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November Release
Global Energy Investment Challenges
Dr. Fatih BirolChief Economist
Head, Economic Analysis DivisionInternational Energy Agency
November Release
World Energy Outlook 2002:World Energy Outlook 2002:Key Strategic ChallengesKey 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 infrastructure
November Release
Oil Oil
November Release
World Oil Production Capacity World Oil Production Capacity OutlookOutlook
0
50
100
150
200
250
2001 2030
mb/
d
World oil demand
2001-2030
Cumulative additionto production capacity
76
120
Decline rates are a key long-term determinant of upstream capacity investment requirements
November Release
Gas Gas
November Release
World Gas Upstream World Gas Upstream Investment OutlookInvestment Outlook
Current production capacity: 2800 bcm
Projected capacity 2030: 5300 bcm
Additional capacity requirement between today and 2030: 10 000 bcm(ca. 350 bcm/year)
Substantial new capacity needed to compensate the declines in existing fields- especially in US
November Release
Global GasGlobal Gas--Trade Flows, 2030Trade Flows, 2030
The Middle East overtakes the transition economies as the world’s biggest gas-exporting region
Bcm
November Release
World Gas Investment OutlookWorld Gas Investment OutlookGlobal gas trade will increase by more than three times. LNG trade is set to quintuple
The share of LNG in trade will grow from 30% now to 50% in 2030 assuming further cost reductions
The shipping fleet will increase from 128 tankers today to over 450 in 2030- some w/o long-term contracts
The length of gas transmission and distribution pipelines will double
November Release
ElectricityElectricity
November Release
World Electricity Consumption World Electricity Consumption vsvs. . GDP 1971GDP 1971--2001 2001
World electricity demand is set to increase rapidly
2000
4000
6000
8000
10000
12000
14000
15000 20000 25000 30000 35000 40000 45000
GDP (billion $(1995) using PPPs)
Elec
tricit
y con
sum
ptio
n (T
Wh)
Electricity Demand 2001 to 2030:
OECD: 1.5%Transition Economies: 2.0%Developing Countries: 4.1%
WORLD: 2.4%
2001
1971
November Release
World Electricity Investment Outlook to 2030
Generation42%
Transmission15%
Distribution37%
CHP1%
Refurbishment5%
Massive investment will be required in the power sector to meet demand growth and to replace/maintain existing infrastructure
November Release
World Installed PowerWorld Installed Power--Generation Generation CapacityCapacity
Nearly 5,000 GW of capacity needs to be built in 2000-2030, almost half in developing countries
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030
GW
Existing capacity New capacity
November Release
World PowerWorld Power--Generation Generation Investment, 2000Investment, 2000--20302030
Cumulative worldwide investment in new power plants amounts to $ 4.2 trillion, more than half in developing countries
AfricaE. AsiaChinaPacificEuropeNorth America
Middle East
Transition economies
South Asia
Latin America
0
100
200
300
400
500
600
700
800
900
$ bi
llion
(200
0 do
llars
)
November Release
Size and Activity of Financial Size and Activity of Financial Markets by RegionMarkets by Region
Financial markets in non-OECD regions are smaller, less active and less efficient.
0
10
20
30
40
50
60
70
80
OECD Russia India Indonesia Brazil Africa
% (R
atio
to G
DP)
Liquid liabilities (size of banking sector)Stock market capitalization (size of stock market)Stock market value traded (activity of stock market)
November Release
Investment Flows into Energy Projects Investment Flows into Energy Projects with Foreign Private Participationwith Foreign Private Participation
Sound macroeconomic management and legal/regulatory framework are needed to secure the availability of
foreign capital to energy projects.
0
5
10
15
20
25
30
35
40
45
50
1997 1998 1999 2000 2001 2002(Preliminary)
2001
US$
bill
ion
Electricity Natural gas distribution and transmission
November Release
Installed Capacity in EUInstalled Capacity in EU--1515
Capacity additions over the next 30 years will be larger than today's installed capacity
901 GWInstalled Capacity - 2030
584 GW 290 GW 618 GWInstalled Capacity
2000Retirements 2000-2030
New Capacity2000 - 2030
=
November Release
Age of Installed Capacity Age of Installed Capacity in 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 current capacity -mostly coal-fired - could be retired by 2030
November Release
Capacity in EU Capacity in EU 7 Major Utilities (2002)7 Major Utilities (2002)
0
10
20
30
40
50
60
70
80
90
100
110
EdF
E.ON
RWE
ENEL
Vatten
fall
Endesa
Electra
bel
GW
Rest of EuropeHome Country
November Release
Concluding RemarksConcluding Remarks--1 1 Electricity is overwhelmingly the largest sector - and most of rest is oil and gas
Bulk of energy investments will shift to developing countries and transition economies
Capital is available globally but issue is cost and balance of risk/return
FDI and international capital markets need to play growing role in financing non-OECD investments
November Release
Concluding RemarksConcluding Remarks-- 2 2 Oil/Gas: Decline rates - key long-term uncertainty for upstream investment requirements
Gas: Unit production/transportation costs still falling, but longer supply chains will drive up overall cost to key markets, and thereby boost investment needs
Gas/Electricity: questions on overall impacts of liberalisation on investments
Electricity in DCs: inadequate local capital markets- limited access to international capital
