Energy markets the short and the long term

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Bernadette Hodges
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1 Energy markets the short and the long term Christof Rühl, Chief Economist, BP BP 2012

2 Outline The economy A year of disruptions Long term implications Conclusion

from Thomson Reuters Datastream Avg 2002-07 Non- OECD World OECD Trillion $US*

3 Global growth: slow and on life support 12% 10% 8% 6% 4% 2% 0% 2013 GDP and the good old days Annual change, % Eurozone Japan US Brazil China India Source: includes data from Thomson Reuters Datastream Avg Non- OECD World OECD Trillion $US* Central Bank liquidity % of world GDP Fed + ECB + BoJ (rhs) *At constant 2011 exchange rates

4 Europe struggles into recession Volume index Eurozone indicators % 10-year benchmark bond yields % per year Source: includes data from Thomson Reuters Datastream

5 The US grows slowly Components of domestic demand Index: 1Q 2007=100 Fiscal cliff Budget deficit, % of GDP Government Investment Additional debt service Lower revenues (extending current tax brakes) Higher spending Source: includes data from CBO August 2012 forecast and Thomson Reuters Datastream

6 The Chinese economy slows Exports Commercial bank loans % y-o-y, 3m ma. Change y-o-y, trillions of CNY % y-o-y Short-term Medium & long-term Source: includes data from Thomson Reuters Datastream

7 Energy in 2011 disruptions and continuity Supply disruptions GDP and energy growth Mtoe Annual change, % Arab Spring Fukushima Source: includes data from Oxford Economics

8 Energy prices $/boe Energy prices Annual change, % 2011 price changes Source: includes data from Platts and McCloskey

9 The Fukushima Adjustment

10 Natural gas markets in 2011 Production and consumption growth Annual change, Bcm $/Mmbtu Regional gas prices Source: includes data from Platts

11 US natural gas market Bcm Production Gas share in power generation Shale gas Source: includes data from Energy Information Administration

12 Global gas trade Bcm Gas exports LNG import growth in 2011 Annual change, Bcm From Qatar From Atlantic Basin Source: includes data from Cedigaz, GIIGNL, CISStats, Poten, Waterborne

13 Coal prices and trade $/tonne Steam coal prices Annual change, Mtoe Import growth in 2011 From Indonesia From Russia From US From Colombia From other Source: includes data from McCloskey, Eurostat, IHS CERA *China, India, Japan, South Korea, Hong Kong, Taiwan

14 Natural gas demand growth is concentrated in the non-oecd Bcf/d Demand Supply Other N. America Other India China Mid East 2030 level Other Africa Australia Mid East Other N. America FSU Mid East OECD Non-OECD 2010 LNG Pipeline Energy Outlook BP 2012

15 Unconventional gas will play a growing role Gas supply by region Bcf/d North America Bcf/d Europe Bcf/d China Energy Outlook BP 2012

16 Oil markets and trends

17 Crude oil prices $/bbl Dated Brent $/bbl Dated Brent and WTI Dated Brent WTI 50 0 Dated Brent Annual averages Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Source: includes data from Platts

18 Oil production growth in 2011 Mb/d Decline Increase Non-OPEC OPEC Saudi Arabia

19 Oil consumption growth in 2011 Kb/d Largest changes Kb/d Regional growth by fuel type

20 Oil consumption and production Mb/d World liquids demand and supply Mbbls OECD commercial oil stocks 35 Mbbl SPR release Source: includes data from Energy Information Administration and Monthly Oil Data Services OECD/International Energy Agency June 2012

21 US supply Annual change, Kb/d US supply Rigs US rig counts *Texas and North Dakota Source: includes data from Energy Information Administration and Baker Hughes

22 Limits to oil consumption growth % of global demand Subsidised consumption $/bbl Vehicle fuel economy Litres/100km for new sales Source: includes data from the International Council for Clean Transportation and the US Environmental Protection Agency * Includes light trucks

23 Global liquids demand and supply Mb/d Demand Supply Other S&C Am Mid East India China 2030 level Oil Sands Biofuels Brazil US Other Iraq Saudi NGLs Energy Outlook BP 2012

24 Liquids supply growth - OPEC and North America Mb/d Liquids supply by type OPEC share (rhs) Mb/d Growth from 2010 to 2030 Other Saudi Arabia Iraq NGLs Brazil US Shale Oil Biofuels Canadian Oil Sands Other RoW Energy Outlook BP 2012

25 The long term: energy security

26 Impact of oil prices on the economy % GDP 2011 net oil import bill Mb/d Net oil imports Source: includes data from the International Monetary Fund

27 Regional energy imbalances Europe FSU N. America Mid-East China Key: Billion toe Gas Oil Coal S. & C. America Africa India Other Asia Pacific Net importers Net exporters Source: includes data from the International Monetary Fund

fuel 42% 80% 47% 91% 80% 94% 40% 6% 57% 32% 1990

28 Import dependency rises in Asia and Europe Billion toe India China EU27 US Import share of respective fuel 42% 80% 47% 91% 80% 94% 40% 6% 57% 32%

29 Long-term trends Shares of world primary energy Trillion bbls Oil and gas reserves Tcm Oil Coal Gas Hydro Nuclear Renew.

30 Conclusion Key to the 2011 response: flexible markets Medium term: supply response, inter-fuel substitution and trade optimisation Long term: Global integration and its perils

31 Energy markets the short and the long term Contact: The back issues are available at the following URL BP 2012

Energy in 2011 disruption and continuity

Energy in 2011 disruption and continuity June 212 bp.com/statisticalreview Energy in 211 disruption and continuity Richard de Caux, Refining Analyst, Group Economics Outline A year of disruptions Energy and the economy Fuel by fuel Concluding