World Energy Outlook 2011

Amos Bromhead Energy Analyst Office of the Chief Economist Riyadh, 24 January 2012
OECD/IEA 2011

Overview of WEO-2011 scenarios

New Policies Scenario is the central scenario in WEO-2011
assumes cautious implementation of recently announced

commitments & plans, even if yet to be formally adopted

provides benchmark to assess achievements & limitations of recent

developments in climate & energy policy

Current Policies Scenario takes into consideration only those

policies that had been formally adopted by mid-2011

equivalent to the Reference Scenario of past Outlooks

The 450 Scenario sets out an energy pathway consistent with the

goal of limiting increase in average temperature to 2OC

OECD/IEA 2011

GDP a fundamental driver of energy demand

GDP growth assumptions by region
OECD Asia Oceania OECD Europe OECD Americas Latin America E. Europe/Eurasia Africa ME Other non-OECD Asia China

2009-2035 2000-2009

India
0% 2% 4% 6% 8% 10% 12%

The rate of growth in world GDP is assumed to average 3.6% per year over the period 2009-2035 in all scenarios
OECD/IEA 2011

Demand for mobility and rising cost of supply keep pressure on prices
Average IEA crude oil import price
Dollars per barrel (2010) 150 120 90 60 30 0 1980 Current Policies Scenario

New Policies Scenario

450 Scenario

1990

2000

2010

2020

2030 2035

In the New Policies Scenario, the oil price in real terms is assumed to rise to $109/barrel in 2020 & $120 in 2035 (over $210 in nominal terms)
OECD/IEA 2011

Signs of convergence but no global price for natural gas

Ratio of average natural gas and coal import prices to crude oil in the New Policies Scenario
Fuel price divided by oil price
1.4 1.2 1.0 Gas:

Japan Europe United States

Coal: OECD

0.8
0.6 0.4 0.2 0 1990 2000 2010 2020 2030 2035

Natural gas prices are assumed to remain low relative to oil prices, while coal prices rise much less than those of both oil & gas
OECD/IEA 2011

Emerging economies continue to drive global energy demand

Growth in primary energy demand
Mtoe 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2010 2015 2020 2025 2030 2035 China India Other developing Asia Russia Middle East Rest of world OECD

Global energy demand increases by one-third from 2010 to 2035, with China & India accounting for 50% of the growth
OECD/IEA 2011

Natural gas & renewables become increasingly important

World primary energy demand
Mtoe 5 000 4 000 3 000 2 000 1 000 0 Oil Coal Gas Renewables Nuclear Additional to 2035 2010

Renewables & natural gas collectively meet almost two-thirds of incremental energy demand in 2010-2035
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Coal won the energy race in the first decade of the 21st century
Growth in global energy demand, 2000-2010
Mtoe

1 600
1 400 1 200 1 000 800 600 400 200 0 Total non-coal Coal Natural gas Oil Nuclear Renewables

Coal accounted for nearly half of the increase in global energy use over the past decade, with the bulk of the growth coming from the power sector in emerging economies
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World primary oil demand and oil price by scenario

mb/d

110 100

Oil demand: Current Policies Scenario New Policies Scenario 450 Scenario Dollars per barrel 150 100 50 Oil price (right axis): Current Policies Scenario New Policies Scenario

90
80 70

60
50 1980

1990

2000

2010

2020

0 2030 2035

450 Scenario

Global oil use continues to expand on planned policies, reaching 99 mb/d by 2035, but would need to use less than 80 mb/d to achieve the 2-degree climate goal
OECD/IEA 2011

Transport drives oil demand

Change in primary oil demand by sector & region, 2010-2035

China India Middle East Other Asia Africa E. Europe/Eurasia Latin America OECD Asia Oceania OECD Europe OECD Americas -4 -2 0 2 4 6 8 mb/d

Transport Buildings Industry Other

Transport net demand expands by 14 mb/d between 2010 & 2035, outweighing a net fall in demand of more than 1 mb/d in other sectors
OECD/IEA 2011

Oil demand is driven higher by soaring car ownership

Vehicles per 1000 people in selected markets
800 700 600 500 400 300 2010 2035

200
100 0 United States European Union Russia Middle East China India

The passenger vehicle fleet doubles to 1.7 billion in 2035; most cars are sold outside the OECD by 2020, making non-OECD policies key to global oil demand
OECD/IEA 2011

Oil use in cars grows much less than the number of cars
World PLDV oil demand in the New Policies Scenario
45
40 35 30

mb/d

Oil demand Increase 2010-2035 due to: Fleet expansion Decrease 2010-2035 due to: Improvement in fuel economy Lower average vehicle usage Use of alternative fuels

25
20 15 10 5 0 2010 2035

Oil use by cars expands by only 15% between 2010 & 2035, with more efficient vehicles, less usage & switching to non-oil fuels offsetting most of the impact of a doubling of the fleet
OECD/IEA 2011

Most new oil production capacity is needed to offset decline

World liquids supply by type in the New Policies Scenario

110 100 90 80 70 60 50 40 30 20 10 0 1990

mb/d

Biofuels Processing gains Unconventional oil

Natural gas liquids

Crude oil: Yet to be found Yet to be developed Currently producing 2000 2010 2020 2030 2035

Decline at existing conventional fields amounts to 47 mb/d, twice current OPEC Middle East production; NGLs and unconventional production are the main sources of growth
OECD/IEA 2011

OPECs market share is set to expand

World oil production by source in the New Policies Scenario
mb/d

100
80 60 40 20

OPEC Middle East OPEC Other Non-OPEC

0
2010 Decline in Increase in production from demand existing fields 2010-2035 2010-2035 2035

Oil production grows by 13 mb/d, or 15%, reaching 96.4 mb/d in 2035, with all of the net increase coming from OPEC countries, mainly in the Middle East
OECD/IEA 2011

Iraq and Saudi Arabia the largest sources of supply growth

Major changes in supply in the New Policies Scenario, 2010-2035
Iraq Saudi Arabia Brazil OPEC Non-OPEC

Canada
Kazakhstan Venezuela UAE Kuwait United States Biofuels

6 mb/d

The rise in MENA production is over 90% of the growth in global oil output to 2035 while companies operating elsewhere turn increasingly to more difficult & costly sources
OECD/IEA 2011

Oil import needs are changing

Net imports of oil
mb/d
14 12 10 8 6 4 2 0 2010 2035 2000

China

India

European Union

United States

Japan

US oil imports drop due to rising domestic output & improved transport efficiency: EU imports overtake those of the US around 2015; China becomes the largest importer around 2020
OECD/IEA 2011

Conclusions
In a world full of uncertainty, one thing is sure:

rising incomes & population will push energy needs higher

Non-OECD countries, China in particular, will be instrumental in

shaping all energy markets.

Rising demand for mobility and reliance on more difficult and

costly sources of supply keep pressure on oil prices

Stronger penetration of natural gas could have profound

implications for global energy markets.

Much stronger policy action is required to move us to a secure

and sustainable energy future and to provide energy for all

OECD/IEA 2011