Post on 03-Apr-2018
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Middle East Energy Outlook
SP Jain
Dubai, May 2013
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Outline
1. Global and Middle East oil & gas export patterns
2. The regions internal demand
3. Fiscal challenges
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Key messages
Each MENA country faces different, though related, challenges
MENA will remain the key oil & gas exporting region, but, with sub-Saharan Africa,
oriented ever more towards Asia
Asia a secondary but growing investor in MENA and a massive player in sub-
Saharan Africa, mostly by China
Oil & gas will continue to be the bedrock of the MENA economy, but cannot drivegrowth as it did over the last decade
Sub-Saharan Africa is differentoil/gas export-led growth remains vital
For the first time, MENAs internal demand is increasingly important and challenging
Political unrest means investment risks but also new pressures for reform &
economic growth
The confluence of these factors means new fiscal challenges
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Middle East energy sector : Oil R/P ratio
Source: BP Statistical Review 2012
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World proved oil reserves reached 1652.6 billion barrels at the end of 2011, sufficient to meet 54.2 years of global production.
The Middle East region holds 48.1% of global proved reserves
but the large increase in its production reduced the regions R/P ratio despite an increase in reserves.
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Middle East energy sector : Gas R/P ratio
Source: BP Statistical Review 2012
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World proved natural gas reserves at end-2011 were sufficient to meet 63.6 years of production.
The Middle East still holds the largest reserves (38.4% of the world total, compared with 37.8% for Europe & Eurasia)
with an R/P ratio of over 150 years.
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Middle East to play a key role in future oil demand
Source: BP Energy Outlook 2030Dated Jan. 2012 6
Source: APICORP as of Jan. 2012
Dated Jan. 2012
2030 ENERGY OUTLOOK
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Middle East/Africa oil exports orient towards Asia
In aggregate, Russia/Central Asia supplies
Europe, Middle East/Africa supplies Asia,Americas self-sufficient
But Middle Eastern oil exports rise little
OPEC restraint
domestic consumption
OPEC itself forecasts slowly-falling market
share from 34% today to 32% by 2015-35 5.7 Mbpd increment from 2010 to 2035,
compared to:
Iraq +6.5 Mbpd by 2020?
Kuwait +1 Mbpd by 2020
UAE +0.7 Mbpd by 2017
Libya +0.5 Mbpd by 2017
Revival in Iran?
Venezuela?
Africa exports fairly flat but sub-
Saharan Africa grows largely at expense of
North Africa (Algeria, Egypt decline)
-35.0
-25.0
-15.0
-5.0
5.0
15.0
25.0
1990 2000 2010 2020 2030
Oilexports(millionbbl/day)
North America S & C America
Europe & Eurasia Middle East
Africa Asia Pacific
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US oil imports declining; Gulf not yet hit
US oil imports have fallensteadily since their August-2006
peak
The burden has been taken up
by OPEC and Africa
US imports from the Gulf have
not yet fallen much, if at all
Shale oil replacing African
light, sweet crudes
Saudi objective to
maintain US market share
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
500000
Jan-2006 May-2007 Oct-2008 Feb-2010 Jul-2011 Nov-2012
USimports(kbbk/month)
Total imports
Gulf
OPEC
Africa
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Shale gas can reshape gas trade flows
White: satellite imagery of lights = energy demand
Purple Red: global gas basins, in increasing size of resources (USGS)
Yellow: main current and future export routes for Middle East gas
Significant shale gas potential
Less LNG demand inEurope?
North African
shale gas toEurope
Australian shale-to-
LNG
Lower Chinese (andIndian?) LNG imports
North American
shale-to-LNG
v
New conventional gas
More intra-MENA gastrade?
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Only modest growth in gas exports
Middle East and Africa are
the two major exportingregions
Asia is the major importing
region
Russia supplies Europe
Big change is the emergenceof North American gas exports
after 2015
However, total Middle East
gas exports do not grow much
-35.0
-25.0
-15.0
-5.0
5.0
15.0
1990 1995 2000 2005 2010 2015 2020 2025 2030
Gasexports(Bcf/day)
North America S & C America
Europe & Eurasia Middle East
Africa Asia Pacific
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Africa a tale of three regions
North similar
challenges to Middle
East
West some new
producers. Nigeria & Angola
heavyweights; some growth
potential. Growing Chineseinvolvement.
East exciting new
exploration frontier
(mostly gas). Exports
oriented to Asia
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Abu Dhabi Energy Issues
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UAE: Oil & Gas Infrastructure
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OIL INFRASTRUCTUREMAP
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Worlds 9th largest crude producer and 5th largest net
exporter
Abu Dhabi accounts for over 90% ofUAEs upstream sector
Major capacity expansion program underway from 2.5m bpd
(2011) to 3.5m bpd (2017); 40% increase
Over US$50 billion of investments required in upstream in
the UAE alone during this 5-year plan
APICORP (January 2012) ranks UAE as second highest
investor in the MENA region with US$ 76 billion of energyinvestments expected in 2012-2016 across the full value
chain
UAE Energy - Overview
2.5
3.5OIL PRODUCTION TARGET
MBPD
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0
2
4
6
8
10
12
2009 2010 2011 2012 2013 2014 2015
ADCO ZADCO Upper Zakum ADMA Shah Gas Other Fields
CapitalExpenditure
(US$
Billion)
PROJECTED
7.8
6
9.7
10.5
9.1
7.3
UAE Historical & Projected Capex in Upstream (2009-2015)______________________________________________________________________________________
HISTORICAL
5.9
2014: Expiration of ADCO current
Concession Expected Additional Capex
notably in EOR
Abu Dhabi Vision 2030 - Upstream Objective: Oil production capacity ramp up from 2.5 Mbpd in 2011 to 3.5 Mbpd
by 2017
15Source: WoodMackenzie, MEED
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Fiscal Challenges
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GCC Economic growth generally strong
0
1
2
3
4
5
6
7
2012 2013 2014 2015 2016
EconomicGrowth
Rate
(%
)
ECONOMIC GROWTH
UAE
Saudi Arabia
Qatar
Oman
Kuwait
Bahrain
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Fiscal challenges varies across OPEC least in the GCC
Source: APICORP Research
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MENA (esp GCC) highly energy-intensive
0.0
5.0
10.0
15.0
20.0
Primaryenergy
consumption(toe/cap
ita)
GCC energy intensity is high in general
Qatar, Bahrain and UAE are particularly high
High income levels
Air-conditioning and desalination
Energy-intensive industry (aluminium, petrochemicals, LNG, etc)
Subsidised prices, hence waste and inefficiency
Focus turns to serving domestic market rather than export, especially in gas
But GCC, Iraq, Libya remain major oil exporters07/06/2013 19
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Attention turning to unconventional gas
Gulf unconventional plays
varied, potentially large Sour and contaminated gas
(CO2, H2S, nitrogen)
Tight gas (sands & carbonates)
Shale gas, condensate and oil
Deep and ultra-deep
Mixed resources (e.g. deep,tight and sour)
Source: PacWest; Manaar research
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Alternative energy becoming competitive
0 2 4 6 8 10 12 14 16 18 20
Gas, $1
Gas, $8
Gas, $15
Oil, $20
Nuclear
Coal CCS
Solar PV ($2.50/W)
Solar PV ($2/W)
ELECTRICITYGENERATIONCOST ($C/KWH)
Alternative generation (solar, nuclear, coal CCS) is cheaper than LNG or oil
However, high-cost domestic gas (e.g. unconventional) at ~$8/MMBtu is still
competitive against alternatives
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Source: Manaar research
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Responses to these new challenges
Future energy sector themes
1. Mature field management (enhanced oil recovery)
2. Domestic gas including unconventionals
3. Alternative energy mostly nuclear and solar, plus efficiency
Economic responses
1. Restructuring the NOCs & SOEs for greater efficiency
2. Greater international & private-sector E&P investment (as in late 1990s)
3. Privatisation (at least of non-core assets)?
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Robin Mills,
Head of Consulting,Manaar Energy Consulting,
Dubai, UAE
robin.mills@manaarco.com
+971 4 326 6300+971 50 293 4668
www.manaarco.com
Contact Details
mailto:robin.mills@manaarco.comhttp://www.manaarco.com/http://www.manaarco.com/mailto:robin.mills@manaarco.com