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WORLD ENERGY INVESTMENT OUTLOOK
Global Strategic Energy Challenges
Dr. Fatih BirolChief Economist Head, Economic Analysis DivisionInternational Energy Agency
INTERNATIONALENERGY AGENCY
US DOE
Special Award
for Analytical
Excellence
US DOE
Special Award
for Analytical
Excellence
ABN AMRO
Award of
Excellence
ABN AMRO
Award of
Excellence
World Coal
Institute
Special AwardWorld Coal
Institute
Special Award
World Primary Energy DemandWorld Primary Energy Demand
Gas grows fastest in absolute terms & non-hydro renewables fastest in % terms, but oil remains the dominant fuel in 2030
0
1,000
2,000
3,000
4,000
5,000
6,000
1970 1980 1990 2000 2010 2020 2030
Mto
e
Oil
Natural gas
Coal
Nuclear power
Hydro powerNon-hydro renewables
Global Strategic ChallengesGlobal Strategic Challenges
Security of energy supplies
Threat of environmental damage caused by energy use
Uneven access of the world’s population to modern energy
Investment in energy-supply infrastructure
Developing Asia Oil and Gas Developing Asia Oil and Gas ImportsImports
20022002 20302030Oil Net Imports
Oil Net Imports
Gas Net Imports
Gas Net Imports
Gas Production
Gas Production
Oil Production
Oil Production
Imports: 45% Imports: 72%
Developing Asia will become more dependent on oil & gas imports, from fewer countries – mainly Middle East and Russia.
Global Strategic ChallengesGlobal Strategic Challenges
Security of energy supplies
Threat of environmental damage caused by energy use
Uneven access of the world’s population to modern energy
Investment in energy-supply infrastructure
EnergyEnergy--Related CORelated CO22 EmissionsEmissions
World emissions increase by 1.8 % per year to 38 billion tonnes in 2030 – 70% above 2000 levels
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1970 1980 1990 2000 2010 2020 2030
milli
on to
nnes
of C
O2
World OECD Transition economies Developing countries
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1970 1980 1990 2000 2010 2020 2030
milli
on to
nnes
of C
O2
World OECD Transition economies Developing countries
World Primary Energy Demand World Primary Energy Demand and COand CO22 EmissionsEmissions
Emissions increase faster than demand over the next 30 years, because the share of fossil fuels in the energy mix grows
0.0
0.5
1.0
1.5
2.0
2.5
1971-2001 2002-2030
Ave
rage
ann
ual p
er c
ent g
row
th ra
te
Energy demand CO2 emissions
Global Strategic ChallengesGlobal Strategic Challenges
Security of energy supplies
Threat of environmental damage caused by energy use
Uneven access of the world’s population to modern energy
Investment in energy-supply infrastructure
Map of Global Energy PovertyMap of Global Energy Poverty
Millions of People Without Electricity
Millions of People Relying on Biomass
28 20
509 530
56 96
815
221 332
801
18 570
1.6 billion people have no access to electricity, 80% of them in South Asia and sub-Saharan Africa
Global Strategic Challenges
Security of energy supplies
Threat of environmental damage caused by energy use
Uneven access of the world’s population to modern energy
Investment in energy-supply infrastructure
World Energy Investment2001-2030
Total investment: 16 trillion dollars
Oil 19%
Electricity60%
Coal 2%Gas 19%
OtherRefining
E&D 72%
13%15%Other
Refining
E&D 72%
13%15%
E&D
LNG Chain
T&D and Storage
55%
37%
8%
E&D
LNG Chain
T&D and Storage
55%
37%
8%
Power generation
T&D54%
46% Power generation
T&D54%
46%
Mining
Shipping and ports
12%
88% Mining
Shipping and ports
12%
88%
Production accounts for the majority of investment in the supplychain – except for electricity
World Transportation Oil DemandWorld Transportation Oil Demand
Oil demand for transport increases very closely in line with GDP in all regions
15
18
21
24
27
30
33
36
17000 22000 27000 32000 37000 42000 47000
GDP (billion 2000 US$ using PPPs)
mb/
d
1971
2001
World Oil Production
0
20
40
60
80
100
120
1980 1990 2000 2010 2020 2030
mb/
d
OPEC - Middle East OPEC - OtherNon-OPEC Non-conventional oil
OPEC countries – mainly in Middle East – will account for bulk of the increase in world oil production to 2030
Oil Production and Capacity Additions
0
50
100
150
200
250
2000 2030 2001-2030
mb/
d
Production Expansion to meet demand growth Replacement to maintain capacity
The bulk of additions to crude oil production capacity will be needed simply to maintain capacity
Access to Oil Reserves
National companies only (Saudi Arabia,
Kuwait, Mexico)35%
Limited access - National
companies 22%
Production sharing
12%
Concession21%
Iraq10%
1,032 billion barrels
Access to much of the world’s remaining oil reserves is restricted
Oil and Gas Reserves
Proven reserves are sufficient to meet demand for next three decades
But considerable uncertainty over remaining probable and possible reserves
Uncertainty is especially great in key producing countries
Need for more transparent, consistent and comprehensive data is obvious
Restricted Middle East Oil Investment Scenario
OPEC Middle East Share in Global Oil Supply
OPEC Middle East’s share of global oil production is assumed to remain flat at under 30% in Restricted Investment Scenario
0
10
20
30
40
50
1970 1980 1990 2000 2010 2020 2030
per c
ent
Restricted Investment Scenario Reference Scenario
Age of Installed CapacityAge of Installed Capacityin EU-15in EU-15
0
20
40
60
80
100
120
140
GW
Oil
Gas
Coal
Uranium
< 10 years 10 - 20 years 20 - 30 years > 30 years
Europe's power plants are ageing: half currentcapacity - mostly coal-fired - could be retired before 2030
Electricity Revenue and Return on Capital of Indian SEBs
-60
-40
-20
0
20
40
60
80
100
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Return on capital Revenue as % of cost
The desperate financial straits of Indian state electricity boards underlines the urgent need for pricing reform
Power Sector Private Investment in Developing Countries
05
1015
2025
3035
4045
50
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
billio
n do
llars
Developing countries will need to reverse the slump in private capital flows if projected investment is to be forthcoming
Some concluding remarks…
Governments: less direct intervention as lender or owner – ‘facilitator’ role
Policymakers need to ensure basic principles of good governance are applied and respected
Fiscal and regulatory incentives for developing advanced technologies could speed their deployment and dramatically alter energy patterns
Need for concerted international efforts
