The Changing Geopolitics of Energy – Part II - · PDF fileNatural Gas 36.1 72 78.1 82.2 94.8 113.8 133.3 152.5 174.2 ... The Changing Geopolitics of Energy II 8/12/98 Page 10 Copyright

Copyright Anthony H. Cordesman, all rights reserved.

CSIS_______________________________Center for Strategic and International Studies

1800 K Street N.W.Washington, DC 20006

(202) 775-3270

TheChanging Geopolitics of

Energy – Part II

Global Oil and Gas Production and Reserves

Anthony H. CordesmanWith the Assistance of Sarin Hacatoryan

Strategic Energy InitiativeCenter for Strategic and International Studies

August 11, 1998

The Changing Geopolitics of Energy II 8/12/98 Page 2


Table of ContentsIMPACT OF OIL AND GAS ON PRESENT AND FUTURE GLOBAL ENERGY DEMAND..................... 4

KEY OIL ISSUES ............................................................................................................................................... 5Estimated Growth of Oil and Gas Use: 1970-2020 ....................................................................................... 6Growing World and US Dependence on Imported Oil: 1990-2020................................................................ 7In the Past, the West Has Driven the Rise in Demand for Oil with Little Impact from Developing Asia: WorldOil Consumption: 1960-1996....................................................................................................................... 8Asia, However, has Become a Major Oil Consumer: .................................................................................... 9Asian Oil Consumption: 1960-1996 ............................................................................................................. 9Asia Will Drive Most of the Future Increase in Demand for Oil: Total World Oil Consumption by Region:1990-2020 ..................................................................................................................................................10Comparative Growth in Demand for Oil by Region: 1990-2020...................................................................11Middle Eastern Trade with Asia Must Change Fundamentally and Recycling “Petro-Yen” Will Not Be Easy...................................................................................................................................................................12

KEY GAS ISSUES .............................................................................................................................................13North America, the FSU, and Western Europe Will Stay the Largest Consumers, but Asia Will Drive Most ofthe Increase in Gas Demand .......................................................................................................................14Comparative Growth in Demand for Gas by Region: 1990-2020 .................................................................15Asia Will Make Major Increases in its Gas Imports:....................................................................................16Asian Gas Consumption: 1990-2020 ...........................................................................................................16

GEOPOLITICAL IMPACT OF OIL AND GAS RESERVES .......................................................................17

OIL RESERVES AND GEOPOLITICS ....................................................................................................................18Shifts in the Regional Balance of Oil Reserves.............................................................................................19The Middle East and the Gulf Dominate Future Oil Supply: World Oil Reserves by Region as a Percent ofWorld Total ................................................................................................................................................20OPEC versus Non-OPEC Production, Reserves and Refining Capacity .......................................................21OPEC Status by Country ............................................................................................................................22The Middle East and the Gulf Dominate Future Oil Supply: World Oil Reserves by Region in Billions ofBarrels .......................................................................................................................................................23Comparative World Oil Reserves by Region................................................................................................24Reserves By Region & Major Producer Country .........................................................................................25Reserve to Production Ratios By Region & Major Producer........................................................................26The Life of Oil Reserves is an Issue for Everyone ........................................................................................27Oil Reserves Are Technology as Well as Price Dependent: US Reserves in the Lower 48 as a Test Case ......28

GAS RESERVES AND GEOPOLITICS ...................................................................................................................29Shifts in the Regional Balance of Gas Reserves ...........................................................................................30The Middle East and the Gulf Dominate Future Gas Supply: World Oil Reserves by Region as a Percent ofWorld Total ................................................................................................................................................31The FSU and the Middle East Dominate Future Gas Supply: World Oil Reserves by Region in Trillions ofCubic Meters ..............................................................................................................................................32World Gas Reserves by Key Nation.............................................................................................................33World Gas Reserve to Production Ratios by Key Nation..............................................................................34Gas Reserves Are Also Technology as Well as Price Dependent: US Reserves in the Lower 48 as a Test Case...................................................................................................................................................................35

UNCERTAINTIES AFFECTING KEY SUPPLIERS AND EXPORTERS...................................................36

KEY AREAS OF UNCERTAINTY IN GLOBAL SUPPLY ...........................................................................................37World’s Growing Dependence on the Gulf and Middle East: Projected Total Global Oil EXPORTS bySource in 1995 and 2020 ............................................................................................................................38World’s Growing Dependence on the Gulf and Middle East: .......................................................................39Projected Total Global Oil IMPORTS by Source in 1995 and 2020 .............................................................39Rising Asian Demand is Met by Rising Middle Eastern Production: Net Balance of Regional Imports andExports: 1995-2015 ....................................................................................................................................40



Large Amounts of Oil Production and Exports Are at Risk ..........................................................................41in Key Exporting Countries: 1995-2015 ......................................................................................................41Cumulative Risk: Estimated Total Demand for Exports from Countries with Sensitive or High Risk OilProduction Capacity Affects 50% of World Supply ......................................................................................42The FSU, Saudi Arabia, and Iraq are the Three Most Critical Future Exporters ..........................................43Today’s “Rogues” Had Damn Well Better Be Tomorrow’s Suppliers: 1995-2020........................................44Pattern of Oil Exports Could Sharply if the FSU Does Not Meet Estimated Production Levels and ChinaCannot Exploit New Fields: Prices Rises Likely ..........................................................................................45Domestic energy Demand Can Radically Change the Energy Available For Export: Middle EasternDomestic Energy Demand As a Test Case ...................................................................................................46IEA/OECD Estimate of Middle Eastern Domestic Energy Demand..............................................................47Downstream Operations Can Also Have Major Geopolitical Impacts: Gulf Cooperation Council vs. WorldPetrochemical Design Capacities: 1993......................................................................................................48



Impact of Oil and Gas onPresent and Future Global

Energy Demand



Key Oil Issues• Oil and gas energy use rises by 75% in BTUs between 1997 and

2020.

• Industrialized world and US become steadily more dependent onimports, with economic growth and Enhanced Oil Recovery(EOR) acting as the major uncertainty.

• Demand from the industrialized world, however, no longerdominates growth.

• Asian demand has leapt since early 1960s.

• Asia will become the dominant consuming region by 2010.

• Asia’s Imports will increase accordingly.

• China is actively competing in the “Great Game” forCentral Asia oil and has outbid US firms in some areas.

• The Middle East and the Gulf are projected to dominateincreases in oil supply.

• The growing domestic demand for oil in other developingregions will become a major factor and with steadily limit theexport capabilities of the Middle East, Africa, and FSU.

• Pipeline, port, and tanker geopolitics will change fundamentallyduring 1998-2020.

• Iran, Iraq, Libya, and Russia represent “high risk” oil supplierswith major potential geopolitical impacts.



Estimated Growth of Oil and Gas Use: 1970-2020(Quadrillion BTU)

1970 19901995 1996

2000 20052010

20152020

Natural Gas

Oil

Oil

Natural Gas

0

50

100

150

200

250

Natural Gas 36.1 72 78.1 82.2 94.8 113.8 133.3 152.5 174.2

Oil 97.8 134.9 142.5 145.7 157.8 176.3 195.5 215.3 237.3

1970 1990 1995 1996 2000 2005 2010 2015 2020

Source: Adapted by Anthony H. Cordesman from EIA, Internet, July 4, 1996, and International Energy Outlook, 1998,DOE/EIA-484(97), p. 8 and 135.



Growing World and US Dependence on Imported Oil: 1990-2020(Average Daily Domestic Production vs. Demand in Millions of Barrels Per Day)

19901996

20002005

20102015

2020

US Domestic Production

US Total Demand

Industrialized World Production

Industrialized World Demand

0

10

20

30

40

50

60

US Domestic Production 9.7 9.4 9.1 9 8.9 8.7

US Total Demand 17 18.3 19.6 21.3 22.7 23.7

Industrialized World Production 20.1 23 24.7 25.4 24.8 23.7

Industrialized World Demand 39.5 43.4 45.6 48.4 51.1 53.3

1990 1996 2000 2005 2010 2015

Source: DOE/EIA, International Energy Outlook, 1998, p. 136 and 175.



In the Past, the West Has Driven the Rise in Demand for Oil with LittleImpact from Developing Asia: World Oil Consumption: 1960-1996

(in Millions of Barrels Per Day (MMBD)

South Korea

India

China

Japan

US

OECD

World

0

10

20

30

40

50

60

70

80

Source: Adapted by Anthony H. Cordesman from EIA Annual Energy Review, 1998, http://www.eia.doe.gov/bookshelf.html



Asia, However, has Become a Major Oil Consumer:Asian Oil Consumption: 1960-1996

(in Millions of Barrels Per Day (MMBD)

China

Japan

South Korea

India

0

2

4

6

8

10

12

14

Source: Adapted by Anthony H. Cordesman from EIA Annual Energy Review, 1998,http://www.eia.doe.gov/bookshelf.html .



Asia Will Drive Most of the Future Increase in Demand for Oil: TotalWorld Oil Consumption by Region: 1990-2020

(Millions of Barrels per Day)

North America

Western Europe

Middle EastAfrica

Latin America

Asia

FSU/E. Europe

0

20

40

60

80

100

120

140

FSU/E. Europe 10 5.9 5.7 5.9 6.7 7.8 9 10.1

Asia 13.8 18.3 19 21 24.8 28.5 33 38.4

Latin America 3.4 3.9 4 5.2 6.2 7.3 8.5 9.8

Africa 2.1 2.3 2.4 3.1 3.7 4.1 4.6 5.1

Middle East 3.4 4.1 4.2 4.4 5 5.6 6.3 7.1

Western Europe 12.9 14.1 14.3 14.3 14.6 14.9 15.2 15.4

North America 20.4 21.3 22 23.7 25.6 27.6 29 30.1

1990 1995 1996 2000 2005 2010 2015 2020

Source: Adapted by Anthony H. Cordesman from DOE/EIA, International Energy Outlook, 1996, Washington, DOE, EIA-0484(96), May,1996, p. 92, and International Energy Outlook, 1998, April, 1998, DOE/EIA-484(97), Reference Case, p. 136.



Comparative Growth in Demand for Oil by Region: 1990-2020(Millions of Barrels per Day)

1990 1995 1996 2000 2005 2010 20152020

Middle East

Africa

Latin America

FSU/E. Europe

Western Europe

Asia

North America

0

5

10

15

20

25

30

35

40

Middle East 3.4 4.1 4.2 4.4 5 5.6 6.3 7.1

Africa 2.1 2.3 2.4 3.1 3.7 4.1 4.6 5.1

Latin America 3.4 3.9 4 5.2 6.2 7.3 8.5 9.8

FSU/E. Europe 10 5.9 5.7 5.9 6.7 7.8 9 10.1

Western Europe 12.9 14.1 14.3 14.3 14.6 14.9 15.2 15.4

Asia 13.8 18.3 19 21 24.8 28.5 33 38.4

North America 20.4 21.3 22 23.7 25.6 27.6 29 30.1

1990 1995 1996 2000 2005 2010 2015 2020

Source: Adapted by Anthony H. Cordesman from DOE/EIA, International Energy Outlook, 1996, Washington,DOE, EIA-0484(96), May, 1996, p. 92, and International Energy Outlook, 1998, April, 1998, DOE/EIA-484(97),Reference Case, p. 136.



Middle Eastern Trade with Asia Must Change Fundamentally andRecycling “Petro-Yen” Will Not Be Easy

(Trade Patterns in 1996 in $US Current Millions)

36.2

15

1.40.6

12.1

5.7

1.5 1.8

48.3

20.7

2.9 2.4

-24.1

-9.3

0.11.2

- 3 0

- 2 0

- 1 0

0

1 0

2 0

3 0

4 0

5 0

J apan S out h Kor ea Indones i a M a l ay s i a

I m por t s Ex po r t s T o t a l Ba l a nc e

Note: Arabia and the Gulf includes Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, UAE, and Yemen. EasternMediterreanean includes Egypt, Israel, Jordan and Syria. North Africa includes Algeria, Morocco, Libya, Tunisia, and Sudan.All Arab includes previous countries less Iran and Israel. Middle East and North Africa includes all countries listed above.

Source: Adapted by Anthony H. Cordesman from EIU, Internet data base, December 16, 1997.



Key Gas Issues• Massive uncertainties exist regarding the size of reserves and

major changes could occur in current estimates by 2020.

• Iran is a key uncertainty.

• Changes in gas liquids technology could change the definition ofeconomic reserves, the value of gas, and the entire market forgas.

• Pipeline geopolitics are even more important for gas than for oil.

• North America, Europe, and FSU will dominate gas use, butAsian demand will rise sharply.

• The growth of gas use in the Pacific Rim states will beparticularly high.

• Tanker traffic will increase because of both oil and gasdemand.

• Russia may create pipelines to service China, Korea, and Japan -- altering current estimates of dependence on oil.



North America, the FSU, and Western Europe Will Stay the LargestConsumers, but Asia Will Drive Most of the Increase in Gas Demand

(Total World Gas Consumption by Region: 1990-2015, Trillion Cubic Feet, EIA Reference Case)

1990 1995 1996 2000 2005 2010 2015 2020

Africa

Industrial Asia

Middle East

Latin America

Developing Asia

Western Europe

FSU/E. Europe

North America

0

5

10

15

20

25

30

35

40

45

Africa 1.4 1.7 1.8 1.7 1.9 2.4 2.9 3.4

Industrial Asia 2.6 3.1 3.3 3.3 3.7 4.1 4.3 4.6

Middle East 3.6 4.7 5.2 5.4 6 6.8 7.8 8.9

Latin America 2 2.6 2.9 3.1 5 7.2 9.8 13

Developing Asia 3 4.7 5.3 9.5 14.1 18.5 22.6 27.7

Western Europe 10.3 12.7 14.1 16.2 19.9 23.5 27.7 32.1

FSU/E. Europe 28.1 23.4 23.7 26.8 31 35.2 38.7 42.7

North America 22 25.4 26 28.5 31.5 34.4 36.9 39.4

1990 1995 1996 2000 2005 2010 2015 2020




Comparative Growth in Demand for Gas by Region: 1990-2020(Millions of Barrels per Day)

1990 1995 1996 2000 2005 2010 2015 2020

Africa

Industrial Asia

Middle East

Latin America

Developing Asia

Western Europe

North America

FSU/E. Europe

0

5

10

15

20

25

30

35

40

45

Africa 1.4 1.6 1.8 1.7 1.9 2.4 2.9 3.4

Industrial Asia 2.6 3.1 3.3 3.3 3.7 4.1 4.3 4.6

Middle East 3.6 4.7 5.2 5.4 6 6.8 7.8 8.9

Latin America 3.9 5 5.6 5.8 8.8 12.4 16.6 21.8

Developing Asia 3 4.7 5.3 9.5 14.1 18.5 22.6 27.7

Western Europe 10.3 12.7 14.1 16.2 19.9 23.5 27.7 32.1

North America 22 25.4 14.1 16.2 19.9 23.5 27.7 32.1

FSU/E. Europe 28.1 23.4 23.7 26.8 31 35.2 38.7 42.7

1990 1995 1996 2000 2005 2010 2015 2020




Asia Will Make Major Increases in its Gas Imports:Asian Gas Consumption: 1990-2020

(Trillion Cubic Feet of Consumption, EIA Reference Case)

Australasia

Pacific Rim

Japan

India

China

0

5

10

15

20

25

30

35

China 0.5 0.6 0.7 1.4 2.4 3 3.3 3.7

India 0.4 0.6 0.7 1.5 2.3 3.3 4.5 5.9

Japan 1.9 2.2 2.4 2.2 2.5 2.8 2.9 3.2

Pacific Rim 2.1 3.5 4 6.7 9.4 12.1 14.8 18.1

Australasia 0.8 0.9 0.9 1.1 1.2 1.3 1.3 1.4

1990 1995 1996 2000 2005 2010 2015 2020

Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, p. 137.



Geopolitical Impact of Oiland Gas Reserves



Oil Reserves and Geopolitics• Enhanced Oil Recovery (EOR) is steadily change reserve

estimates and help the US and Northern Europe maintainreserve ratios for much longer than previously expected.

• Asia is “oil poor” in reserves, and reserves are depleting fasterthan new discoveries.

• China is having little success in finding new reserves.

• Offshore oil reserves in South China Sea may be myth.

• India has virtually no oil.

• Enhanced oil recovery (EOR) unlikely to provide muchhelp.

• Russia’s ability to exploit its reserves is economically andtechnically uncertain. Siberia is a particular problem.

• Gulf has about two-thirds of world’s known oil reserves. Algeriaand Libya have major reserves, and Egypt, Syria, and Tunisiahave some oil.

• North African reserves exceed reserves of all Sub-Saharanstates: Angola, Nigeria, etc.

• Far Eastern reserves are comparatively low, with littlepotential for major new discoveries.

• Other regions have a faster growth of domesticconsumption as a ratio of reserves.

• Gulf and Middle Eastern oil reserves are just as important evenif ultimate oil reserves are considered.

• New reserves in other regions tend to be offset by depletion ofexisting reserves.



Shifts in the Regional Balance of Oil Reserves(Billions of Barrels)

0

1 0 0

2 0 0

3 0 0

4 0 0

5 0 0

6 0 0

7 0 0

Nor t h

A m er i ca

S & C

A m er i ca

Eur ope FSU M i ddl e Eas t A f r i ca A s i a/ Pac

1 9 7 7

1 9 8 7

1 9 9 6

1 9 9 8

1977 56.9 26.4 30.3 75 365.8 59.2 39.71987 93 65.7 24.2 69 564.7 55.3 37.81996 85.9 79.1 20.5 65.5 676.3 67.5 42.41998 76.6 86.2 20.2 65.4 676.9 70 42.3

Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 4.



The Middle East and the Gulf Dominate Future Oil Supply: World OilReserves by Region as a Percent of World Total

(Based on Oil and Gas Journal Forecast for and a World Total of 1,037.6 billion barrels)

North America

7%

S&C America

8%

Europe

2%

FSU

6%

Gulf

65%

N. Africa

4% S. Africa

3%Asia/Pacific

4%

Other Middle East

1%




OPEC versus Non-OPEC Production, Reserves and Refining Capacity

29.9

797.1

8

44.2

244.2

70.4

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Oil Production in

MMBD

Reserves in Billions of

Barrels

Refining Capacity in

MMBD

Non-OPEC

OPEC

Source: DOE/EIA, Non-OPEC Fact Sheet, 3/98.



OPEC Status by Country(Thousands of Barrels Per Day

Country 1997 Quota 1998 Quota 1998 Cutbacks* Crude Oil Production 1997 3/98

Algeria 750 909 50,000 847 860

Indonesia 1,300 1,456 70,000 1,366 1,340

Iran 3,650 3,942 140,000 3,629 3,600

Iraq 1,200 1,314 0 1,182 1,820

Kuwait 2,000 2,190 125,000 2,038 2,210

Libya 1,390 1,522 80,000 1,446 1,450

Nigeria 1,865 2,042 125,000 2,217 2,270

Qatar 378 414 30,000 614 700

Saudi Arabia 8,000 8,761 525,000 8,562 8,460

UAE 2,161 2,366 125,000 2,236 2,400

Venezuela 2,359 2,583 325,000 3,275 3,370

TOTAL OPEC 25,033 27,500 - 27,457 28,480

Mexico - - 200,000 - -

Norway - - 100,000 - -

Oman - - 30,000 - -

Yemen - - 20,000 - -

TOTAL - - 1,945,000 - -

* Combined from the March 22, 1998, March 30 OPEC, and June 4 Amsterdam agreements.

Source: Adapted by Anthony H. Cordesman from DOE/EIA OPEC Fact Sheet, June, 1998, and Oil ProductionAgreements of 1998, June 5, 1998.



The Middle East and the Gulf Dominate Future Oil Supply: World OilReserves by Region in Billions of Barrels

(Based on Oil and Gas Journal Forecast for and a World Total of 1,037.6 billion barrels)

42.3

27.2

42.8

6.7

670.2

20.2

86.2

76.6

65.4

0 1 0 0 2 0 0 3 0 0 4 0 0 5 0 0 6 0 0 7 0 0

A s i a/ Pac i f i c

Subsahar an A f r i ca

Nor t h A f r i ca

Ot her M i ddl e Eas t

Gul f

FSU

Eur ope

S& C A m er i ca

Nor t h A m er i ca




Comparative World Oil Reserves by Region (Billions of Barrels)

GulfEurasia

OECDOther

OPECOther

Identified Reserves

Ultimate Resources - Low

Estimate

Ultimate Resources - High

Estimate

0

100

200

300

400

500

600

700

800

900

1000

Identified Reserves 583 163.7 156.4 123.4 76.7

Ultimate Resources - Low

Estimate

834.2 383.5 450.2 250.4 175.7

Ultimate Resources - High

Estimate

992 636.6 605.7 317.1 255.6

Gulf Eurasia OECD Other OPEC Other

Source: Adapted by Anthony H. Cordesman from DOE/EIA, International Energy Outlook, 1997, April, 1997,DOE/EIA-484(97), Reference Case, p. 35.



Reserves By Region & Major Producer Country(Billions of Barrels in 1997)

42.3

70

676.9

65.4

20.2

76.6

76.6

5

4.3

24

16.8

29.5

9.2

97.8

261.5

96.5

112.5

93

8

48.6

7

5

10.4

71.7

40

6.8

29.8

0 1 0 0 2 0 0 3 0 0 4 0 0 5 0 0 6 0 0 7 0 0

Indones i a

Indi a

Chi na

A s i a/ Pac

Ni ger i a

Li by a

A l ger i a

A f r i ca

UA E

Saudi

Kuw ai t

Ir aq

Ir an

M i ddl e Eas t

Kazakhs t an

Russ i a

A zer bai j an

FSU

UK

Nor w ay

Eur ope

Venezuel a

S & C A m er i ca

M ex i co

Canada

US

Nor t h A m er i ca




Reserve to Production Ratios By Region & Major Producer(Reserves/Production Ratios in 1997)

15.6

25

87.7

42.5

24.7

8.2

37.3

16

9

20.5

20.2

55.6

18.8

100

79.5

100

100

69

21.7

59.5

33.6

10

0 2 0 4 0 6 0 8 0 1 0 0

Indones i a

Chi na

A s i a/ Pac

Ni ger i a

Li by a

A l ger i a

A f r i ca

UA E

Saudi

Kuw ai t

Ir aq

Ir an

M i ddl e Eas t

Kazakhs t an

Russ i a

FSU

Eur ope

Venezuel a

S & C A m er i ca

M ex i co

US

Nor t h A m er i ca




The Life of Oil Reserves is an Issue for Everyone (Years of Proven Reserves at Average Rate of Production in 1996)

Canada

Indonesi a

Nor w ay

Uni t ed St at es

Om an

A l ger i a

Ni ger i a

A ngol a

Chi na

Russ i a

M ex i co

Kazakhs t an

Li by aI r an

Saudi A r abi aA zer bai j an

Ir aqKuw ai t

UA E

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

8 0

9 0

1 0 0

Note: Iran and Saudi Arabia probably have major additional reserves. Countries shown as 100 years havesubstantially larger reserve life, but it is impossible to determine how much.Source: British Petroleum and the Economist, August 2, 1997, p. 80.



Oil Reserves Are Technology as Well as Price Dependent: US Reserves inthe Lower 48 as a Test Case

(in Billions of Barrels)

26 26

102

92

0

20

40

60

80

100

120

140

1990 Technology 2020 Technology

Unproved

Proved

Source: Adapted by Anthony H. Cordesman from EIA, Annual Energy Outlook, 1998, p. 59.



Gas Reserves and Geopolitics• The Middle East plays a critical role in Gas Reserves, but the

FSU has the largest reserves.

• North American and Asian gas reserves are much higher asa ratio of current demand, but fall far short of FSU andGulf.

• Asia must become a major net gas importer from the Gulf,although the FSU will be a critical supplier.

• North African reserves again exceed Sub-Saharan reserves, butNorth African gas reserves are not high relative to worldreserves or future demand.

• The FSU and Iran present a cumulative massive analyticproblem because:

• Data on oil reserves of Caspian states, Central Asia, andIran are very uncertain.

• Little meaningful data exist on the gas reserves of Russia,Caspian states, Central Asia, and Iran.

• The economic value of given types of gas reserves is muchmore uncertain than for oil.

• The geopolitics of gas reserve are currently transportationlimited!

• New gas liquids technologies might change this.

• Gas may substitute for oil in many exporting countries,increasing their oil export potential.



Shifts in the Regional Balance of Gas Reserves(Trillions of Cubic Meters)

0

1 0

2 0

3 0

4 0

5 0

6 0

Nor t h

A m er i ca

S & C

A m er i ca

Eur ope FSU M i ddl e Eas t A f r i ca A s i a/ Pac

1 9 7 7

1 9 8 7

1 9 9 6

1 9 9 8

1977 8.44 2.22 4.21 26.05 20.36 5.88 4.191987 10.23 4.25 7.01 41.06 30.7 7.04 7.231996 8.53 5.9 5.42 57.28 45.79 9.3 9.111998 8.36 6.29 6.29 56.71 48.88 9.87 9.08




The Middle East and the Gulf Dominate Future Gas Supply: World OilReserves by Region as a Percent of World Total

(Based on Oil and Gas Journal Forecast for a World Total of 144.76 Trillion Cubic Meters)

North America

6%

South and Central America

4%

Europe

4%

FSU

39%

Middle East

34%

Asia/Pacific

6%

Africa

7%




The FSU and the Middle East Dominate Future Gas Supply: World OilReserves by Region in Trillions of Cubic Meters

9.08

9.87

48.88

56.71

5.57

8.36

6.29

0 1 0 2 0 3 0 4 0 5 0 6 0

A s i a/ Pac i f i c

A f r i ca

M i ddi l e Eas t

FSU

Eur ope

S& C A m er i ca

Nor t h A m er i ca




World Gas Reserves by Key Nation (Trillions of Cubic Feet in Reserves)

1,700

810

300

204.9

190.5

166.5

143.1

130.6

114.9

109.8

79.8

72.3

66.2

65

65

63.9

61.3

52.9

52.3

46.3

41

39.6

30

17.4

0 2 0 0 4 0 0 6 0 0 8 0 0 1 , 0 0 0 1 , 2 0 0 1 , 4 0 0 1 , 6 0 0 1 , 8 0 0

Russ i a

I r an

Qat ar

UA E

Saudi

US

Venezuel a

A l ger i a

Ni ger i a

I r aq

M al ay s i a

Indones i a

Uzbek i s t an

Canada

Kazakhs t an

M ex i co

Net her l ands

Kuw ai t

Nor w ay

Li by a

Chi na

Uk r ai ne

A zer bai j an

Indi a

Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 20..



World Gas Reserve to Production Ratios by Key Nation (Nations with At Least 100 Trillion Cubic Feet in Reserves)

85.9

100

100

100

100

8.8

100

54.8

100

100

0 2 0 4 0 6 0 8 0 1 0 0

Russ i a

Ir an

Qat ar

UA E

Saudi

US

Venezuel a

A l ger i a

Ir aq

Ni ger i a

Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 20..



Gas Reserves Are Also Technology as Well as Price Dependent: US Reservesin the Lower 48 as a Test Case

(in Trillions of Cubic Feet)

169 169

1186

870

0

200

400

600

800

1000

1200

1400

1600

1990 Technology 2020 Technology

Unproved

Proved

Source: Adapted by Anthony H. Cordesman from EIA, Annual Energy Outlook, 1998, p. 59.



Uncertainties Affecting KeySuppliers and Exporters



Key Areas of Uncertainty in Global Supply

• Global and regional economic growth and energy demand.

• Russian stability and ability to produce.

• Chinese ability to find new oil and gas reserves and sustainproduction. Search for alternative sources of energy.

• Algerian stability.

• Sanctions Affecting Iran, Iraq, and Libya.

• Creation of new energy transportation infrastructure: Pipelines,ports, tankers, etc.

• The impact of domestic energy demand on export capacity,particularly in the Middle East.

• Possible impact on China on US coal exports.



World’s Growing Dependence on the Gulf and Middle East: Projected TotalGlobal Oil EXPORTS by Source in 1995 and 2020

(MMBD, EIA Reference Case)

0

20

40

60

80

100

120

Asia

West Africa

North Sea

North Africa

FSU

South America

Carribean

Persian Gulf

Middle East

TOTAL

Asia 0.3 0.7

West Africa 2.3 2.1

North Sea 4.1 4.6

North Africa 2.5 2.3

FSU 5.6 2.6

South America 4.3 2.6

Carribean 6 4.2

Persian Gulf 41.8 15.4

Middle East 44.3 17.7

TOTAL 111.2 52.2

2020 1995

Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, DOE/EIA-0484 (97),April 1997, p. 36.



World’s Growing Dependence on the Gulf and Middle East:Projected Total Global Oil IMPORTS by Source in 1995 and 2020

(MMBD, EIA Reference Case)

0

5

10

15

20

25

30

China

Industrial Asia

Other Developing

North America

Pacific Rim

Europe

Asia

The West

China 7.5 0.6

Industrial Asia 8.5 6.1

Other Developing 15.7 4.7

North America 15.2 8.9

Pacific Rim 11.7 5.1

Europe 12.3 11.7

Asia 27.7 11.4

The West 27.5 20.6

2020 1995

Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, DOE/EIA-0484 (97),April 1997, p. 36.



Rising Asian Demand is Met by Rising Middle Eastern Production: NetBalance of Regional Imports and Exports: 1995-2015

(Millions of Barrels per Day, EIA Reference Case)

-50

-40

-30

-20

-10

0

10

20

30

40

1990 1995 200 2005 2010 2015Asian Imports

OECD Imports

North American Imports

EE/FSU Exports

Middle East Exports

African Exports

Latin American Exports

1990 1995 2000 2005 2010 2015Asian Imports 7.2 10.6 14.5 18.7 22.5 26.7OECD Imports 8.3 7.5 7.2 8.5 9.3 10.5North American Imports 5.7 6.6 8.5 10.1 11 11.4EE/FSU Exports -1.7 -1.5 -1.4 -1.3 -1.5 -1.2Middle East Exports -19.4 -21.3 -28.2 -32.5 -36.6 -43.6African Exports -1.9 -2.3 -2.5 -2.4 -2 -1.5Latin American Exports -1.6 -1.8 -2.7 -3.1 -3.2 -2.9Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1996, pp. 116-122.



Large Amounts of Oil Production and Exports Are at Risk in Key Exporting Countries: 1995-2015

(EIA Reference Case Estimate in MMBD)

73 75 80 85 90 96 0 5 10 15 20

Libya

China

Iraq

Iran

FSU

Saudi

0

5

10

15

20

25

Libya 2.175 1.48 1.787 1.059 1.5 1.5 1.5 1.6 1.7 1.6 1.5

China 1.09 1.49 2.122 3 3 3.1 3.4 3.5 3.6 3.6 3.5

Iraq 2.018 2.62 2.514 1.433 2.2 0.6 0.6 2.1 3.2 5.9 7.8

Iran 5.681 5.35 1.662 2.25 3.2 3.9 4 4.3 4.5 5.7 6.8

FSU 8.32 9.532 11.11 11.585 11 7.1 7.5 9.5 12.1 12.6 13.2

Saudi 7.596 7.075 9.9 3.388 8.6 10.6 10.9 11.2 13.5 17.2 23.8

73 75 80 85 90 96 0 5 10 15 20

Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, DOE/EIA-0484 (97),April 1997, pp. 175, and EIA, Monthly Energy Review, April, 1997, pp. 130-131. Note that total world productionis 69.7 MMBD in 1990, 73.0 MMBD in 1995, 81.4 MMBD in 2000, 90,5 MMBD in 2005, 98.1 MMBD in 2010,and 106.9 MMBD in 2015.



Cumulative Risk: Estimated Total Demand for Exports from Countries withSensitive or High Risk Oil Production Capacity Affects 50% of World

Supply(EIA Reference Case Estimate in MMBD)

Saudi Arabia

Iran

IraqLibya

China

FSU

0

10

20

30

40

50

60

FSU 8.32 9.532 11.11 11.59 12 7 7.7 9.1 9.8 10.6 13.2

China 1.09 1.49 2.122 3 3 2.99 3.1 3.2 3.3 3.5 3.5

Libya 2.175 1.48 1.787 1.059 1.375 1.39 1.8 2.2 2.4 2.5 1.5

Iraq 2.018 2.62 2.514 1.433 2.04 0.56 4.3 5.8 7 7.4 7.8

Iran 5.681 5.35 1.662 2.25 3.088 3.643 4 5.1 5.5 5.9 6.8

Saudi Arabia 7.596 7.075 9.9 3.388 6.41 8.231 11.4 13.3 15.8 22.3 23.8

1973 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, DOE/EIA-0484 (97), April 1997, pp. 175, andEIA, Monthly Energy Review, April, 1997, pp. 130-131. Note that total world production is 69.7 MMBD in 1990, 73.0 MMBD in 1995, 81.4MMBD in 2000, 90,5 MMBD in 2005, 98.1 MMBD in 2010, and 106.9 MMBD in 2015.



The FSU, Saudi Arabia, and Iraq are the Three Most Critical FutureExporters


Saudi Arabia

Iraq

FSU

0

5

10

15

20

25

30

35

40

45

50

FSU 8.32 9.532 11.11 11.59 12 7 7.7 9.1 9.8 10.6 13.2

Iraq 2.018 2.62 2.514 1.433 2.04 0.56 4.3 5.8 7 7.4 7.8

Saudi Arabia 7.596 7.075 9.9 3.388 6.41 8.231 11.4 13.3 15.8 22.3 23.8

1973 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, DOE/EIA-0484 (97), April 1998,pp. 175, and EIA, Monthly Energy Review, April, 1997, pp. 130-131. Note that total world production is 69.7 MMBD in 1990,73.0 MMBD in 1995, 81.4 MMBD in 2000, 90,5 MMBD in 2005, 98.1 MMBD in 2010, and 106.9 MMBD in 2015.



Today’s “Rogues” Had Damn Well Better Be Tomorrow’s Suppliers: 1995-2020


73 75 8085 90 96

0 510

15 2020

Libya

Iraq

Iran0

1

2

3

4

5

6

7

8

Libya 2.175 1.48 1.787 1.059 1.5 1.5 1.5 1.6 1.7 1.6 1.5

Iraq 2.018 2.62 2.514 1.433 2.2 0.6 0.6 2.1 3.2 5.9 7.8

Iran 5.681 5.35 1.662 2.25 3.2 3.9 4 4.3 4.5 5.7 6.8

73 75 80 85 90 96 0 5 10 15 2020

Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, DOE/EIA-0484 (97), April 1998,pp. 175, and EIA, Monthly Energy Review, April, 1997, pp. 130-131. Note that total world production is 69.7 MMBD in 1990,73.0 MMBD in 1995, 81.4 MMBD in 2000, 90,5 MMBD in 2005, 98.1 MMBD in 2010, and 106.9 MMBD in 2015.



Pattern of Oil Exports Could Sharply if the FSU Does Not Meet EstimatedProduction Levels and China Cannot Exploit New Fields: Prices Rises Likely

(Estimated Demand vs. Production Capacity in MMBD, EIA Reference Case)

19901996

20002005

20102015

2020

China-Production

China-Demand

FSU-Demand

FSU Production

0

2

4

6

8

10

12

14

China-Production 2.8 3.1 3.4 3.5 3.6 3.6 3.5

China-Demand 2.3 3.5 4.4 5.6 7 8.8 11.2

FSU-Demand 8.4 4.4 4.4 5.1 5.9 6.7 7.5

FSU Production 11.4 7.1 7.5 9.5 12.1 12.6 13.2

1990 1996 2000 2005 2010 2015 2020

Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, pp. 136, 175. Notethat total world production is 69.7 MMBD in 1990, 73.0 MMBD in 1995, 81.4 MMBD in 2000, 90.4 MMBD in2005, 98.1 MMBD in 2010, and 106.9 MMBD in 2015.



Domestic energy Demand Can Radically Change the Energy Available ForExport: Middle Eastern Domestic Energy Demand As a Test Case

(IEA Estimate in MTOE)

55

289

577

508

35

189

358

316

21

130

200

178

12

37

9383

0

1 0 0

2 0 0

3 0 0

4 0 0

5 0 0

6 0 0

1 9 7 1 1 9 9 3 2 0 1 0 CC 2 0 1 0 ES

Pr i m ar y Ener gy Fi nal Cons um pt i on Oi l Gas

CC = Capacity Constrained or maximum production ES = Energy Savings, or reduced energy use.Source: Adapted by Anthony H. Cordesman from IEA, World Energy Outlook, 1996, pp. 153-158.



IEA/OECD Estimate of Middle Eastern Domestic Energy Demand(IEA Estimate in MMBD)

Basic Energy Demand Trends

Category 1971 1993 2000 2010 Capacity Energy Constraints SavingsPrimary EnergyConsumption (MTOE) 55 289 - 577 508

Final Consumption 35 189 - 358 316 Solids 0 1 - 2 2 Oil 21 130 - 200 178 Gas 12 37 - 93 83 Electricity & Heat 2 21 - 62 54

Energy Intensity(TOE/$1000) - 0.7 - 0.8 0.7

Energy Per Capita (TOE)0.8 2.0 2.0 - 2.7 2.4

Fuel Shares in Primary Demand(%) Solids 1 2 2 2 - Oil 70 64 56 50 - Gas 29 34 39 46 - Hydro & Other 1 1 2 2 -

Growth in Energy Primary Demand & Intensity: 1975-1993

GDP Primary Energy Energy IntensityIran 0.4 5.9 5.4Saudi Arabia 3.4 12.1 8.7Other 11 Countries 1.0 7.0 5.9Total Middle East 1.3 7.6 6.2

Final Energy Consumption Growth Trends 1993-2000 2000-2010 1993-2010Capacity Constraints 3.5 4.0 3.8Energy Savings 2.9 3.2 3.1

Source: Adapted by Anthony H. Cordesman from IEA, World Energy Outlook, 1996, pp. 173-177.



Downstream Operations Can Also Have Major Geopolitical Impacts: GulfCooperation Council vs. World Petrochemical Design Capacities: 1993

(Thousand Tons)

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

8 0

Et hy l ene Et hy l ene Gl y c ol M et hanol M T BE

GCC Wor l d

6.%

of

World

10.0%

of

World

9.5%

of

World

4.8%

of

World

Source: Adapted by Anthony H. Cordesman from IEA, World Energy Outlook, 1996, pp. 179-181.

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