12,000
15,000
18,000
21,000
24,000
27,000
30,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
...
(3,000)
-
3,000
6,000
9,000
12,000
15,000
18,000
21,000
24,000
27,000
30,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
...
(3,000)
-
3,000
6,000
9,000
12,000
15,000
18,000
21,000
24,000
27,000
30,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
...
-
5,000
10,000
15,000
20,000
25,000
30,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999...
-
5,000
10,000
15,000
20,000
25,000
30,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999...
-
5,000
10,000
15,000
20,000
25,000
30,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999...
(1,000)
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
...
(1,000)
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
...
(1,000)
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
...
-
2,000
4,000
6,000
8,000
10,000
12,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
20...
-
2,000
4,000
6,000
8,000
10,000
12,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
20...
-
2,000
4,000
6,000
8,000
10,000
12,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
20...
-
2,000
4,000
6,000
8,000
10,000
12,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
20...
-
2,000
4,000
6,000
8,000
10,000
12,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
20...
-
2,000
4,000
6,000
8,000
10,000
12,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
20...
(6,000)
(4,500)
(3,000)
(1,500)
-
1,500
3,000
4,500
6,000
7,500
9,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
19...
(6,000)
(4,500)
(3,000)
(1,500)
-
1,500
3,000
4,500
6,000
7,500
9,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
19...
(6,000)
(4,500)
(3,000)
(1,500)
-
1,500
3,000
4,500
6,000
7,500
9,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
19...
(6,000)
(4,500)
(3,000)
(1,500)
-
1,500
3,000
4,500
6,000
7,500
9,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
19...
(6,000)
(4,500)
(3,000)
(1,500)
-
1,500
3,000
4,500
6,000
7,500
9,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
19...
(6,000)
(4,500)
(3,000)
(1,500)
-
1,500
3,000
4,500
6,000
7,500
9,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
19...
1. World demand has increased around 50% since 1984 from 60 to 90 Mbd.
2. Non-OECD demand increase was almost three times ...
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
...
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
...
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
...
(2,500)
-
2,500
5,000
7,500
10,000
12,500
15,000
17,500
20,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995...
(2,500)
-
2,500
5,000
7,500
10,000
12,500
15,000
17,500
20,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995...
(2,500)
-
2,500
5,000
7,500
10,000
12,500
15,000
17,500
20,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995...
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
199...
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
199...
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
199...
(2,000)
(1,500)
(1,000)
(500)
-
500
1,000
1,500
2,000
2,500
3,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1...
(2,000)
(1,500)
(1,000)
(500)
-
500
1,000
1,500
2,000
2,500
3,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1...
(2,000)
(1,500)
(1,000)
(500)
-
500
1,000
1,500
2,000
2,500
3,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1...
-
2,500
5,000
7,500
10,000
12,500
15,000
17,500
20,000
22,500
25,000
27,500
1984
1985
1986
1987
1988
1989
1990
1991
1992
1...
-
2,500
5,000
7,500
10,000
12,500
15,000
17,500
20,000
22,500
25,000
27,500
1984
1985
1986
1987
1988
1989
1990
1991
1992
1...
-
2,500
5,000
7,500
10,000
12,500
15,000
17,500
20,000
22,500
25,000
27,500
1984
1985
1986
1987
1988
1989
1990
1991
1992
1...
(1,500)
-
1,500
3,000
4,500
6,000
7,500
9,000
10,500
12,000
13,500
15,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
199...
(1,500)
-
1,500
3,000
4,500
6,000
7,500
9,000
10,500
12,000
13,500
15,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
199...
(1,500)
-
1,500
3,000
4,500
6,000
7,500
9,000
10,500
12,000
13,500
15,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
199...
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
...
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
...
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
...
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
...
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
...
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
...
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
-
1,000
2,000
3,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
19...
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
-
1,000
2,000
3,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
19...
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
-
1,000
2,000
3,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
19...
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
-
1,000
2,000
3,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
19...
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
-
1,000
2,000
3,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
19...
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
-
1,000
2,000
3,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
19...
1. Non-OPEC/OECD supply increase has more than compensated the decline in OEDC
supply.
2. The bulk of the net supply incre...
2 A New Energy Paradigm
Price Scenarios
New Sources of Crude
A
B
D
C
Changes in Demand
New Oil Balances
A Price Scenarios
Source: IEA World Energy Outlook 2012
Current
Policies
New
Policies
450
Scenario
DollarsperBarrel(2011)
B Changes in World DemandMillionbarrelsperday
Source: IEA World Energy Outlook 2012
Dollarsperbarrel(2011)
Current Policie...
Source: IEA World Energy Outlook 2012
B Changes in World Demand
Oil demand growth by region
Million barrels per day
Source: IEA World Energy Outlook 2012
B Changes in DemandBilliontonne-Km
Incremental road freight growth by region since 2...
Source: IEA World Energy Outlook 2012
C New Sources of Crude
World oil supply by type
Millionbarrelsperday
Processing Gain...
Source: IEA World Energy Outlook 2012
C New Sources of Crude
US oil production by type
Millionbarrelsperday
Light tight oi...
0
2
4
6
8
10
12
14
China European Union India United States Japan
2005 2011 2020 2035
Source: IEA World Energy Outlook 201...
D New Oil Balances
Reductions in net oil imports in the United States by Source
Source: IEA World Energy Outlook 2012
Mill...
3 Oil Sector Performance & Institutional Frameworks
Price Dynamics
Contracting for Oil Production
A
B
D
C
Response to Pric...
Response process to price signals:
Price Investment Supply
3 Oil Sector Performance & Institutional Frameworks
Response process to price signals:
Price Investment
Active
DrillingRigs
3 Oil Sector Performance & Institutional Frameworks
0
50
100150
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA, U.S. BLS and own calculations
Marker Crude Price WTI in r...
Break in trend
2.5
3
3.5
4
4.5
5
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA, U.S. BLS and own calculations
Hodric...
Based on experiences of the last 15 years, we can sort
the Latin American oil producers into 2 groups,
depending on their ...
Despite oil price increases, oil production has fallen in:
Group 1
Argentina
Ecuador
Mexico
Venezuela
B Response to Price ...
Break oil price trend
600700800900
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and author calculations
Argentina O...
Break oil price trend
6.56.66.76.8
H-Poilsupplytrend
3
3.5
4
4.5
1995m1 2000m1 2005m1 2010m1
Period
H-P oil price trend H-...
Break oil price trend
300350400450500550
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and author calculations
Ecuad...
Break oil price trend
5.966.16.26.3
H-PEcuoilsupplytrend
3
3.5
4
4.5
1995m1 2000m1 2005m1 2010m1
Period
H-P oil price tren...
Break oil price trend
20002500300035004000
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and author calculations
Mex...
Break oil price trend
7.988.18.28.3
H-PMexoilsupplytrend
3
3.5
4
4.5
1995m1 2000m1 2005m1 2010m1
Period
H-P oil price tren...
Break oil price trend
15002000250030003500
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and author calculations
Ven...
Break oil price trend
7.97.9588.058.1
H-PVzlaoilsupplytrend
3
3.5
4
4.5
1995m1 2000m1 2005m1 2010m1
Period
H-P oil price t...
Following oil price increases, oil production has sharply
increased in:
Group 2
Brazil
Colombia
Peru
B Response to Price S...
Break oil price trend
500
1000150020002500
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and author calculations
Bra...
Break oil price trend
6.577.58
H-PBraoilsupplytrend
3
3.5
4
4.5
1995m1 2000m1 2005m1 2010m1
Period
H-P oil price trend H-P...
Break oil price trend
500600700800900
1000
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and author calculations
Col...
Break oil price trend
6.36.46.56.66.76.8
H-PColoilsupplytrend
3
3.5
4
4.5
1995m1 2000m1 2005m1 2010m1
Period
H-P oil price...
Break oil price trend
80
100120140160
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and author calculations
Peru Oil...
Break oil price trend
4.64.74.84.955.1
H-PPeroilsupplytrend
3
3.5
4
4.5
1995m1 2000m1 2005m1 2010m1
Period
H-P oil price t...
Break oil price trend
100200300400500
1995m1 2000m1 2005m1 2010m1
period
Group 1 supply index Group 2 supply index
Oil pri...
 Over the last 15 years, oil prices increased
almost fourfold – in real terms – from $26 /
barrel to $96 / barrel
 LAC o...
Therefore,thesituationis:
 Samepricesignals
 Differentreactions
Why?
Institutional Framework
B Response to Price Signals
 Large,upfrontinvestments
 Assetspecific
 Longrecoveryperiods
 Inherentgeologicalrisks
 Asymmetriccontractingbetween
...
 Productionisundergovernmentcontrol
 Direct:Stateoilcompany(SOC)
 Indirect:Pressureonprivatecompanies(POC)
 Discretion...
 Permanentexpropriationofrevenues
 Subsidies, non-oilrelatedactivities,anddiscretionarydistribution
 Uncertaintyregardi...
6.56.66.76.8
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and own calculations
Hodrick-Prescott Trend
Argentina Oil...
5.9
6
6.16.26.3
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and own calculations
Hodrick-Prescott Trend
Ecuador Oi...
7.9
8
8.18.28.3
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and own calculations
Hodrick-Prescott Trend
Mexico Oil...
7.9
7.95
8
8.05
8.1
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and own calculations
Hodrick-Prescott Trend
Venezu...
 Argentina
 Regulationdomesticfuelpricebelowint.prices
 SpecificOilExportTax
 CreationofENARSA
 ExpropriationofYPF
 ...
 Mexico
 PressureonPEMEXspendinginfavoroftransferstogovernment
 CeilingonPIDIREGASdebt
 Venezuela
 InterferenceonPDVS...
 Governmentadministersnationaloilreserves
 Byanon-operatinghydrocarbonagency(NHA)
 NHAopensoilbearinglandstocompetition...
 SOCundersamerulesasPOC
 Notsubjecttodiscretionarygovernmentintervention
 SOCfocusedonindustryrelatedactivities
 Subje...
 Oilsectorisolatedfromgovernment
 ANHactingasabuffer
 Oilproductionundercontrolofcompanies
 Subjecttocontractualguidel...
6.5
7
7.5
8
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and own calculations
Hodrick-Prescott Trend
Brazil Oil Pro...
6.36.46.56.66.76.8
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and own calculations
Hodrick-Prescott Trend
Colombi...
4.64.74.84.9
5
5.1
1995m1 2000m1 2005m1 2010m1
Period
Data Source: IEA and own calculations
Hodrick-Prescott Trend
Peru Oi...
 Brazil
 CreationofANP:Openingtodirectprivateinvestmentand
operationupstream
 PartialprivatizationofPetrobras
 Colombi...
 ItispossibletoidentifyamongtheLatinAmericanoilproducerstwofamilies
ofcountrieswithsimilarinstitutionalpatternsandrespons...
4 The Peruvian Case
The Oil Market in Peru
Drilling Activity
A
B
C
Natural Gas Growth
Closing ConsiderationsD
A Oil in Peru: Production
Source: US Energy Information Administration
Thousandbarrelsperday
Crude Oil
-75
-25
25
75
125
1...
A Oil in Peru: Production
Source: US Energy Information Administration
Thousandbarrelsperday
Non-Crude Oil
-75
-25
25
75
1...
A Oil in Peru: Production
Source: US Energy Information Administration
Thousandbarrelsperday
Total Oil
-75
-25
25
75
125
1...
A Oil in Peru: Consumption
Source: US Energy Information Administration
Thousandbarrelsperday
Total Oil
Consumption
-75
-2...
A Oil in Peru: Balance
Source: US Energy Information Administration
Thousandbarrelsperday
Oil Balance
-75
-25
25
75
125
17...
B Natural Gas Growth
Source: US Energy Information Administration
BillionCubicFeet
0
25
50
75
100
125
150
175
200
225
250
...
B Natural Gas Growth
BillionCubicFeet
0
25
50
75
100
125
150
175
200
225
250
275
300
325
350
375
400
425
1980
1981
1982
19...
B Natural Gas Growth
BillionCubicFeet
Exportable
Surplus
Note: 2012 consumption figure is author’s estimate Source: US Ene...
C Drilling Activity since 2000
0
2
4
6
8
10
12
Jan-00
May-00
Sep-00
Jan-01
May-01
Sep-01
Jan-02
May-02
Sep-02
Jan-03
May-0...
D Closing Considerations
1. Hydrocarbons production growth in Peru over the last thirty years has been exclusively
in Natu...
Dia de-la-energia2013-Ramon Espinasa
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El economista líder del sector petróleo y gas del Banco Interamericano de Desarrollo BID, Ramón Espinasa realizó una presentación en el marco del II Congreso del “Día de la Energía”realizado en Perú.
Su charla tuvo como principales temas:
-El aumento de la demanda de petróleo en los países de la región.
-La importancia de desarrollar una oferta energética competitiva.
-El impacto del gas de esquistos (shale gas) sobre los precios del mercado de gas y de líquidos de gas natural en los EEUU así como en el mercado internacional. http://bit.ly/13r2Jay

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Dia de-la-energia2013-Ramon Espinasa

  1. 1. Oil Market Dynamics, Paradigms and Performance __________________________________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________ II Congreso Día de la Energía 2013 // 3 July 2013 Ramón Espinasa, Lead Specialist (Oil & Gas)
  2. 2. Dynamics of Petroleum Markets Oil Sector Performance and Institutional Frameworks 1 3 A New World Energy Paradigm 2 The Peruvian Case 4
  3. 3. 1 Dynamics of Petroleum Markets Commodity Prices Supply A DemandB C
  4. 4. 0 20 40 60 80 100 120 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Avg. 1984─2001 US$ 19.9 (nominal prices) Avg. 2002─2013 US$ 63.4 (nominal prices) US$/barrel,nominal A Commodity Prices Source: BP Statistical Review of World Energy 2012
  5. 5. 0 20 40 60 80 100 120 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Avg. 1984─2001 US$ 33.0 (2011 US$ prices) Avg. 2002─2013 US$ 68.6 (2011 US$ prices) 2011US$/barrel A Commodity Prices Source: BP Statistical Review of World Energy 2012
  6. 6. - 50 100 150 200 250 ene-96 jul-96 ene-97 jul-97 ene-98 jul-98 ene-99 jul-99 ene-00 jul-00 ene-01 jul-01 ene-02 jul-02 ene-03 jul-03 ene-04 jul-04 ene-05 jul-05 ene-06 jul-06 ene-07 jul-07 ene-08 jul-08 ene-09 jul-09 ene-10 jul-10 ene-11 jul-11 ene-12 jul-12 ene-13 Energy PriceIndex,2005=100 A Commodity Prices Source: World Bank
  7. 7. - 50 100 150 200 250 ene-96 jul-96 ene-97 jul-97 ene-98 jul-98 ene-99 jul-99 ene-00 jul-00 ene-01 jul-01 ene-02 jul-02 ene-03 jul-03 ene-04 jul-04 ene-05 jul-05 ene-06 jul-06 ene-07 jul-07 ene-08 jul-08 ene-09 jul-09 ene-10 jul-10 ene-11 jul-11 ene-12 jul-12 ene-13 Energy Food PriceIndex,2005=100 A Commodity Prices Source: World Bank
  8. 8. - 50 100 150 200 250 ene-96 jul-96 ene-97 jul-97 ene-98 jul-98 ene-99 jul-99 ene-00 jul-00 ene-01 jul-01 ene-02 jul-02 ene-03 jul-03 ene-04 jul-04 ene-05 jul-05 ene-06 jul-06 ene-07 jul-07 ene-08 jul-08 ene-09 jul-09 ene-10 jul-10 ene-11 jul-11 ene-12 jul-12 ene-13 Energy Food Metals & minerals PriceIndex,2005=100 A Commodity Prices Source: World Bank
  9. 9. - 50 100 150 200 250 ene-96 jul-96 ene-97 jul-97 ene-98 jul-98 ene-99 jul-99 ene-00 jul-00 ene-01 jul-01 ene-02 jul-02 ene-03 jul-03 ene-04 jul-04 ene-05 jul-05 ene-06 jul-06 ene-07 jul-07 ene-08 jul-08 ene-09 jul-09 ene-10 jul-10 ene-11 jul-11 ene-12 jul-12 ene-13 Energy Food Metals & minerals Non-energy commodities PriceIndex,2005=100 A Commodity Prices Source: World Bank
  10. 10. 1. Oil prices increased threefold in nominal terms and twofold in real terms in the years after 2002 compared to very stable prices prevailing in the seventeen years after 1984. 2. This price behavior is not exclusive of oil / energy but is replicated by other commodities and food prices. 3. The increase in the price of all commodities as from 2002 is due to a demand push from the non-OECD countries, particularly Asian. 4. For the specific case of oil the structural factors behind the price increase are the demand push from the Non-OECD coupled with a shift towards more expensive production in the OECD countries as will be described next. A Commodity Prices: Observations
  11. 11. - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: World Thousandbarrelsperday OECD Source: IEA and Own Calculations
  12. 12. - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: World Thousandbarrelsperday Non-OECD Source: IEA and Own Calculations
  13. 13. - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: World Thousandbarrelsperday OECD + Non-OECD Source: IEA and Own Calculations
  14. 14. (3,000) - 3,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000 27,000 30,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Thousandbarrelsperday B Demand: World Changes OECD Source: IEA and Own Calculations
  15. 15. (3,000) - 3,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000 27,000 30,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Thousandbarrelsperday B Demand: World Changes Non-OECD Source: IEA and Own Calculations
  16. 16. (3,000) - 3,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000 27,000 30,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Thousandbarrelsperday B Demand: World Changes OECD + Non-OECD Source: IEA and Own Calculations
  17. 17. - 5,000 10,000 15,000 20,000 25,000 30,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: OECD Thousandbarrelsperday OECD Americas Source: IEA and Own Calculations
  18. 18. - 5,000 10,000 15,000 20,000 25,000 30,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: OECD Thousandbarrelsperday OECD Asia & Oceania Source: IEA and Own Calculations
  19. 19. - 5,000 10,000 15,000 20,000 25,000 30,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: OECD Thousandbarrelsperday OECD Europe Source: IEA and Own Calculations
  20. 20. (1,000) - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: OECD Changes Thousandbarrelsperday OECD Americas Source: IEA and Own Calculations
  21. 21. (1,000) - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: OECD Changes Thousandbarrelsperday OECD Asia & Oceania Source: IEA and Own Calculations
  22. 22. (1,000) - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: OECD Changes Thousandbarrelsperday OECD Europe Source: IEA and Own Calculations
  23. 23. - 2,000 4,000 6,000 8,000 10,000 12,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: Non-OECD Thousandbarrelsperday Africa Source: IEA and Own Calculations
  24. 24. - 2,000 4,000 6,000 8,000 10,000 12,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: Non-OECD Thousandbarrelsperday China Source: IEA and Own Calculations
  25. 25. - 2,000 4,000 6,000 8,000 10,000 12,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: Non-OECD Thousandbarrelsperday Former USSR Source: IEA and Own Calculations
  26. 26. - 2,000 4,000 6,000 8,000 10,000 12,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: Non-OECD Thousandbarrelsperday Middle East Source: IEA and Own Calculations
  27. 27. - 2,000 4,000 6,000 8,000 10,000 12,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: Non-OECD Thousandbarrelsperday Latin America Source: IEA and Own Calculations
  28. 28. - 2,000 4,000 6,000 8,000 10,000 12,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: Non-OECD Thousandbarrelsperday Other Asia Source: IEA and Own Calculations
  29. 29. (6,000) (4,500) (3,000) (1,500) - 1,500 3,000 4,500 6,000 7,500 9,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: Non-OECD Changes Thousandbarrelsperday Africa Source: IEA and Own Calculations
  30. 30. (6,000) (4,500) (3,000) (1,500) - 1,500 3,000 4,500 6,000 7,500 9,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: Non-OECD Changes Thousandbarrelsperday China Source: IEA and Own Calculations
  31. 31. (6,000) (4,500) (3,000) (1,500) - 1,500 3,000 4,500 6,000 7,500 9,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: Non-OECD Changes Thousandbarrelsperday Former USSR Source: IEA and Own Calculations
  32. 32. (6,000) (4,500) (3,000) (1,500) - 1,500 3,000 4,500 6,000 7,500 9,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: Non-OECD Changes Thousandbarrelsperday Middle East Source: IEA and Own Calculations
  33. 33. (6,000) (4,500) (3,000) (1,500) - 1,500 3,000 4,500 6,000 7,500 9,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: Non-OECD Changes Thousandbarrelsperday Latin America Source: IEA and Own Calculations
  34. 34. (6,000) (4,500) (3,000) (1,500) - 1,500 3,000 4,500 6,000 7,500 9,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 B Demand: Non-OECD Changes Thousandbarrelsperday Other Asia Source: IEA and Own Calculations
  35. 35. 1. World demand has increased around 50% since 1984 from 60 to 90 Mbd. 2. Non-OECD demand increase was almost three times OECD demand increase: 22 vs. 7.7 Mbd. 3. Demand in Non-OECD since 1984 increased by 100% compared to 17% in the OECD. 4. Until 2002 demand growth was rather homogeneous, then shifted to Non-OECD. 5. OECD Americas demand increase (4.4 Mbd) is almost twice that of OECD Asia & Oceania (2.4 Mbd) and more than four times that of OECD Europe (0.9 Mbd). 6. Non-OECD demand (excluding Former USSR) increased by 26.5 Mbd over the period – more than 3 times the OECD demand increase of 7.7 Mbd. 7. More than half of non-OECD (excluding Former USSR) increase came from Asia with 16.2 Mbd – 8.4 Mbd from non-China Asia and 7.8 Mbd from China. 8. Asian demand increase was more than double the OECD increase: 16.2 vs 7.7 Mbd 9. China demand has increased by a factor of 5; rest of Asia demand has increased 4 times. 10. After the collapse of the USSR, the FSU reduced consumption by 50% and has remained at that level since. B Demand: Observations
  36. 36. - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: World Thousandbarrelsperday OECD Source: IEA and Own Calculations
  37. 37. - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: World Thousandbarrelsperday OPEC Source: IEA and Own Calculations
  38. 38. - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: World Thousandbarrelsperday Non-OPEC/OECD Source: IEA and Own Calculations
  39. 39. (2,500) - 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: World Changes Thousandbarrelsperday OECD Source: IEA and Own Calculations
  40. 40. (2,500) - 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: World Changes Thousandbarrelsperday OPEC OECD Source: IEA and Own Calculations
  41. 41. (2,500) - 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: World Changes Thousandbarrelsperday OPEC Non-OPEC/OECD OECD Source: IEA and Own Calculations
  42. 42. - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: OECD Thousandbarrelsperday OECD Asia & Oceania Source: IEA and Own Calculations
  43. 43. - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: OECD Thousandbarrelsperday OECD Europe Source: IEA and Own Calculations
  44. 44. - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: OECD Thousandbarrelsperday OECD Americas Source: IEA and Own Calculations
  45. 45. (2,000) (1,500) (1,000) (500) - 500 1,000 1,500 2,000 2,500 3,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: OECD Changes Thousandbarrelsperday OECD Asia & Oceania Source: IEA and Own Calculations
  46. 46. (2,000) (1,500) (1,000) (500) - 500 1,000 1,500 2,000 2,500 3,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: OECD Changes Thousandbarrelsperday OECD Europe Source: IEA and Own Calculations
  47. 47. (2,000) (1,500) (1,000) (500) - 500 1,000 1,500 2,000 2,500 3,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: OECD Changes Thousandbarrelsperday OECD Americas Source: IEA and Own Calculations
  48. 48. - 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000 22,500 25,000 27,500 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: OPEC Thousandbarrelsperday OPEC Latin America Source: IEA and Own Calculations
  49. 49. - 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000 22,500 25,000 27,500 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: OPEC Thousandbarrelsperday OPEC Africa Source: IEA and Own Calculations
  50. 50. - 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000 22,500 25,000 27,500 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: OPEC Thousandbarrelsperday OPEC Middle East Source: IEA and Own Calculations
  51. 51. (1,500) - 1,500 3,000 4,500 6,000 7,500 9,000 10,500 12,000 13,500 15,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: OPEC Changes Thousandbarrelsperday OPEC Latin America Source: IEA and Own Calculations
  52. 52. (1,500) - 1,500 3,000 4,500 6,000 7,500 9,000 10,500 12,000 13,500 15,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: OPEC Changes Thousandbarrelsperday OPEC Africa Source: IEA and Own Calculations
  53. 53. (1,500) - 1,500 3,000 4,500 6,000 7,500 9,000 10,500 12,000 13,500 15,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: OPEC Changes Thousandbarrelsperday OPEC Middle East Source: IEA and Own Calculations
  54. 54. - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: Non-OPEC/OECD Thousandbarrelsperday Non-OECD Europe Source: IEA and Own Calculations
  55. 55. - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: Non-OPEC/OECD Thousandbarrelsperday Non-OPEC Middle East Source: IEA and Own Calculations
  56. 56. - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: Non-OPEC/OECD Thousandbarrelsperday Non-OPEC Africa Source: IEA and Own Calculations
  57. 57. - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: Non-OPEC/OECD Thousandbarrelsperday Non-OPEC Latin America Source: IEA and Own Calculations
  58. 58. - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: Non-OPEC/OECD Thousandbarrelsperday Non-OPEC Asia Source: IEA and Own Calculations
  59. 59. - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: Non-OPEC/OECD Thousandbarrelsperday Former USSR Source: IEA and Own Calculations
  60. 60. (5,000) (4,000) (3,000) (2,000) (1,000) - 1,000 2,000 3,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: Non-OPEC/OECD Changes Thousandbarrelsperday Non-OECD Europe Source: IEA and Own Calculations
  61. 61. (5,000) (4,000) (3,000) (2,000) (1,000) - 1,000 2,000 3,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: Non-OPEC/OECD Changes Thousandbarrelsperday Non-OPEC Middle East Source: IEA and Own Calculations
  62. 62. (5,000) (4,000) (3,000) (2,000) (1,000) - 1,000 2,000 3,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: Non-OPEC/OECD Changes Thousandbarrelsperday Non-OPEC Africa Source: IEA and Own Calculations
  63. 63. (5,000) (4,000) (3,000) (2,000) (1,000) - 1,000 2,000 3,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: Non-OPEC/OECD Changes Thousandbarrelsperday Former USSR Source: IEA and Own Calculations
  64. 64. (5,000) (4,000) (3,000) (2,000) (1,000) - 1,000 2,000 3,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: Non-OPEC/OECD Changes Thousandbarrelsperday Non-OPEC Latin America Source: IEA and Own Calculations
  65. 65. (5,000) (4,000) (3,000) (2,000) (1,000) - 1,000 2,000 3,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 C Supply: Non-OPEC/OECD Changes Thousandbarrelsperday Non-OPEC Asia Source: IEA and Own Calculations
  66. 66. 1. Non-OPEC/OECD supply increase has more than compensated the decline in OEDC supply. 2. The bulk of the net supply increase has come from OPEC production out of spare capacity since 1985. It increased twofold from 18 to 38 Mbd. 3. OECD essentially flat behavior has coincided with oil price increase since 2002. 4. OECD Americas has recovered slightly from its decline in production since 1985; OECD Europe peaked in production and has been declining since 2000 and is below 1985 level. 5. OPEC Latin America is slightly above 1985; OPEC Africa increased almost twofold; OPEC Middle East increase more than doubles the rest of OPEC. 6. The FSU is back to where it was in 1985 with export capacity around 9 Mbd. 7. Latin America is the Non OPEC/OECD region with the fastest and largest growth. C Supply: Observations
  67. 67. 2 A New Energy Paradigm Price Scenarios New Sources of Crude A B D C Changes in Demand New Oil Balances
  68. 68. A Price Scenarios Source: IEA World Energy Outlook 2012 Current Policies New Policies 450 Scenario DollarsperBarrel(2011)
  69. 69. B Changes in World DemandMillionbarrelsperday Source: IEA World Energy Outlook 2012 Dollarsperbarrel(2011) Current Policies New Policies 450 Scenario
  70. 70. Source: IEA World Energy Outlook 2012 B Changes in World Demand Oil demand growth by region Million barrels per day
  71. 71. Source: IEA World Energy Outlook 2012 B Changes in DemandBilliontonne-Km Incremental road freight growth by region since 2000
  72. 72. Source: IEA World Energy Outlook 2012 C New Sources of Crude World oil supply by type Millionbarrelsperday Processing Gains Light tight oil Other unconventional oil NGLs Fields yet-to-be found Fields yet-to-be developed Currently producing
  73. 73. Source: IEA World Energy Outlook 2012 C New Sources of Crude US oil production by type Millionbarrelsperday Light tight oil Other unconventional oil Fields yet-to-be found Fields yet-to-be developed Currently producing NGLs
  74. 74. 0 2 4 6 8 10 12 14 China European Union India United States Japan 2005 2011 2020 2035 Source: IEA World Energy Outlook 2012 D New Oil Balances Prospective oil imports Millionbarrelsperday
  75. 75. D New Oil Balances Reductions in net oil imports in the United States by Source Source: IEA World Energy Outlook 2012 Millionbarrelsperday
  76. 76. 3 Oil Sector Performance & Institutional Frameworks Price Dynamics Contracting for Oil Production A B D C Response to Price Signals Institutional Features & Consequences
  77. 77. Response process to price signals: Price Investment Supply 3 Oil Sector Performance & Institutional Frameworks
  78. 78. Response process to price signals: Price Investment Active DrillingRigs 3 Oil Sector Performance & Institutional Frameworks
  79. 79. 0 50 100150 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA, U.S. BLS and own calculations Marker Crude Price WTI in real terms A Price Dynamics
  80. 80. Break in trend 2.5 3 3.5 4 4.5 5 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA, U.S. BLS and own calculations Hodrick-Prescott Trend Marker Crude Price WTI in logs A Price Dynamics
  81. 81. Based on experiences of the last 15 years, we can sort the Latin American oil producers into 2 groups, depending on their responses to price signals: Group 1 Group 2 Argentina Ecuador Mexico Venezuela Brazil Colombia Peru B Response to Price Signals
  82. 82. Despite oil price increases, oil production has fallen in: Group 1 Argentina Ecuador Mexico Venezuela B Response to Price Signals: Supply
  83. 83. Break oil price trend 600700800900 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and author calculations Argentina Oil Production B Response to Price Signals – Group 1: Argentina
  84. 84. Break oil price trend 6.56.66.76.8 H-Poilsupplytrend 3 3.5 4 4.5 1995m1 2000m1 2005m1 2010m1 Period H-P oil price trend H-P oil supply trend Data Source: IEA, U.S. BLS and own calculations Hodrick-Prescott Trends Marker Crude Price and Argentina Oil Production B Response to Price Signals – Group 1: Argentina
  85. 85. Break oil price trend 300350400450500550 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and author calculations Ecuador Oil Production B Response to Price Signals – Group 1: Ecuador
  86. 86. Break oil price trend 5.966.16.26.3 H-PEcuoilsupplytrend 3 3.5 4 4.5 1995m1 2000m1 2005m1 2010m1 Period H-P oil price trend H-P Ecu oil supply trend Data Source: IEA, U.S. BLS and own calculations Hodrick-Prescott Trends Marker Crude Price and Ecuador Oil Production B Response to Price Signals – Group 1: Ecuador
  87. 87. Break oil price trend 20002500300035004000 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and author calculations Mexico Oil Production B Response to Price Signals – Group 1: Mexico
  88. 88. Break oil price trend 7.988.18.28.3 H-PMexoilsupplytrend 3 3.5 4 4.5 1995m1 2000m1 2005m1 2010m1 Period H-P oil price trend H-P Mex oil supply trend Data Source: IEA, U.S. BLS and own calculations Hodrick-Prescott Trends Marker Crude Price and Mexico Oil Production B Response to Price Signals – Group 1: Mexico
  89. 89. Break oil price trend 15002000250030003500 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and author calculations Venezuela Oil Production B Response to Price Signals – Group 1: Venezuela
  90. 90. Break oil price trend 7.97.9588.058.1 H-PVzlaoilsupplytrend 3 3.5 4 4.5 1995m1 2000m1 2005m1 2010m1 Period H-P oil price trend H-P Vzla oil supply trend Data Source: IEA, U.S. BLS and own calculations Hodrick-Prescott Trends Marker Crude Price and Venezuela Oil Production B Response to Price Signals – Group 1: Venezuela
  91. 91. Following oil price increases, oil production has sharply increased in: Group 2 Brazil Colombia Peru B Response to Price Signals: Supply
  92. 92. Break oil price trend 500 1000150020002500 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and author calculations Brazil Oil Production B Response to Price Signals – Group 2: Brazil
  93. 93. Break oil price trend 6.577.58 H-PBraoilsupplytrend 3 3.5 4 4.5 1995m1 2000m1 2005m1 2010m1 Period H-P oil price trend H-P Bra oil supply trend Data Source: IEA, U.S. BLS and own calculations Hodrick-Prescott Trends Marker Crude Price and Brazil Oil Production B Response to Price Signals – Group 2: Brazil
  94. 94. Break oil price trend 500600700800900 1000 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and author calculations Colombia Oil Production B Response to Price Signals – Group 2: Colombia
  95. 95. Break oil price trend 6.36.46.56.66.76.8 H-PColoilsupplytrend 3 3.5 4 4.5 1995m1 2000m1 2005m1 2010m1 Period H-P oil price trend H-P Col oil supply trend Data Source: IEA, U.S. BLS and own calculations Hodrick-Prescott Trends Marker Crude Price and Colombia Oil Production B Response to Price Signals – Group 2: Colombia
  96. 96. Break oil price trend 80 100120140160 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and author calculations Peru Oil Production B Response to Price Signals – Group 2: Peru
  97. 97. Break oil price trend 4.64.74.84.955.1 H-PPeroilsupplytrend 3 3.5 4 4.5 1995m1 2000m1 2005m1 2010m1 Period H-P oil price trend H-P Per oil supply trend Data Source: IEA, U.S. BLS and own calculations Hodrick-Prescott Trends Marker Crude Price and Peru Oil Production B Response to Price Signals – Group 2: Peru
  98. 98. Break oil price trend 100200300400500 1995m1 2000m1 2005m1 2010m1 period Group 1 supply index Group 2 supply index Oil price index Data Source: IEA, U.S. BLS, Baker Hughes Inc and own calculations Price and Supply Performance Group 1 vs. Group 2 B Response to Price Signals – Group 1 vs. Group 2
  99. 99.  Over the last 15 years, oil prices increased almost fourfold – in real terms – from $26 / barrel to $96 / barrel  LAC oil producers reacted differently: Group 1 Group 2 Drilling activity has remained stagnant and oil supply has fallen Drilling activity has increased 2.8 x Oil output has increased 150% B Response to Price Signals
  100. 100. Therefore,thesituationis:  Samepricesignals  Differentreactions Why? Institutional Framework B Response to Price Signals
  101. 101.  Large,upfrontinvestments  Assetspecific  Longrecoveryperiods  Inherentgeologicalrisks  Asymmetriccontractingbetween Sovereignresourceownerand concessionarycompany  Presenceofeconomicrentscreate distributivetensionsbetween government&companies  Nationalization&expropriation Complexities Requirements  Long-lastingcontracts  Fair,credible,andstabledistributional rules  Securityagainstthepossibilityof expropriation  Credibilityofinstitutions C Contracting for Oil Production
  102. 102.  Productionisundergovernmentcontrol  Direct:Stateoilcompany(SOC)  Indirect:Pressureonprivatecompanies(POC)  Discretionaryadministrationofreserves&oilrevenue  Exposuretorent-seekingbehaviorbygovernment  Managementunderpoliticalscrutiny  Closedtocompetitionnotexposedtomarketsignals  Operational&financialopacitylackofpublicscrutiny  SOCperformingnon-inherenttasks  SOC/POCforcedtosubsidizedomesticfuelsupply Group1 Features D Institutional Features & Consequences
  103. 103.  Permanentexpropriationofrevenues  Subsidies, non-oilrelatedactivities,anddiscretionarydistribution  Uncertaintyregardingrevenues&savings  Difficulttoundertakelargeprojects  Noresponsetomarketsignals  Nobehaviorasacommercialfirm  LackofcompetitionLeadstoinefficiency  Limitedaccessto  Technology,financing,andengineeringcapacity Group1 Consequences D Institutional Features & Consequences
  104. 104. 6.56.66.76.8 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and own calculations Hodrick-Prescott Trend Argentina Oil Production and Institutional Break Swearing in Néstor Kischner 05/03 D Institutional Features – Group 1: Argentina
  105. 105. 5.9 6 6.16.26.3 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and own calculations Hodrick-Prescott Trend Ecuador Oil Production and Institutional Break Swearing in Rafael Correa 01/07 D Institutional Features – Group 1: Ecuador
  106. 106. 7.9 8 8.18.28.3 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and own calculations Hodrick-Prescott Trend Mexico Oil Production and Institutional Break Swearing in Felipe Calderón 12/06 D Institutional Features – Group 1: Mexico
  107. 107. 7.9 7.95 8 8.05 8.1 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and own calculations Hodrick-Prescott Trend Venezuela Oil Production and Institutional Break Swearing in Hugo Chávez 02/99 D Institutional Features – Group 1: Venezuela
  108. 108.  Argentina  Regulationdomesticfuelpricebelowint.prices  SpecificOilExportTax  CreationofENARSA  ExpropriationofYPF  Ecuador  Pressureonprivatecompaniesinmarginalfields  Specificwindfallprofittaxonprivatecompanies Group1 New Policies D Institutional Features & Consequences
  109. 109.  Mexico  PressureonPEMEXspendinginfavoroftransferstogovernment  CeilingonPIDIREGASdebt  Venezuela  InterferenceonPDVSAprofessionalmanagement  New2002HydrocarbonsLawincreasinggovernment interventionpower  Expropriationofprivatecompaniesbothnationaland international,coreandnon-core Group1 New Policies D Institutional Features & Consequences
  110. 110.  Governmentadministersnationaloilreserves  Byanon-operatinghydrocarbonagency(NHA)  NHAopensoilbearinglandstocompetition  National&foreign  Private&stateowned  Exposedtomarketsignals  Contractuallysetrules:distribution&operation Group2 Features D Institutional Features & Consequences
  111. 111.  SOCundersamerulesasPOC  Notsubjecttodiscretionarygovernmentintervention  SOCfocusedonindustryrelatedactivities  Subjecttocompetition&publicscrutiny  Subsidytodomesticmarket  Explicitandassumedbythegovernment  Reservesnotinjeopardy  SOCcanbepartiallyprivatized Group2 Features D Institutional Features & Consequences
  112. 112.  Oilsectorisolatedfromgovernment  ANHactingasabuffer  Oilproductionundercontrolofcompanies  Subjecttocontractualguidelines  Oilcompaniessubjecttopublicscrutiny  Sectoropentointernationalfinancing,technology& engineeringcapacity Group2 Consequences D Institutional Features & Consequences
  113. 113. 6.5 7 7.5 8 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and own calculations Hodrick-Prescott Trend Brazil Oil Production and Institutional Break Swearing in Fernando Henrique Cardoso 01/95 Creation ANP 08/97 D Institutional Features – Group 2: Brazil
  114. 114. 6.36.46.56.66.76.8 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and own calculations Hodrick-Prescott Trend Colombia Oil Production and Institutional Break Swearing in Álvaro Uribe 08/02 Creation ANH 06/03 D Institutional Features – Group 2: Colombia
  115. 115. 4.64.74.84.9 5 5.1 1995m1 2000m1 2005m1 2010m1 Period Data Source: IEA and own calculations Hodrick-Prescott Trend Peru Oil Production and Institutional Break Swearing in Alberto Fujimori 07/90 Creation Perupetro 08/93 D Institutional Features – Group 2: Peru
  116. 116.  Brazil  CreationofANP:Openingtodirectprivateinvestmentand operationupstream  PartialprivatizationofPetrobras  Colombia  ANH: Openingtodirectprivateinvestment,operationupstream  PartialprivatizationofEcopetrol.  Peru  Perupetrol:Openingtodirectprivateinvestment,operation upstream Group2 New Policies D Institutional Features & Consequences
  117. 117.  ItispossibletoidentifyamongtheLatinAmericanoilproducerstwofamilies ofcountrieswithsimilarinstitutionalpatternsandresponsebehaviorto marketsignals  Group1:  Governmentmonopolycontrolofproduction  Discretionaldistributionalandoperationalrules  Closed,notrespondingtointernationalpricesignals  Group2:  CompetitionunderRegulatoryAgency  Contractuallysetdistributionalandoperationalrules  Openandresponsivetointernationalpricesignals E Conclusions
  118. 118. 4 The Peruvian Case The Oil Market in Peru Drilling Activity A B C Natural Gas Growth Closing ConsiderationsD
  119. 119. A Oil in Peru: Production Source: US Energy Information Administration Thousandbarrelsperday Crude Oil -75 -25 25 75 125 175 225 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  120. 120. A Oil in Peru: Production Source: US Energy Information Administration Thousandbarrelsperday Non-Crude Oil -75 -25 25 75 125 175 225 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  121. 121. A Oil in Peru: Production Source: US Energy Information Administration Thousandbarrelsperday Total Oil -75 -25 25 75 125 175 225 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  122. 122. A Oil in Peru: Consumption Source: US Energy Information Administration Thousandbarrelsperday Total Oil Consumption -75 -25 25 75 125 175 225 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  123. 123. A Oil in Peru: Balance Source: US Energy Information Administration Thousandbarrelsperday Oil Balance -75 -25 25 75 125 175 225 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  124. 124. B Natural Gas Growth Source: US Energy Information Administration BillionCubicFeet 0 25 50 75 100 125 150 175 200 225 250 275 300 325 350 375 400 425 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Production Note: 2012 production figure is from Peru’s Ministry of Energy & Mines
  125. 125. B Natural Gas Growth BillionCubicFeet 0 25 50 75 100 125 150 175 200 225 250 275 300 325 350 375 400 425 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Consumption Note: 2012 consumption figure is author’s estimate Source: US Energy Information Administration
  126. 126. B Natural Gas Growth BillionCubicFeet Exportable Surplus Note: 2012 consumption figure is author’s estimate Source: US Energy Information Administration 0 25 50 75 100 125 150 175 200 225 250 275 300 325 350 375 400 425 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  127. 127. C Drilling Activity since 2000 0 2 4 6 8 10 12 Jan-00 May-00 Sep-00 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 Source: Baker Hughes ActiveDrillingRigs(Land&Offshore)
  128. 128. D Closing Considerations 1. Hydrocarbons production growth in Peru over the last thirty years has been exclusively in Natural Gas 2. Crude oil production has shown a steady decline. Production has fallen by 60% 3. Gas production has increased discretionally over the last decade. First with the coming on stream of the Camisea pipeline by the mid 2010s. Second when Peru LNG came on stream by the late 2010s. 4. The increase in Oil production has been exclusively due to the production of Liquids associated to Natural Gas production. 5. The increase in Total Oil production explains almost closing down the domestic oil deficit. 6. The country is nowadays a net hydrocarbons exporter. 7. The drop in drilling activity over the last two years is worrisome. It may lead to a drop in total hydrocarbons production. 8. It is necessary to understand and remedy the reasons for the recent drop in drilling activity.

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