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Oil and Gas Security of Supply for Europe

Oil and Gas Security of Supply for Europe. Athens, 3 rd November, 2005. Agenda. Global Energy Demand Oil and Gas Resources EU Gas Issues Investment, Demand Growth and Spare Capacity Indigenous Production Technology Summary. Global energy demand - growth continues.

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Oil and Gas Security of Supply for Europe

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  1. Oil and Gas Security of Supply for Europe Athens, 3rd November, 2005

  2. Agenda • Global Energy Demand • Oil and Gas Resources • EU Gas Issues • Investment, Demand Growthand Spare Capacity • Indigenous Production • Technology • Summary

  3. Global energy demand - growth continues • Energy demand fuelled by economic and population growth • Fossil fuels will retain their market share • Renewables enjoy significant growth but remain marginal • Energy efficiency gains included in forecast • Energy price trends and developing countries’ demand remain uncertain Source: ExxonMobil, 2004

  4. ... and large oil and gas resources exist Trillion Barrels Oil Equivalent World Hydrocarbon Resources Already Produced Technically Recoverable Source: IEA

  5. ...with substantial potential • Claude Mandil (IEA): • “Quenching the world’s oil thirst …. is a major investment in modern technology.” Availability of oil resources as a function of economic price Source: IEA

  6. Resources not a constraint • Oil resources • Ample conventional resources exist • Unconventional volumes untapped • Gas resources • Significant upside to support growing demand • Market incentives exist to develop remote resources

  7. Proven gas reserves 1984: 96 Tcm 1994: 143 Tcm 2004: 180 Tcm Reserves-to-production ratio: 66.7 years Highly concentrated 70–80% within economic reach of Europe ...with abundant gas reserves Technically recoverable conventional gas: ~ 450 Tcm

  8. ... albeit from more distant sources Europe* (EU34) • LNG • Imports to triple • Pipeline gas • Imports to grow by > 50% • Total imports by 2015: • ~450 Bcm/y • Increased competition for supplies 715 650 140 100 550 40 Demand LNG Imports 305 191 255 Pipeline Imports Dom. Prod. 319 295 270 in Bcm 2004 2010 2015 * EU25 + Bulg / Cro / Rom / Turk + Norw/Bos/Mac/Serb/Switz Source : WoodMackenzie, Cedigaz, Total

  9. ... and Europe is well positioned …but it needs • Supply diversification • Integration of gas networks • Dialogue with producing countries • Contractual flexibility • Long term contracts • Regulatory stability • Improving market efficiency • Interoperability Russia Norway 48 Tcm Caspian 9 Tcm Iran Iraq 30 Tcm Egypt Nigeria LNG Libya Algeria Qatar

  10. The development challenge Resources + access + investment + technology + market + lead times …. Production

  11. Industry investment is increasing • Upstream investments • Up nearly 60% since 1999 • In 2003 at $160 billion • Predictions for 2005 • $180 billion • Annual requirement to 2030 • $200 billion Global Upstream Investment Source : J.S Herold / Harrison Lovegrove

  12. OPEC spare production capacity - historic lows Million Barrels per Day • Recent oil price rise seems to reflect: • Reduced spare capacity • Risk premium 12 10 8 6 4 2 0 1973 1976 1979 1982 1994 1970 1985 1988 1991 1997 2000 2003 Source: DOE / EIA / BP

  13. European basin – a leading global producer 5 10 15 20 Year 2004 Production Mboe per day Source: BP Stat review 2004

  14. ... with a major contribution to EU economy • Indigenous potential up to 100 billion boe • Supports European manufacturing and service Industry • Sustains employment • Contributes tax revenues • Facilitates access to global resources

  15. ... supported by new technologies • More oil becomes accessible • Deep water • Reservoirs with higher pressures • Difficult geography • Recovery factor up • Current average around 35% • 1% increase = 1 year global energy consumption

  16. ...in summary A shared challenge

  17. Summary Thank you for your attention!

  18. ... to meet oil demand growth Forecast History Source: EIA, Short-Term Energy Outlook, September 2005

  19. German Gas – Growing Reserves through Technology

  20. German Gas – Growing Reserves through Technology

  21. German Gas – Growing Reserves through Technology

  22. German Gas – Growing Reserves through Technology 3D seismic, sub salt imaging, horizontal drilling, sour gas processing ….

  23. German Gas – Growing Reserves through Technology 3D seismic, sub salt imaging, horizontal drilling, sour gas processing ….

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