Madrid WPC Breakfast Conference 7 May Keisuke SADAMORI Director of Energy Markets and Security IEA

Transcription

1 Madrid WPC Breakfast Conference 7 May 2015 Keisuke SADAMORI Director of Energy Markets and Security IEA OECD/IEA 2014

2 Oil prices ease in March, but recover in early April $/bbl Source: ICE, NYMEX Crude Futures Front Month Close 40 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 NYMEX WTI ICE Brent Higher Middle East exports pressure, Yemen tension supports OECD/IEA

3 mb/d Business as unusual Implied OPEC spare capacity World demand growth World supply capacity growth Supply has become more price-elastic Demand less so OECD/IEA 2015

4 mb/d Oil price drop slows supply growth OPEC crude capacity OPEC NGLs Non-OPEC World Global capacity growth slows to annual 860 kb/d through 2020 from 1.8 mb/d in 2014 OECD/IEA 2015

5 March non-opec supply rose on increased North America output, but growth is slowing mb/d Total Non-OPEC Supply, y-o-y Change Q11 1Q12 1Q13 1Q14 1Q15 Other North America Total Non-OPEC production rose by 100 kb/d m-o-m in March, to 57.7 mb/d. Non-OPEC expected to grow by 630 y-o-y in 2015 vs 2014 growth of 2.1 mb/d OECD/IEA Non-OPEC output expected to post first y-o-y decline in 4Q15 since 2Q11

6 mb/d Iraq dominates OPEC capacity growth Iraq Rest of OPEC OPEC Oil price collapse, ISIL challenge yet to cause substantial slowdown Growth estimated at 1.1 mb/d in period Elevated risks OECD/IEA 2015

7 OPEC supply soars to 31 mb/d in March, up 890 kb/d from February mb/d 33 OPEC Crude Supply Higher flows from Saudi Arabia, Iraq and Libya push output to highest in nearly two years Biggest month-on-month increase since June 2011 OECD/IEA

8 mb/d mb/d Survival of the fittest 2.0 Change in US liquids production 0.30 Change in Russian liquids production Feb Q Feb Q2014 US production growth slows in Oil price, sanctions see Russian output contracting by 560 kb/d by 2020 OECD/IEA 2015

9 Lower oil prices get a mixed demand response Middle East Africa Latin America Revised demand growth prospects FSU India US kb/d Although many other factors come into play, lower oil prices generally dampen the demand outlook in net oil-exporters Raise the outlook in net oil-imports OECD/IEA 2015

10 Eastward pull unabated Europe FSU Asia/Pacific 345 Americas 158 Middle East Africa Average global demand growth (kb/d) % % % OECD/IEA, 2015 This map is w ithout prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. OECD/IEA 2015

11 Oil trade tilts to products Crude Exports in 2020 and Growth in for Key Trade Routes 1 (million barrels per day) OECD Americas 2 OECD Europe 3.6 (-0.5) 0.5 (-0.1) 0.4 Asia 0.2 Oceania (+0.1) (+0.2) (-0.5) (+0.3) (-0.1) (+0.1) (-0.6) China OECD 0.2 (+0.1) 1.5 (+0.1) (+0.5) (-0.3) 5.5 (+0.1) Other Asia (+0.6) 0.6 (+0.4) Red number in brackets denotes growth in period Excludes Intra-Regional Trade (+0.1) 2 Includes Chile 3 Includes Israel OECD/IEA 2015

12 Global recovery in demand gathers pace mb/d 2 Global y-on-y absolute growth Total products growth rate 2% 1 1% 0 0% -1-1% 1Q2011 1Q2013 1Q2015 LPG Naphtha Gasoline JetKero Diesel RFO Other Total (RHS) +1.3 mb/d in 1Q15, to 93.0 mb/d Colder weather provided a particular impetus Very strong gains seen in Korea & India Growth of 1.1 mb/d foreseen in 2015 as a whole, to 93.6 mb/d Up sharply on 2014 s +0.7 mb/d gain OECD/IEA

13 kb/d Refining surplus lingers despite scaling back Global crude distillation capacity additions OECD Americas OECD Europe OECD Asia Oceania China Other Asia Middle East Other non-oecd Total Net New capacity of 6.4 mb/d by 2020, led by non-oecd Asia, Middle East Brief margin respite in 2014 on shutdowns Startups lift surplus to 5 mb/d in 2020 from 6-yr low ~3 mb/d in 2014 OECD/IEA 2015

14 Global refinery crude demand fall seasonally through May mb/d 80 Global Refining Crude Throughput Jan Mar May Jul Sep Nov Jan Range Average est. Global refinery runs rose in February, despite US refinery maintenance Global crude demand to fall through May, as European, then Asian turnarounds commence. Asia takes as much as 2.5 mb/d of capacity offline at peak in May OECD/IEA

15 Recent inventory builds unbalanced heavily skewed to crude and centered in the US and China mb/d Demand/Supply Balance until 4Q15 *OPEC production assumed at 30 mb/d through forecast period 84 1Q09 3Q10 1Q12 3Q13 1Q15 mb/d Impl. stock ch.&misc (RHS) Demand Supply* S&D balances imply 140 mb stock build in 1Q15 90% of this can be identified from preliminary data: OECD +50 mb China + 76 mb OECD/IEA

16 mb/d Despite lower oil prices biofuels continue to grow Global biofuels production United States biofuels OECD Europe biofuels Brazil biofuels Rest of the world biofuels Biofuel production is mandate not price driven OECD/IEA 2015

17 Oil consumption by sector (OECD) % 31% Industry 6% Petrochemical 29% 5% 10% Transportation 13% 34% Power generation Other 4% 52% OECD/IEA 2014

18 Instability in the Middle East a major risk to oil markets mb/d +15 Oil production growth in United States, Canada, Brazil & the Middle East Increase to 2040: 14 mb/d Middle East Increase to 2040: 14 mb/d Net decline in output from other producers Brazil Canada United States The short-term picture of a well-supplied market should not obscure future risks as demand rises to 104 mb/d & reliance grows on Iraq & the rest of the Middle East OECD/IEA 2014

19 Ever-growing crude trade between Asia and the Middle East 2013 crude oil imports 2040 crude oil imports Europe India China North America Other Asia 6.3 North America s oil imports fall as it becomes more self-sufficient, and Europe s decrease with falling demand, 90% of Middle East crude exports go to Asia by 2040 OECD/IEA 2014

20 US shale gas: LTO associated gas might be hit, but benefits from lower drilling costs 5,00 US gas production growth across major shale plays (bcf/d) 4,00 3,00 2,00 1,00 0,00-1,00-2,00 Texas and ND associated Marcellus Haynesville Fayetteville Other OECD/IEA 2014

21 Asia LNG spot prices started to fall sharply well ahead of the drop in oil USD/Mbtu Oil and LNG prices in 2014 Asian LNG Spot Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec USD/bbl 140 LNG prices were already falling well ahead of the drop in oil Cheap oil linked gas from the new Australian contracts will reduce demand for spot gas Brent OECD/IEA 2014

22 Japan: persistent electricity demand weakness limits LNG needs Twh Japanese power generation Financial crisis WEO 2010 projection Earthquake 120 TWh OECD/IEA 2014

23 Very high prices have had a major impact on Asian demand Bcm LNG import volumes in major Asian countries (Jan-Oct) Korean LNG demand has dropped significantly in 2014 due to the restart of nuclear capacity and switch to coal in the power sector. India and China underutilized their LNG infarstructure India Chinese Taipei China Korea OECD/IEA 2014

24 A wave of new LNG supply is coming Additional LNG capacity (growth relative to the previous period, bcm) Others Australia H H H H H2 OECD/IEA 2014

25 Large impact on Japanese energy costs Billion/USD 80 Japanese LNG import bill GW nuclear restart but $100/bbl No nuclear restart but $50/bbl OECD/IEA 2014

26 Cheaper LNG enables faster electrification in India 25 India gas-fired capacity and load factors ~ 11MT of LNG 70% 20 60% 50% 15 40% 10 30% 20% 5 10% 0 Gas-fired capacity end 2011 (GW) Gas-fired capacity end 2014 (GW) Load factor 2011 Load factor % OECD/IEA 2014

27 Gas reduces China s coal dependency outside the power and steel sectors OECD/IEA 2014

28 Significant upside potential in EU power generation OECD/IEA 2014

29 .But it requires even lower prices as coal prices are also in a freefall European gas prices might need to drop towards $5/mmbtu if gas-tocoal switching is the way to rebalance the market 10,0 9,0 TTF forward curve (USD/Mbtu) Gas price required to trigger gas to coal switching 8,0 7,0 6,0 5,0 4,0 3,0 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Note: Based on gas, coal, and carbon forward curves as of May approximate switching price OECD/IEA 2014

30 Increasing examples of wind and solar PV costs comparable to new-build alternatives Recent long-term remuneration contract prices (e.g. auctions and FITs) Ireland 69 $/MWh Germany $/MWh Onshore wind Utility PV STE US 48 $/MWh Chile 89 $/MWh 85 $/MWh US ~75 $/MWh UK $/MWh Morocco 160 $/MWh Brazil 81 $/MWh Brazil 54 $/MWh UK 120 $/MWh SA 72 $/MWh Dubai 60 $/MWh 60 $/MWh SA 97 $/MWh Turkey 73 $/MWh South Africa Base 124 $/MWh Peak 335 $/MWh India 88 $/MWh China $/MWh Australia 65 $/MWh Transition to new era of economic attractiveness for renewables where good resource and appropriate policy and regulatory framework are in place OECD/IEA 2015

31 Long term scenario of the Technology Roadmap Recent bids PV could provide 16% of global electricity by 2050 and 20% of CO2 emission cuts Based on cautious cost assumptions and 8% WACC Key factor will be flexibility of power systems to integrate large share of v-re; STE will play a complementary role to PV