Energy Perspectives 2013 Long-run macro and market outlook Eirik Wærness, Chief Economist Security

Classification: Internal -

Status: Draft

www.statoil.com/energyperspectives

• Outlook to 2040

•  The global economy

–  Growth close to historic average (2.8%)

–  Two speeds – non-OECD catching up

• Overall energy market outlook

–  1.3% annual growth (oil 0.5%, coal: 0.7%)

–  Moderate greening of energy mix

• Global oil and gas markets

–  Oil demand peaks around 2030

–  Gas demand increasing (1.6% per year)

•  Strong growth in new renewables

– … but CO2 emissions grow until 2030…

2

Energy Perspectives 2013

Difficult to predict – a number of outcomes are possible

•  The world is characterized by… –  Volatility, Uncertainty, Complexity, and

Ambiguity

–  Conflicts are difficult to solve

–  Growth is difficult to generate

–  Sustainability is very difficult to ensure

3

A world of uncertainty framing the development

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A world of uncertainty framing the development

•  The world is characterized by… –  Volatility, Uncertainty, Complexity, and

Ambiguity

–  Conflicts are difficult to solve

–  Growth is difficult to generate

–  Sustainability very difficult to ensure

• … but also by

–  High growth in emerging economies

–  Movement out of poverty and into affluence

–  Increasing life expectancy

–  Technological progress and opportunities

Difficult to predict – a number of outcomes are possible

0

20

40

60

80

100

120

140

160

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

5

The world’s most important commodity … is notoriously difficult to predict…

Mar 99 Dec 01 Oct 03

Aug 05

Apr 05

May 08

Mar 11 Aug 13

Source: IHS Global Insight and Statoil

Short-/medium-term global economic outlook Still on the path to recovery, but pace is slower than expected

•  US economy –  Weaker 1H2013 growth than expected

–  Private consumption will lift growth, while fiscal consolidation continues

•  Eurozone –  Out of recession, finally

–  Germany and France driving the recovery

•  Japan sees temporary boom

•  China’s rebalancing is a difficult feat

•  Risk and uncertainty remain elevated, especially in key emerging markets

6 Classification:

-5

0

5

10

15

2000 2005 2010 2015

OECD Non-OECD USA China

Economic growth 2000-2015 Annual change in GDP (%)

Economic gravity moves (back) to the east, and so does energy demand

Source: McKinsey (map), IEA, Statoil

The global economic centre of gravity Based on geographical weighting of GDP

A strong trend affecting economics and energy

Shifting energy demand Share in global energy demand, %

0

25

50

75

100

2000 2010 2020 2030 2040 Rest of world India China OECD Pacific OECD Europe OECD North America

Non-OECD driving growth, energy efficiency to improve by almost 40%

Global energy demand TPED, bn toe

Growth and energy intensity Growth (%) and toe/million 2005-USD

0

100

200

300

-4

0

4

8

1990 2000 2010 2020 2030 2040

TPED GDP Energy intensity (rhs)

0

5

10

15

20

1990 2000 2010 2020 2030 2040

International bunkers Other non-OECD Non-OECD Asia OECD

Source: IHS Global Insight and IEA, Statoil

8

Growth, efficiency and energy demand

Economic growth Annual change in GDP (%)

0

2

4

6

8

OECD Non-OECD Asia

Other non-OECD

'91-00 '01-10 11-20 21-30 '31-40

World energy mix Share of total energy demand (TPED, %)

Source: IEA, Statoil

… but fossil fuels constitute 72% of total energy demand in 2040

0

20

40

60

80

100

2010 2040 2010 2040 2010 2040 Coal Oil Natural gas Nuclear Renewables

Energy mix Shareof total energydemand (TPED, %)

North America Europe China

9

Gradual greening of energy mix

0

20

40

60

80

100

1990 2000 2010 2020 2030 2040

Coal Oil Natural gas Nuclear Renewables

Emerging economies drive demand growth – oil demand peaks ~ 2030

Global oil demand ex bio fuels, mbd

Global gas demand 1000 bcm

Source: IEA, Statoil

10

Fossil fuels are here to stay

0

25

50

75

100

125

150

1990 2000 2010 2020 2030 2040

International bunkers Other non-OECD Non-OECD Asia OECD

0

1

2

3

4

5

6

1990 2000 2010 2020 2030 2040

International bunkers

Other non-OECD

Non-OECD Asia

OECD

Non-Opec production Mbd

*Biofuels, GTL, processing gains

Source: IEA, Statoil

Global oil supply from different sources Opec crude regaining importance, eventually

0

20

40

60

80

2000 2010 2020 2030 2040

Other sources* Oil sands Non-Opec NGL Non-Opec Tight oil Non-Opec Conv. crude

Opec oil production Mbd

0

10

20

30

40

50

2000 2010 2020 2030 2040

Opec NGL Iraq crude Saudi Arabia crude Other crude

Source: IEA, WoodMac, various research institutions, Statoil

New sources of oil are not cheap – economics and finance matter Technology and prices affect new oil supplies

Break-even prices for new developments USD/bbl

Source: IEA, Statoil

LNG supply 2012-30 Bcm

Gas is the winner among fossil fuels - growing 1.6% per year

Global gas demand Bcm

Global gas markets – long-term growth

0

1000

2000

3000

4000

5000

6000

7000

1990 2000 2010 2020 2030 2040

International bunkers Africa Middle East Other non-OECD Asia India China OECD Pacific Other FSU Russia Non-OECD Europe OECD Europe Latin America OECD North America

0

100

200

300

400

500

600

700

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Africa Asia Europe FSU Latin America Middle East North America Oceania

Source: IEA, Statoil

14

CO2 emissions level out around 2030 Lower growth, fuel efficiency, electrification, CCS

Global CO2 emissions billion tonnes

0

20

40

60

2010 2020 2030 2040

International bunkers Other non-OECD Non-OECD Asia OECD IEA NP IEA CP IEA 450

Regional change in energy demand 2010-40 Bn toe

-1

0

1

2

3

Coal Oil Gas Nuclear Renewables

Rest of the world China OECD Europe OECD North America World

Moderate growth – energy efficiency and greener energy mix

Total primary energy demand bn toe

Source: IEA, Statoil

15

Energy demand and mix in North America

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1990 2000 2010 2020 2030 2040

Renewables Nuclear Gas Oil Coal

•  2.3% average GDP growth

•  Overall energy demand growth 0.5% per year – 16% overall increase

•  Increase for renewables and gas at the expense of coal and oil

–  8.5% annual growth in new renewables

–  Both coal and oil market share down by around 10 %-points

•  Gas (1.1% annual growth) to –  Power

–  Industrial use

–  Transport

–  Moderate growth in LNG exports

Assumptions on economic and energy demand growth differ, …

Total primary energy demand CAGR, %

Total oil demand CAGR, %

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Comparing different forecasts

0

0.5

1

1.5

2

2.5

2010-2030

2010-2040

0

0.2

0.4

0.6

0.8

1

1.2

1.4 2010-2030

2010-2040

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Thank you!