Linked Global Energy Outlook 050210

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Linked Global Energy Outlook 050210

  1. 1. Global Energy Outlook 2010-2030 Emerging Markets, Challenges, Opportunities & Winning Strategies for Energy Companies and GE By Shahzad Paracha By Shahzad Paracha
  2. 2. 2009 Review  Primary Energy Consumption Growth +7.2% -2.8% China USA -0.6%  Global oil consumption Growth • First Decline since 1993 • Global Oil Production Growth +0.4% • Oil production outside OPEC -1.4% or 610K b/d, the largest decline since 1992  Global Refining Capacity Additions +2.8% • Led by Asia Pacific (China)  Refining Capacity Utilization • Consistent Decline since 2003 85% 2
  3. 3.  Global Natural Gas Consumption +2.5% • Below 10 years Historical Average +16% • Middle East led Above Average 3.1% growth BUT China led..............  Global Gas Production above 10 years Average (3%) +3.5% • Output Led by USA +7.5% • 10 times than 10 year Average  Natural Gas +24.1% • Highest Share of energy consumption • LNG & LPG share 15% • 2020 LNG & LPG Demand/Share 30%  Other Fuels: +3.1%  Global Coal consumption growth • Worlds fastest growing fuel • China with 43% consumption share led with 7% growth equivalent to 85% global growth  Renewable Energy Stronger Growth • Wind & Solar Capacity rise of 30% & 70% 3 • Driven by 50% rise in USA Wind Capacity surpassing Germany
  4. 4. World Primary Fuel Mix 2009 EIA – September’09 4
  5. 5. 5
  6. 6. 6
  7. 7. Total Proved Oil Reserves & Segmentation Total Proved Oil Reserves Distribution of Proved Oil Reserves (%) 7
  8. 8. Total Proved Gas Reserves & Segmentation Total Proved Gas Reserves Distribution of Proved Gas Reserves (%) 8
  9. 9. Reserves to Production Ratios (R/P) 9
  10. 10. Global Coal Demand & Supply Production Consumption Million Tonnes Oil Equivalent Million Tonnes Oil Equivalent 10
  11. 11. Opportunities & Challenges 11
  12. 12. Global Supply & Demand Challenges  Surplus Reserves in Middle  Oil Reserves 1. S. Arabia (20% of Global Oil Reserves) East, Russia & Africa. 2. Canada 3. Iraq  Cost US$ 15 Trillion in 4. Iran  Infrastructure: Exploration,  Gas Reserves & Producers Production & Transportation 1. Russia 2. Iran 3. Qatar 4. S. Arabia • Major Oil Exporters: S. Arabia (15% of Total Exports & 2. Russia • Gas Reserves & Producers (GR&P): Top 4 constitutes 60% of Total GR&P. 12
  13. 13.  50 % Global Energy Demand Growth by 2030 • Met by 80% Fossil Fuel & 20% Alternatives with  Total Global Investments of 52%, 24% & 21% in Power, Oil & Gas sectors  LPG & LNG Demand Share 40% including UK & EU • Developing Countries Growth Twice Vs Developed Ones • 5Bln New Energy Consumers & New development  Escalating demand, rising oil & gas prices, tight refining capacity inducing: • Cost reductions • Improvement in Production • Investment in New Technology for  Improved Margins & Revenue Growth 13
  14. 14. Global & Regional  Power & Gas  Refining (Including Petrochemicals) • Efficient technology installation in Power generation • Environmental compliance investments - 52% of Total investments • Capex upgrade investment decisions • Future gas supply assessment, Storage Capacities & • Constantly changing global markets role of LNG & Gas to liquid (GTL) • Cost reduction programs to Improve NIAT 1. W. Europe supplier, Norway with 45% EU gas due to potential declining margins. reserves 2. Investments in EU (UK focus) Gas Storage  Retail Capacities • Eroding margins in mature markets 3. 30% Global & EU LNG Supply Growth by 2020 (later stage of market development) • BRICS : 135% demand growth by 2030  Upstream (E&P) •Early Stage Markets • High % of Total Oil & Gas Investments  India, China, Russia • Increase volume from existing reserves • Transitional Markets • Reduce cost of producing reserves  Brazil • Partnering & role of NOC’s  Opportunities • Cost effective technological solutions from suppliers  Urbanization  High population & demand growth  Double Digit Fuels market development 14
  15. 15. NOC’s  Control 80% of global oil reserves  Opportunities & Challenges  50% in Top 100 companies • Acquisition of downstream assets  High margins & prices inducing: 1. Maximize value/barrel • Fund growth strategy 2. Economic diversification • Investment in new technology from service firms like General 3. Drive domestic industry growth Electric  Raised training & recruitment budges to  Access to Reserves Strategy improve talent pipeline by 2030 • Saudi Aramco allocated $50M pear year • Transition from PSA’s to PSC’s for high ROI and control on reserves * IOC’s: International Oil Companies 15 NOC’s: National Oil Companies
  16. 16. Moving Forward 16
  17. 17. Upstream Strategy  Regional fit for purpose strategy development • Minimize over–investment in capacity utilization • Practice for high ROI: 1. Stringent fuel specifications 2. Degradation of crude oil quality 3. High capacity utilization (>90%) • Appropriate Investments in Projects with Positive NPV on right - Oil prices in range $70-95 in 2010-2012. • Weighted Average Cost stands $45/boe • High Payback Investments costing $65/boe • Capacity additions by building green-field refineries • Expansion in attractive alternative energy • US$ 1 Trillion investment by 2030 • Penetration in LNG emerging markets • US$250 Bln investment to fuel 100% growth by 2020 17
  18. 18. Downstream Strategy  Regional market entry strategy development.  BRIC emerging economies market development.  Fuel & Non-Fuel Opportunities (Mature Markets):  Low Fuel Margins, Efficiency Index & 30% network rationalization 1998-2008  Current Forecourt CR penetration 17% of CR industry.  Target high margin CR & capitalize projected £30 Billion industry by 2020.  Customer centric retailing with RCVP development & implementation: • BSP, VFM, customer loyalty/penetration, Sales density (£/sqm), Avg transaction value, shopper marketing • Desired Customer Experience Offer: • Store concepts, formats, branding, channel management • Site & network operations, CRM, Supply chain management • Card Payment & terminals, huge gap in demand vs actual • Locations : Store footprints on consumer insight not property deals 18
  19. 19. Regional & UK Gas Demand & Storage  30% Global & Regional LNG Demand Growth  UK Gas Supply 2016 Proportion: by 2020  Domestic production 20%, Imports 80%  EU: 10% & BRIC’s: 50% (Norway 35%, LNG 35%, Continent 10%)  IOC’s focus on Global & Regional LNG  Current Gas Imports 40% acquisitions  UK Supply Cover Storage  Gas Supplier Qatar meets 30% of EU, US &  15 days Vs 100 in France & SC/AC only 4% Russia demand.  Will meet 20% of UK Gas demand from 2011  Investments In Gas Storage :  From 2010-2020 : 14 bcm (SC/AC - 11%)  UK - 2nd Largest Gas Markets in EU • Will lead Supply Cover Storage – 45 days  1999 – 2009 Average demand growth 6%  Gas Fired Power Generation to drive Gas demand till 2020 Annual Storage Capacity Storage capacity/ Annual Consumption (bcm) (bcm) consumption (%) UK 99 4 4 Germany 101 9 19 Italy 86 13 15 France 46 11 25 19
  20. 20. Few Other Opportunities for Oil, Gas Utilities & Service Companies  Investments by Oil & Gas companies in Upstream generating Order Intake for Vetco Business  Predominantly Surface (On-shore) AND Subsea (Off-shore) Drilling & Production  Gas Fired Plants Roll-out for Electricity Generation using Combined Cycle Turbines  Coal Fuelled Carbon Capture Storage (CCS) Plants Roll-out from 2030 * • Current Efficiency 35% to rise to 55% • Potential to Meet 25% of UK Gas / Energy Demand  Oil Refineries :  IOC’s divestments of EU Assets (Less Margins & 1% Growth) and investments in BRIC’s  Alternative Energy:  Huge UK Government Stimulus Packages for 34% CERT by 2020* (Slide 19)  Concentrated Solar Panel (CSP) Market:  $20 Bln Global Industry  Double digit growth in ALL Markets 2010-2030  Wind Farms (On and Off-Shore) –More Potential as costs cheaper  Solar Plants (Farms) * In US Coal accounts for 50% Power Generation but Generates 80% Emissions 20 * CERT-Carbon Emission Reduction Target

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