How To Understand The Global Energy Picture

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Moses Curtis
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1 Energy Perspectives 215 Long-term macro and market outlook Press seminar, Oslo, June 215 Eirik Wærness, Chief economist

2 2 Energy Perspectives 215 Macro and market outlook to 2

3 A world of volatility and change Hope to be vaguely right, not precisely wrong 8 Commodity prices (real Apr 215, indexed Feb 1997=1) 15 Supply and demand factors (indexed 22=1) 5 6 Brent HH NBP Coal 12 9 Chinese int. tourists New Chinese cars Chinese air passengers US shale oil prod. Solar generation (rhs) Sources: Thomson Reuters Datastream, DOE, CEIC, IEA

12 9 Chinese int. tourists New Chinese cars Chinese air passengers US shale oil prod.

4 Long-term forecasts are uncertain Climate change, policy, technology, consumers and economy will decide Sources: The Economist, Google, UN, Statoil, McKinsey & Company, National Geographic, twistedsifter.com

decide Sources: The Economist, Google, UN, Statoil,

5 Several futures are possible 2 Rivalry Three scenarios stories about the future have been established Reform 12 Energy intensity in different scenarios Index, 212=1 12 CO 2 emissions/tped Index, 212= Reform Rivalry 6 Reform Rivalry Source: IEA (history), Statoil (projections) 5

Index, 212=1 12 CO 2 emissions/tped Index, 212=1 1 1 8 8 6 Reform Rivalry 6

6 A strong trend affecting economics and energy Economic gravity moves (back) to the east, and so does energy demand The global centre is in Asia Each region home to1 billion people World energy demand per region Bn toe Rest of world China OECD Europe India OECD Pacific OECD North America Ref Ren Riv Ref Ren Riv Source: Imgur, IEA, Statoil (projections) 6

energy demand per region Bn toe Rest of world China OECD Europe India OECD Pacific OECD North

7 Growth is a key driver for energy demand and is different in alternative scenarios World GDP growth rates 1-year annual growth average, % World GDP growth rates 1-year annual growth average, % Reform Reform Rivalry 2 2 '13-2 '21-3 '31- '13-2 '21-3 '31- Source: IEA (history), Statoil (projections) 7

growth rates 1-year annual growth average, % Reform Reform Rivalry 2 2

8 Energy demand and energy mix differ depending on growth, efficiency, technology and policies World energy mix Share of total energy demand in 212 and 2 (TPED), % 22% 1% 1% 2% 5% 31% 29% % % 1% World energy demand per fuel Bn toe New renewables Hydro Gas Coal % 1% Biomass and waste Nuclear Oil 22 2 Ref Ren Riv Ref Ren Riv Source: IEA (history), Statoil (projections) 8

2 16 12 8 13% % 1% World energy demand per fuel Bn toe New renewables Hydro Gas Coal 212 11% 1%

9 Energy demand and energy mix differ depending on growth, efficiency, technology and policies World energy mix Share of total energy demand in 212 and 2 (TPED), % 6% 3% 9% 22% 7% 1% 1% 2% 5% 31% 29% 25% Reform % % 1% World energy demand per fuel Bn toe New renewables Hydro Gas Coal % 1% Biomass and waste Nuclear Oil % 27% Ref Ren Riv Ref Ren Riv Source: IEA (history), Statoil (projections) 9

Reform 2 16 12 8 13% % 1% World energy demand per fuel Bn toe New renewables Hydro Gas Coal 212 11% 1%

10 Energy demand and energy mix differ depending on growth, efficiency, technology and policies World energy mix Share of total energy demand in 212 and 2 (TPED), % 6% 3% 9% 13% % 1% 22% 7% 11% 1% 1% 2% 5% 31% 1% 29% 25% % % 1% World energy demand per fuel Bn toe New renewables Hydro Gas Coal % 1% Biomass and waste Nuclear Oil % 27% Ref Ren Riv Ref Ren Riv Source: IEA (history), Statoil (projections) 1

29% 25% 2 16 12 8 13% % 1% World energy demand per fuel Bn toe New renewables Hydro Gas Coal 212 11% 1%

11 Energy demand and energy mix differ depending on growth, efficiency, technology and policies World energy mix Share of total energy demand in 212 and 2 (TPED), % Rivalry 6% 3% 9% 5% 23% 3% 22% 13% % 1% 1% 22% 7% 11% % 1% 1% 2% 5% 31% 1% 29% 27% 3% 25% 27% % % 1% World energy demand per fuel Bn toe New renewables Hydro Gas Coal % 1% Biomass and waste Nuclear Oil 22 2 Ref Ren Riv Ref Ren Riv Source: IEA (history), Statoil (projections) 11

2% 5% 31% 1% 29% 27% 3% 25% 27% 2 16 12 8 13% % 1% World energy demand per fuel Bn toe New renewables Hydro Gas

12 requires large changes in particular in transport and power 3 Energy use in transport Bn toe Biofuels Electricity Gas Oil Coal Fuel shares in private road transport (%) Biofuels Electricity Gas Oil Electricity and renewables Thousand TWh and % New RES* New RES share in el (rhs) El share in final energy (rhs) Ref Ren Ref Ren Ref Ren Ref Ren Ref Ren Ref Ren * incl. Biomass Source: IHS Global Insight and International Energy Agency (history), Statoil (projections) 12

and % New RES* New RES share in el (rhs) El share in final energy (rhs) 212 22 2 5 8 16 2 6 12 3 1 8 2 2 1 Ref Ren Ref Ren Ref Ren

13 Oil and gas are here to stay Considerable need for new investments, irrespective of scenario Global oil demand* Mbd International bunkers Other non-oecd Non-OECD Asia OECD Rivalry 3-6% decline 6 5 Global gas demand Bcm International bunkers Non-OECD Asia 3-6% decline Other non-oecd OECD Rivalry * Excl. Bio-fuels Source: IEA (history), Statoil (projections) 13

6 5 Global gas demand Bcm International bunkers Non-OECD Asia 3-6% decline Other non-oecd OECD

14 Energy related CO 2 emissions vary considerably driven by policy, energy intensity, and fuel mix World CO 2 emissions Bn tons China CO 2 emissions Bn tons 5 Reform Rivalry 15 Reform Rivalry IEA NP IEA 5 IEA NP IEA Source: Statoil, IEA WEO 21 1

2 emissions Bn tons 5 Reform Rivalry 15 Reform Rivalry IEA NP IEA 5

15 Thank you!

2014 BP Madrid forum on energy & sustainability BP 2014

2014 BP Madrid forum on energy & sustainability BP 2014 14 BP Madrid forum on energy & sustainability BP 14 Contents Global energy trends Liquid fuels Refining implications European focus Energy Outlook 35 BP 14 Primary energy consumption growth slows and the