Oil and Gas Security of Supply for Europe

Oil and Gas Security of Supply for Europe Athens, 3rd November, 2005

Agenda • Global Energy Demand • Oil and Gas Resources • EU Gas Issues • Investment, Demand Growthand Spare Capacity • Indigenous Production • Technology • Summary

Global energy demand - growth continues • Energy demand fuelled by economic and population growth • Fossil fuels will retain their market share • Renewables enjoy significant growth but remain marginal • Energy efficiency gains included in forecast • Energy price trends and developing countries’ demand remain uncertain Source: ExxonMobil, 2004

... and large oil and gas resources exist Trillion Barrels Oil Equivalent World Hydrocarbon Resources Already Produced Technically Recoverable Source: IEA

...with substantial potential • Claude Mandil (IEA): • “Quenching the world’s oil thirst …. is a major investment in modern technology.” Availability of oil resources as a function of economic price Source: IEA

Resources not a constraint • Oil resources • Ample conventional resources exist • Unconventional volumes untapped • Gas resources • Significant upside to support growing demand • Market incentives exist to develop remote resources

Proven gas reserves 1984: 96 Tcm 1994: 143 Tcm 2004: 180 Tcm Reserves-to-production ratio: 66.7 years Highly concentrated 70–80% within economic reach of Europe ...with abundant gas reserves Technically recoverable conventional gas: ~ 450 Tcm

... albeit from more distant sources Europe* (EU34) • LNG • Imports to triple • Pipeline gas • Imports to grow by > 50% • Total imports by 2015: • ~450 Bcm/y • Increased competition for supplies 715 650 140 100 550 40 Demand LNG Imports 305 191 255 Pipeline Imports Dom. Prod. 319 295 270 in Bcm 2004 2010 2015 * EU25 + Bulg / Cro / Rom / Turk + Norw/Bos/Mac/Serb/Switz Source : WoodMackenzie, Cedigaz, Total

... and Europe is well positioned …but it needs • Supply diversification • Integration of gas networks • Dialogue with producing countries • Contractual flexibility • Long term contracts • Regulatory stability • Improving market efficiency • Interoperability Russia Norway 48 Tcm Caspian 9 Tcm Iran Iraq 30 Tcm Egypt Nigeria LNG Libya Algeria Qatar

The development challenge Resources + access + investment + technology + market + lead times …. Production

Industry investment is increasing • Upstream investments • Up nearly 60% since 1999 • In 2003 at $160 billion • Predictions for 2005 • $180 billion • Annual requirement to 2030 • $200 billion Global Upstream Investment Source : J.S Herold / Harrison Lovegrove

OPEC spare production capacity - historic lows Million Barrels per Day • Recent oil price rise seems to reflect: • Reduced spare capacity • Risk premium 12 10 8 6 4 2 0 1973 1976 1979 1982 1994 1970 1985 1988 1991 1997 2000 2003 Source: DOE / EIA / BP

European basin – a leading global producer 5 10 15 20 Year 2004 Production Mboe per day Source: BP Stat review 2004

... with a major contribution to EU economy • Indigenous potential up to 100 billion boe • Supports European manufacturing and service Industry • Sustains employment • Contributes tax revenues • Facilitates access to global resources

... supported by new technologies • More oil becomes accessible • Deep water • Reservoirs with higher pressures • Difficult geography • Recovery factor up • Current average around 35% • 1% increase = 1 year global energy consumption

...in summary A shared challenge

Summary Thank you for your attention!

... to meet oil demand growth Forecast History Source: EIA, Short-Term Energy Outlook, September 2005

German Gas – Growing Reserves through Technology

German Gas – Growing Reserves through Technology 3D seismic, sub salt imaging, horizontal drilling, sour gas processing ….

Oil and Gas Security of Supply for Europe