Maria van der Hoeven, Executive Director of the International Energy Agency presentation at The Future of Energy on Global Energy Trends: Focus on oil and gas

1. Global Energy Trends:
Focus on oil & gas
Maria van der Hoeven
Executive Director
International Energy Agency
International Seminar: “The Future of Energy”
Mexico City, 29 February 2012
© OECD/IEA 2011

2. Oil prices remain high
World: Oil Burden & Price $/bbl
Crude Futures
$/bbl 9% 115
Nominal Oil Expenditures as %
Front Month Close Contributing to
2nd oil
8% the next shock? 105
130 shock
95
of Nominal GDP
7%
120 85
6%
110 1st oil Post- 75
5%
shock recession 3rd oil 65
100 4% recoveries shock 55
90 3% 45
Source: Platts 2%
80 35
1% 25
70
0% 15
Feb 11 May 11 Aug 11 Nov 11 Feb 12
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
NYMEX WTI ICE Brent
Oil Burden WTI (real, 2008 base) * ICE Brent from 2009 onwards
 Crude prices remain high in historical terms.
 Oil burden in 2011 marginally exceeds 2008, in both
years standing above 5% of world GDP.
 Longer term trend to higher prices, but short-term risk
of derailing economic recovery.
© OECD/IEA 2011

3. Oil prices remain high
World: Oil Burden & Price $/bbl
Crude Futures
$/bbl 9% 115
Nominal Oil Expenditures as %
Front Month Close Contributing to
2nd oil
8% the next shock? 105
130 shock
95
of Nominal GDP
7%
120 85
6%
110 1st oil Post- 75
5%
shock recession 3rd oil 65
100 4% recoveries shock 55
90 3% 45
Source: Platts 2%
80 35
1% 25
70
0% 15
Feb 11 May 11 Aug 11 Nov 11 Feb 12
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
NYMEX WTI ICE Brent
Oil Burden WTI (real, 2008 base) * ICE Brent from 2009 onwards
 Crude prices remain high in historical terms.
 Oil burden in 2011 marginally exceeds 2008, in both
years standing above 5% of world GDP.
 Longer term trend to higher prices, but short-term risk
of derailing economic recovery.
© OECD/IEA 2011

4. 2011- The year of supply surprises
Non-OPEC Supply 2011 and 1Q12
mb/d Libyan Crude Oil Capacity kb/d
Selected Shut-ins & Maintenance
 If 2010 was 2.0 -50 -50 -130 -180
-70 -20
-160
-140
the year of 1.6 -250 -130 -270
-190
the post- 1.2 -450
-350
-470 -590
recession 0.8 -650
-360
-360
demand 0.4 -850
surge, then… 0.0 1Q11 2Q11 3Q11 4Q11
Planned Maintenance (N. Sea)
1Q12
2010 2011 2012 2013 2014 2015 2016 Unplanned Outages (N.Sea)
June 2011 December 2011 Other Unplanned Outages
 2011 was the year of unwelcome mb/d Non-OPEC Supply - Yearly Change
supply surprises (Libya, outages in 1.5
1.0
MENA countries, North Sea unplanned 0.5
shut-ins) 0.0
 But non-OPEC supply should recover in -0.5
2012 -1.0
-1.5
1Q11 3Q11 1Q12 3Q12
NAM OECD EUR FSU
China Other Asia LAM
PG & Biofuels Other Total
© OECD/IEA 2011

5. 2011- The year of supply surprises
Non-OPEC Supply 2011 and 1Q12
mb/d Libyan Crude Oil Capacity kb/d
Selected Shut-ins & Maintenance
 If 2010 was 2.0 -50 -50 -130 -180
-70 -20
-160
-140
the year of 1.6 -250 -130 -270
-190
the post- 1.2 -450
-350
-470 -590
recession 0.8 -650
-360
-360
demand 0.4 -850
surge, then… 0.0 1Q11 2Q11 3Q11 4Q11
Planned Maintenance (N. Sea)
1Q12
2010 2011 2012 2013 2014 2015 2016 Unplanned Outages (N.Sea)
June 2011 December 2011 Other Unplanned Outages
 2011 was the year of unwelcome mb/d Non-OPEC Supply - Yearly Change
supply surprises (Libya, outages in 1.5
1.0
MENA countries, North Sea unplanned 0.5
shut-ins) 0.0
 But non-OPEC supply should recover in -0.5
2012 -1.0
-1.5
1Q11 3Q11 1Q12 3Q12
NAM OECD EUR FSU
China Other Asia LAM
PG & Biofuels Other Total
© OECD/IEA 2011

6. 2012 Uncertainties abound
Global GDP Growth Assumption kb/d
Iranian Crude Imports, 2011
Y-o-Y, % Difference vs. Previous MTOGM 1500 3000
5.5
1250 2500
5.0
1000 2000
4.5
750 1500
4.0
500 1000
3.5
250 500
3.0
0 0
2010 2011 2012 2013 Jan-11 Apr-11 Jul-11 Oct-11
Current Previous Total (right) Japan/Korea China/India
Other non-IEA Gre/It/Sp/Tur Other Europe
 Weak economic growth expected in
2012, keeping oil demand growth
below 1.0 mb/d for 2012. mb/d
4.0
Iran Crude Oil Capacity
 Iran increases the geopolitical risk 3.5
premium
 2012 likely to be year of two
3.0
mutually counteracting forces – 2.5
economic and geopolitical risks. 2.0
2010 2011 2012 2013 2014 2015 2016
June 2011 December 2011
© OECD/IEA 2011

7. 2012 Uncertainties abound
Global GDP Growth Assumption kb/d
Iranian Crude Imports, 2011
Y-o-Y, % Difference vs. Previous MTOGM 1500 3000
5.5
1250 2500
5.0
1000 2000
4.5
750 1500
4.0
500 1000
3.5
250 500
3.0
0 0
2010 2011 2012 2013 Jan-11 Apr-11 Jul-11 Oct-11
Current Previous Total (right) Japan/Korea China/India
Other non-IEA Gre/It/Sp/Tur Other Europe
 Weak economic growth expected in
2012, keeping oil demand growth
below 1.0 mb/d for 2012. mb/d
4.0
Iran Crude Oil Capacity
 Iran increases the geopolitical risk 3.5
premium
 2012 likely to be year of two
3.0
mutually counteracting forces – 2.5
economic and geopolitical risks. 2.0
2010 2011 2012 2013 2014 2015 2016
June 2011 December 2011
© OECD/IEA 2011

8. Longer term, oil retains its
importance
World primary energy demand
5 000
Additional
Mtoe
to 2035
4 000
2010
3 000
2 000
1 000
0
Oil Coal Gas Renewables Nuclear
 Renewables & natural gas collectively meet almost two-thirds
of incremental energy demand in 2010-2035
 But oil retains the largest fuel share at 28%
Source: World Energy Outlook 2011 © OECD/IEA 2011

9. Longer term, oil retains its
importance
World primary energy demand
5 000
Additional
Mtoe
to 2035
4 000
2010
3 000
2 000
1 000
0
Oil Coal Gas Renewables Nuclear
 Renewables & natural gas collectively meet almost two-thirds
of incremental energy demand in 2010-2035
 But oil retains the largest fuel share at 28%
Source: World Energy Outlook 2011 © OECD/IEA 2011

10. Transport sector to drive oil demand
Change in primary oil demand by sector & region
in the New Policies Scenario, 2010-2035
China Transport
India Buildings
Middle East
Other Asia Industry
Africa Other
E. Europe/Eurasia
Latin America
OECD Asia Oceania
OECD Europe
OECD Americas
-4 -2 0 2 4 6 8
mb/d
 Transport net demand grows by 14 mb/d during 2010-2035,
outweighing a decline of more than 1 mb/d in other sectors
Source: World Energy Outlook 2011 © OECD/IEA 2011

11. Transport sector to drive oil demand
Change in primary oil demand by sector & region
in the New Policies Scenario, 2010-2035
China Transport
India Buildings
Middle East
Other Asia Industry
Africa Other
E. Europe/Eurasia
Latin America
OECD Asia Oceania
OECD Europe
OECD Americas
-4 -2 0 2 4 6 8
mb/d
 Transport net demand grows by 14 mb/d during 2010-2035,
outweighing a decline of more than 1 mb/d in other sectors
Source: World Energy Outlook 2011 © OECD/IEA 2011

12. Iraq is the largest source of oil
supply growth
Major changes in world liquids supply in the New Policies Scenario, 2010-2035
OPEC
Iraq Non-OPEC
Saudi Arabia
Brazil
Canada
Kazakhstan
Venezuela
UAE
Kuwait
United States
0 1 2 3 4 5 6
mb/d
The rise in MENA production is over 90% of the growth in global oil output to
2035, while companies operating elsewhere turn increasingly to more
difficult & costly sources
© OECD/IEA 2011

13. Iraq is the largest source of oil
supply growth
Major changes in world liquids supply in the New Policies Scenario, 2010-2035
OPEC
Iraq Non-OPEC
Saudi Arabia
Brazil
Canada
Kazakhstan
Venezuela
UAE
Kuwait
United States
0 1 2 3 4 5 6
mb/d
The rise in MENA production is over 90% of the growth in global oil output to
2035, while companies operating elsewhere turn increasingly to more
difficult & costly sources
© OECD/IEA 2011

14. Changing oil import needs
shift concerns about oil security
Net imports of oil
14
Mb/d
2000
12 2010
10 2035
8
6
4
2
0
European United Japan China India ASEAN
Union States
US oil imports drop due to rising domestic output & improved transport efficiency: EU imports
overtake those of the US around 2015; China becomes the largest importer around 2020
© OECD/IEA 2011

15. Changing oil import needs
shift concerns about oil security
Net imports of oil
14
Mb/d
2000
12 2010
10 2035
8
6
4
2
0
European United Japan China India ASEAN
Union States
US oil imports drop due to rising domestic output & improved transport efficiency: EU imports
overtake those of the US around 2015; China becomes the largest importer around 2020
© OECD/IEA 2011

16. Are we entering a Golden Age of Gas ?
Natural gas can enhance security of supply: global resources exceed 250 years of current
production; while in each region, resources exceed 75 years of current consumption
© OECD/IEA 2011

17. Are we entering a Golden Age of Gas ?
Natural gas can enhance security of supply: global resources exceed 250 years of current
production; while in each region, resources exceed 75 years of current consumption
© OECD/IEA 2011

18. The majority of energy subsidies
still go to fossil fuels
World subsidies to fossil fuels consumption & renewable energy
600 Fossil fuel
Billion dollars (nominal)
consumption
500
Renewable energy
400 production
300
200
100
0
2007 2008 2009 2010
Fossil-fuels subsidies amounted to $409 billion in 2010 – down from $550 billion in 2008 but
still much larger than subsidies to renewables, which reached $66 billion in 2010
© OECD/IEA 2011

19. The majority of energy subsidies
still go to fossil fuels
World subsidies to fossil fuels consumption & renewable energy
600 Fossil fuel
Billion dollars (nominal)
consumption
500
Renewable energy
400 production
300
200
100
0
2007 2008 2009 2010
Fossil-fuels subsidies amounted to $409 billion in 2010 – down from $550 billion in 2008 but
still much larger than subsidies to renewables, which reached $66 billion in 2010
© OECD/IEA 2011

20. Unlocking the potential of energy
efficiency
 Improving energy efficiency is the quickest and cheapest way to
address energy security, environmental & economic challenges
 The IEA has developed 25 recommendations for promoting
energy efficiency which could save:
 82 EJ/year by 2030 (17% of the current global energy demand)
 Governments have a critical role to play in improving energy
efficiency:
 stimulate investment in energy efficiency
 accelerate implementation through national energy efficiency strategies
 monitoring, enforcement & evaluation
 International collaboration is also vital
© OECD/IEA 2011

21. Unlocking the potential of energy
efficiency
 Improving energy efficiency is the quickest and cheapest way to
address energy security, environmental & economic challenges
 The IEA has developed 25 recommendations for promoting
energy efficiency which could save:
 82 EJ/year by 2030 (17% of the current global energy demand)
 Governments have a critical role to play in improving energy
efficiency:
 stimulate investment in energy efficiency
 accelerate implementation through national energy efficiency strategies
 monitoring, enforcement & evaluation
 International collaboration is also vital
© OECD/IEA 2011

22. Energy is at the heart of
the climate challenge
45
CO2 emissions (giggatonnes)
6°C trajectory
40
35
30
2°C trajectory
25
20 Delay until 2017
Delay until 2015
15
10 Emissions from
existing
5 infrastructure
0
2010 2015 2020 2025 2030 2035
Without further action, by 2017 all CO2 emissions permitted in the 450 Scenario
will be “locked-in” by existing power plants, factories, buildings, etc
© OECD/IEA 2011

23. Energy is at the heart of
the climate challenge
45
CO2 emissions (giggatonnes)
6°C trajectory
40
35
30
2°C trajectory
25
20 Delay until 2017
Delay until 2015
15
10 Emissions from
existing
5 infrastructure
0
2010 2015 2020 2025 2030 2035
Without further action, by 2017 all CO2 emissions permitted in the 450 Scenario
will be “locked-in” by existing power plants, factories, buildings, etc
© OECD/IEA 2011

24. Mexico in the global energy
context
 The IEA projects Mexico’s oil production to gradually decline in
the medium term, but then to once again grow in line with the
country’s resource potential
 Thanks to its large reserves of unconventional gas, Mexico could
be among the leaders in any potential ‘Golden age of Gas’
 Energy efficiency: Mexico has already had considerable success
with its end-use programme
 With its vast potential in renewable energy, Mexico could
become an avant-garde player in areas such as geothermal, solar
and wind energy
 Mexico has established itself as a proactive player in both
national & international climate policy
© OECD/IEA 2011

25. Mexico in the global energy
context
 The IEA projects Mexico’s oil production to gradually decline in
the medium term, but then to once again grow in line with the
country’s resource potential
 Thanks to its large reserves of unconventional gas, Mexico could
be among the leaders in any potential ‘Golden age of Gas’
 Energy efficiency: Mexico has already had considerable success
with its end-use programme
 With its vast potential in renewable energy, Mexico could
become an avant-garde player in areas such as geothermal, solar
and wind energy
 Mexico has established itself as a proactive player in both
national & international climate policy
© OECD/IEA 2011

26. Key Messages
 In a world full of uncertainty, one thing is sure:
rising incomes & population will push energy needs higher
 Rising transport demand and upstream costs reconfirm the end of
cheap oil
 New options are opening up for natural gas, but ‘golden
standards’ will be needed if it is to enter a ‘golden age’
 Energy efficiency is the first step toward enhancing energy
security & climate change mitigation
 Despite steps in the right direction, the door to 2OC is closing
© OECD/IEA 2011

27. Key Messages
 In a world full of uncertainty, one thing is sure:
rising incomes & population will push energy needs higher
 Rising transport demand and upstream costs reconfirm the end of
cheap oil
 New options are opening up for natural gas, but ‘golden
standards’ will be needed if it is to enter a ‘golden age’
 Energy efficiency is the first step toward enhancing energy
security & climate change mitigation
 Despite steps in the right direction, the door to 2OC is closing
© OECD/IEA 2011