Global Opportunities for Energy Security

Presentation

By

R S ButolaMD ONGC Videsh Limited

Energy Security

The Umbrella Term

Source; CERA

Dimensions of the Energy Security

• 1970s: -Arab Embargo and the Iranian Revolution

• 1990s: -Environmental problem: Climate change-Liberal Democracy and Market Capitalism

• 2000 ….. -Nationalist fervor / Extremist threat emerging

Parallelly-Unparallel demand growth-Sustainable Development- Alternate fuels/resources are in embryonic stage

Energy enters domain of Geo-politics & Security becomes the concern

Energy Issue Map

Source; World Economic Forum 2006

The Impact

Source; IMF & CERA

Oil Price Spikes & Global Economic Growth

The Opportunity

Source; IMF & CERA

Oil Intensity of Global Economy

The case of energy: World primary energy demand by fuel

(source: IEA)

0

1000

2000

3000

4000

5000

6000

7000

1970 1980 1990 2000 2010 2020 2030

Mto

e

Coal Oil Gas Nuclear Hydro Other

Fossil Fuels; Coal, Oil & Gas to remain the main sources of Energy

Share of Gas would increase in the futureSource; IEA

34%

22 %

10%

7%3%

35%

27 %

21%

11%

5%2%

The Changes

• Demand Centre

• Supply Centre

• Geo-Politics

• Resource as a Tool

• The New Engagements

Refined Products Demand

Changes by region 2005-2015

Source; CERA

The World Population

Source; EXXON

From 6.53 billion in 2006 to 8.0 billion in 2030

Structural Changes

Oil Production Capacities Increases

15 Countries dominate long term Oil Supply Growth

In million barrels per day

Source; CERA

Supply Corridors (Mostly West wards)

International LNG Trade: Connecting Markets

Surplus Capacities are Decreasing

Source; IMF & BP

Future Oil Consumption

India: Oil Consumption

4.1%

3.3% 3.3% 3.3%

2.4%2.2%

2.0% 1.9%1.7%

1.0%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

BP Stats data for past oil consumption; EIA, International Energy Outlook 2003

CAGR 2001-2025 ~ 4.1%

Past Oil Consumption

119108

8491

97100 100

104

6775

81

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

(MMT)

CAGR 1995-2004 ~ 6.1 %

0

50

100

150

200

250

300

350

400

'97-

98

'98-

99

'99-

00

'00-

01

'01

- 02

'02

- 03

'04-

05

'06-

07

'11-

12

'24-

25

India prodn. India consmpn

Widening Oil Demand in India

Source: PPAC & IHV 2025

(MMT)

Consumption

Production

Widening Gap

Year Ending March 31

Production Consumption Gap %

Self S.

1998 33.86 90 56.7 37.4

1999 32.72 97.1 64.3 33.7

2000 31.95 100 68.1 31.9

2001 32.43 100.4 67.6 32.4

2002 32.03 104.1 71.9 30.7

2003 33.04 108.1 75.1 30.6

2005 34.00 119 85.0 29.0

2007 173.00

2012 240.00

2025 364.00

Troubled Middle East

Unapproachable Middle East

North & South America South

East Asia

Russia

& FSU Africa

Areas not Available for Business

Possible Indian PieINTERNATIONAL INDUSTRY PLAYERS

INTERNATIONAL PETROLEUM INDUSTRY ENVIRONMENT

Unexplo

red /F

rontie

r

Areas

Geo

-Po

liti

cs

Car

tels

& T

rad

e B

lock

s

Imbalances

Mar

ket

Str

uct

ure

& D

ynam

ics

HOW BIG COULD BE AN INDIAN PIE (Opportunities)

Vietnam 3

Myanmar 2

Sudan 3

Nigeria 1 in JDZ

Libya 3

Egypt 1 Syria 1+1

Iraq 1

Russia 1

Iran 1

Our International Presence

Producing Assets Development Exploration

Cuba 2

Qatar 1

OVL has 24 Projects (36 Blocks) in 14 Countries

OperatorIran, FarsiIraq, Bl 8Qatar, Na NjVietnam 127Vietnam 128Cuba 34 Cuba 35Libya 81-1

Joint OperatorSudan GNOPEgypt Bl. 6

Brazil

By 27th July OVL has contracted 21 Projects (32 Blocks)

Nigeria 2

The Issues

• Energy Security and its Forms• Government - Role & Influence• Compete or Collaborate• Harnessing Interdependencies

– Cris-cross Investments– Buyer-Seller Engagements

• Technology Alliances– NOC and IOC– Up-gradation

• Securing the flow of Energy– Collaborative Energy Corridors

• Alternate Energy Sources• Market - The ultimate Arbiter• Promoting Investments

The Approach

• Pursue an Integrated Energy Policy

– Harness vast Coal, Hydel resources to generate power

– Realize Nuclear power potential

• Accept the reality that despite growth of alternate fuels, oil would continue to be main transportation fuel

• Access to hydrocarbon resources is a key ingredient of Energy Security

• Promote investments by Indian Companies

– Proactive role of Government

– Empowerment and enabling framework for companies

• Explore and Develop Interdependencies

– Economic Packaging

– Leveraging Market Access

• Strengthen the flow; Pipelines - Infrastructure

Thank You