Energy Perspectives 216 Long-term macro and market outlook Columbia University, 16 November 216 Eirik Wærness, Senior vice president and Chief economist
2 Energy Perspectives 216 Macro and market outlook to 24 www.statoil.com/energyperspectives
The triple energy challenge a balancing act Satisfying demand Population growth GDP growth Increasing energy demand Fighting decline from existing fields Price uncertainty Cost challenges Risk elements Policy uncertainty Risk/reward balance Sustainability Clean and affordable energy for all Limiting greenhouse gas emissions Policy gap between targets and measures 3
Significant uncertainty and large changes this calls for using scenarios 16 Supply and demand factors (indexed 22=1) 12 14 12 1 8 6 4 2 US shale oil prod. Chinese int. tourists New Chinese cars Chinese air passengers Solar capacity (rhs) 1 8 6 4 2 2 23 26 29 212 215 Source: The Economist Source: DOE, CEIC, IEA, IRENA 4
Reform Several futures are possible 213 Renewal Rivalry Rivalry, Reform, Renewal* - but the world is twice as rich and more efficient 4 World GDP growth rates % Reform Renewal Rivalry 12 Energy intensity Index, 199=1 Reform Renewal Rivalry 5 World GDP and energy demand Index, 199=1 Reform Renewal Rivalry 3 1 4 8 3 2 6 2 1 4 2 1 '9-''-'1 '1-'2 '2-'3 '3-'4 199 2 21 22 23 24 199 2 21 22 23 24 Source: IEA (history), Statoil (projections) *Rivalry: Geopolitical uncertainty, regional conflicts; Reform: COP21 followed up and tightened; Renewal: Energy revolution delivering emissions consistent with 2 -C target 5
A strong trend affecting economics and energy All growth in energy demand in emerging economies, in particular in Asia The global population centre is in Asia Each small square represents 1 million people World energy demand per region Bn toe Rest of world India China OECD Pacific OECD Europe OECD Americas 2 16 213 22 24 12 8 4 Source: BigThink, IEA, Statoil (projections) 6
1973 1983 1993 23 213 24 Reform 24 Renewal 24 Rivalry 1973 1983 1993 23 213 24 Reform 24 Renewal 24 Rivalry Speeding up the change in global energy mix with Renewal displaying a paradigm shift 1% 8% 6% 4% New RES Biofuels and waste Hydro Nuclear Bn toe 2 15 1 2% % Gas Oil Solid fuels 5 Source: IEA (history), Statoil (projections) 7
1973 1983 1993 23 213 24 Reform 24 Renewal 24 Rivalry 1973 1983 1993 23 213 24 Reform 24 Renewal 24 Rivalry OECD Americas energy mix changes gradually but Renewal displays a paradigm shift 1% New RES 3 Bn toe 8% 6% Biofuels and waste Hydro Nuclear 2 4% Gas 1 2% Oil Solid fuels %
CO 2 emissions determined by demand and mix Climate policies: Driving Renewal, contributing to Reform World CO 2 emissions Billion tons World CO 2 emissions Billion tons Rest of world India China 4 213 Rivalry 24 NP OECD Pacific OECD Europe OECD Americas 213 24 4 3 Reform 3 2 Renewal 45 2 1 1 Statoil IEA Source: IEA (history), Statoil (projections) 9
Technology shift for light duty vehicles in all scenarios, and a revolution in Renewal Sales Light Duty Vehicles Millions Light Duty Vehicle fleet composition Billions Fuel mix in Final Energy Demand for LDVs % 14 Other Electric vehicles Gasoline 213 Plug-in hybrids Diesel 24 3 Other Electric vehicles Gasoline 213 Plug-in hybrids Diesel 24 Electricity Biomass Gas Oil 213 24 1 12 1 8 2 8 6 6 4 2 1 4 2 Source: IEA (history), Statoil (projections) 1
Technology changes in LDVs in OECD Americas and revolution in Renewal Sales Light Duty Vehicles Millions Light Duty Vehicle fleet composition Millions Fuel mix in Final Energy Demand for LDVs % 2 Other Electric vehicles Gasoline 213 Plug-in hybrids Diesel 24 35 Other Electric vehicles Gasoline 213 Plug-in hybrids Diesel 24 1 Electricity Biomass Gas Oil 213 24 15 3 25 8 1 2 15 6 4 5 1 5 2 Source: IEA (history), Statoil (projections)
Fuel mix change in electricity Large investments in new renewables required, especially in Renewal Electricity generation mix % Solar and wind generation capacity GW Geothermal Solar Wind Biomass Hydro Nuclear Gas Oil Coal Solar Wind 1 213 24 7, 213 24 8 6 6, 5, 4, 4 2 3, 2, 1, 12
De-carbonization of power in OECD Americas will require large investments in new renewables Electricity generation mix % Solar and wind generation capacity GW Geothermal Solar Wind Biomass Hydro Nuclear Gas Oil Coal Solar Wind 1 213 24 2, 213 24 8 1,6 6 1,2 4 8 2 4
Other sectors are more challenging to change and demand here will grow as the economy grows Fuel mix in Final Energy Demand for Transport excluding LDVs Bn toe Coal Oil Gas Biomass Electricity Fuel mix in Final Energy Demand for Residential, Commercial & Industrial sectors Bn toe Coal Oil Gas Biomass New RES Electricity Heat 2.5 213 24 12 213 24 2 1 1.5 8 6 1 4.5 2 Source: IEA (history), Statoil (projections) 14
Global oil and gas demand growth varies Large variation across sectors significant growth in non-energy demand Change in oil demand 213-24 Mbd Change in gas demand 213-24 Bcm 3 2 1.6 23.8 Other Transformation Power & Heat 1,5 1, 1,229 1,166 1 Non-Energy 5 Transport -9-1 -14. Other Stationary -5-2 Residential -1, -3 Reform Renewal Rivalry Industry -1,5 Reform Renewal Rivalry Source: IEA (history), Statoil (projections)
North American oil demand will decrease despite growth in non-energy demand Change in oil demand 213-24 Mbd Change in gas demand 213-24 Bcm 6 3 Other Transformation Power & Heat 6 3 255 437 -.2 Non-Energy -3-4.2 Transport -3-178 -6 Other Stationary -6-9 -1. Residential -9-12 Reform Renewal Rivalry Industry -1,2 Reform Renewal Rivalry Source: IEA (history), Statoil (projections)
Huge investments needed in oil, gas and renewable electricity to replace production and ensure sustainability New oil production 215-24 Mbd New gas production 215-24 Bcm Incremental New RES production 215-4 Thousand TWh 15 1 Rivalry add-on Reform add-on Renewal add-on Potential legacy production Min legacy production History RenXX RefXX RivXX 7, 6, 5, 4, Reform add-on Rivalry add-on Renewal add-on Potential legacy production Min legacy production History RenXX RefXX RivXX 4 35 3 25 Hist Renewal add-on Reform add-on Rivalry add-on Legacy production History RenXX RivXX 5 3, 2, 2 15 1 1, 5 215 24 215 24 215 24 Source: Statoil 17
Wide span in forecasts 13 Oil demand Million barrels per day Reform Rivalry Renewal IEA NP IEA 45 EIA BP XOM History 6 Gas demand Billion cubic meters Reform Rivalry Renewal IEA NP IEA 45 EIA BP XOM History 12 55 11 5 1 45 9 4 8 35 7 215 22 225 23 235 24 3 215 22 225 23 235 24 Source: Statoil, IEA (WEO 215), EIA, BP, ExxonMobil Source: Statoil, IEA (WEO 215), EIA, BP, ExxonMobil 18
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