Middle East Energy Outlook

SP Jain Dubai, May 2013
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Outline
1. 2. 3. Global and Middle East oil & gas export patterns The region’s internal demand Fiscal challenges

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oriented ever more towards Asia Asia a secondary but growing investor in MENA – and a massive player in subSaharan Africa. challenges MENA will remain the key oil & gas exporting region. but. though related. mostly by China Oil & gas will continue to be the bedrock of the MENA economy. with sub-Saharan Africa. but cannot drive growth as it did over the last decade Sub-Saharan Africa is different – oil/gas export-led growth remains vital For the first time. MENA’s internal demand is increasingly important and challenging Political unrest means investment risks but also new pressures for reform & economic growth The confluence of these factors means new fiscal challenges 3 .Key messages • • • • • • • • Each MENA country faces different.

The Middle East region holds 48.6 billion barrels at the end of 2011.Middle East energy sector : Oil R/P ratio Source: BP Statistical Review 2012 World proved oil reserves reached 1652.1% of global proved reserves but the large increase in its production reduced the region’s R/P ratio despite an increase in reserves. 4 .2 years of global production. sufficient to meet 54.

compared with 37. The Middle East still holds the largest reserves (38.4% of the world total.8% for Europe & Eurasia) with an R/P ratio of over 150 years. 5 .Middle East energy sector : Gas R/P ratio Source: BP Statistical Review 2012 World proved natural gas reserves at end-2011 were sufficient to meet 63.6 years of production.

2012 Dated Jan. 2012 6 .Middle East to play a key role in future oil demand 2030 ENERGY OUTLOOK Source: APICORP as of Jan. 2012 Source: BP Energy Outlook 2030 Dated Jan.

0 North America S & C America Europe & Eurasia Africa Middle East Asia Pacific • In aggregate. Egypt decline) .7 Mbpd increment from 2010 to 2035.0 -35. Middle East/Africa supplies Asia.7 Mbpd by 2017 • Libya +0.Middle East/Africa oil exports orient towards Asia 25.0 1990 -5.0 Oil exports (million bbl/day) 5.0 15.5 Mbpd by 2020? • Kuwait +1 Mbpd by 2020 • UAE +0. Americas self-sufficient • But Middle Eastern oil exports rise little • OPEC restraint • domestic consumption • OPEC itself forecasts slowly-falling market 2030 share from 34% today to 32% by 2015-35 • 5. compared to: • Iraq +6.0 2000 2010 2020 -15. Russia/Central Asia supplies Europe.5 Mbpd by 2017 • Revival in Iran? • Venezuela? • Africa exports fairly flat – but subSaharan Africa grows largely at expense of North Africa (Algeria.0 -25.

if at all • Shale oil replacing African light.US oil imports declining. sweet crudes • Saudi objective to maintain US market share May-2007 Oct-2008 Feb-2010 Jul-2011 Nov-2012 . Gulf not yet hit 500000 450000 400000 350000 US imports (kbbk/month) Total imports Gulf OPEC Africa 300000 250000 200000 150000 100000 50000 0 Jan-2006 • US oil imports have fallen steadily since their August-2006 peak • The burden has been taken up by OPEC and Africa • US imports from the Gulf have not yet fallen much.

Shale gas can reshape gas trade flows v Less LNG demand in Europe? Lower Chinese (and Indian?) LNG imports North American shale-to-LNG North African shale gas to Europe More intraMENA gas trade? Australian shale-toLNG Significant shale gas potential • • • New conventional gas White: satellite imagery of lights = energy demand Purple  Red: global gas basins. in increasing size of resources (USGS) Yellow: main current and future export routes for Middle East gas .

0 5. total Middle East gas exports do not grow much -25.0 -35.0 1995 2000 2005 2010 2015 2020 2025 2030 -15.0 Gas exports (Bcf/day) 1990 -5.Only modest growth in gas exports 15.0 North America Europe & Eurasia Africa S & C America Middle East Asia Pacific .0 • Middle East and Africa are the two major exporting regions • Asia is the major importing region • Russia supplies Europe • Big change is the emergence of North American gas exports after 2015 • However.

Exports oriented to Asia . Growing Chinese involvement. Nigeria & Angola heavyweights. East – exciting new exploration frontier (mostly gas). some growth potential.Africa – a tale of three regions North – similar challenges to Middle East West – some new producers.

Abu Dhabi Energy Issues .

UAE: Oil & Gas Infrastructure OIL INFRASTRUCTURE MAP 13 .

UAE Energy . 40% increase  Over US$50 billion of investments required in upstream in the UAE alone during this 5-year plan  APICORP (January 2012) ranks UAE as second highest investor in the MENA region with US$ 76 billion of energy investments expected in 2012-2016 across the full value chain 14 .5  World’s 9th largest crude producer and 5th largest net exporter  Abu Dhabi accounts for over 90% of UAE’s upstream sector  Major capacity expansion program underway from 2.5m bpd (2017).Overview OIL PRODUCTION TARGET MBPD 2.5 3.5m bpd (2011) to 3.

8 9.Upstream Objective: Oil production capacity ramp up from 2.5 Mbpd in 2011 to 3.5 Mbpd by 2017 ADCO ZADCO HISTORICAL Upper Zakum ADMA Shah Gas Other Fields PROJECTED 2014: Expiration of ADCO current Concession Expected Additional Capex notably in EOR 12 10.9 7.5 Capital Expenditure (US$ Billion) 10 8 5.1 7.7 9. MEED 2010 2011 2012 2013 2014 2015 15 .3 6 6 4 2 0 2009 Source: WoodMackenzie.UAE Historical & Projected Capex in Upstream (2009-2015) ______________________________________________________________________________________ Abu Dhabi Vision 2030 .

Fiscal Challenges .

GCC Economic growth generally strong ECONOMIC GROWTH 7 Economic Growth Rate ( % ) 6 5 4 3 2 1 0 2012 UAE Saudi Arabia Qatar Oman Kuwait Bahrain 2013 2014 2015 2016 .

Fiscal challenges varies across OPEC – least in the GCC 18 Source: APICORP Research .

petrochemicals.0 10.0 • • • • GCC energy intensity is high in general Qatar. Libya remain major oil exporters 07/06/2013 19 . especially in gas But GCC. hence waste and inefficiency Focus turns to serving domestic market rather than export.0 15. Iraq.0 5. Bahrain and UAE are particularly high • High income levels • Air-conditioning and desalination • Energy-intensive industry (aluminium.MENA (esp GCC) highly energy-intensive Primary energy consumption (toe/capita) 20. etc) • Subsidised prices.0 0. LNG.

tight and sour) Source: PacWest. condensate and oil Deep and ultra-deep Mixed resources (e.Attention turning to unconventional gas • • • • • • Gulf unconventional plays varied. H2S. nitrogen) Tight gas (sands & carbonates) Shale gas.g. deep. Manaar research . potentially large Sour and contaminated gas (CO2.

$1 Gas. $8 Gas.50/W) Solar PV ($2/W) • • Alternative generation (solar. coal CCS) is cheaper than LNG or oil However. $20 Nuclear Coal CCS Solar PV ($2.g. $15 2 4 6 8 10 12 14 16 18 20 Oil. unconventional) at ~$8/MMBtu is still competitive against alternatives 21 Source: Manaar research . high-cost domestic gas (e. nuclear.Alternative energy becoming competitive ELECTRICITY GENERATION COST ($C/KWH) 0 Gas.

Mature field management (enhanced oil recovery) 2. 2. Domestic gas – including unconventionals Alternative energy – mostly nuclear and solar.Responses to these new challenges Future energy sector themes 1. Restructuring the NOCs & SOEs for greater efficiency Greater international & private-sector E&P investment (as in late 1990s) Privatisation (at least of non-core assets)? 22 . 3. 3. plus efficiency Economic responses 1.

mills@manaarco.Contact Details Robin Mills. Manaar Energy Consulting.com .manaarco.com +971 4 326 6300 +971 50 293 4668 www. Dubai. Head of Consulting. UAE robin.

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