Shell Global Scenarios to

2025
Ing. Mario Matuk
Strategy and Business Development - Royal
Dutch Shell
Convencin Minera Arequipa , Peru
September 2007
Agenda
Scenarios: why and what?
Predetermined trends and Critical
uncertainties
Trilemma framework and Global
Scenarios to 2025
Implications for energy and mining
Preguntas y respuestas
30 min
15 min
Scenarios ask the right question..
X Will it happen?
What would we do if it did happen?
Plausible - not easily dismissed
Recognisable from the signals of the present
Relevant and of consequence for the users decisions
Challenging
Internally consistent - based on analysis
X Predictions Projections - Preferences
Features of a good scenario
Expert forecasts can be wrong
1996
1993
1990
1987
1984
1981
2010 2020 1990 2000
Year
0
20
40
60
80
100
1970 1980
U
S
(
'
9
0
)
/
b
b
l
Actual
2000
Scenarios versus Forecasts
Current
Realities
(mental maps)
Multiple
Paths
Alternative
Future Images
SCENARIOS
The Present The Path The Future
FORECAST
Predetermined
trends
Dependent elderly as percent
of population
0
10
20
30
40
50
60
1970 1990 2010 2030
USA
UK
France
Japan
Sweden
Italy
China
Pharmaceutical
evaluation and design
Wide body passenger
aircraft design
"Retrofit" large scale
civil engineering
Investment
banking
World-class legal services
Peasant
agriculture
Textiles and footware
Commercialising
computer games
Oil and gas exploration
Map making
Retail
banking
Plantation agriculture
Small scale building services
Making insulated wire
Petrochemicals
Complexity index
20
40
60
80
100
20000 40000 60000 80000 100000
Median income in the industry, US$1997
Commodities
Complex
activities,
complex
infrastructure
Highly specified
and usually free-
standing activities
Complexity and
commoditization
20012005:
The dual crisis of security and
market trust
Joe Zeff Design, Inc.
The dual crisis
Three forces shaping
our global business environment
Efficiency
Market incentives
Social cohesion
The force of
community
Low Trust Globalisation
Carrots and Sticks
A legalistic world
Realpolitik, coalitions of the willing
NGO alliances with investors and/or states
State steps in, with market-friendly yet
tough hand
Open Doors
Incentives and Bridges
Pragmatic world
The value chain of trust
Precautionary principle
Civil society works with investors
State acts consensually through incentives
and soft power
Flags:
Nations and Causes
Dogmatic world
Competing claims from self-centric
communities
Security sought through gated
communities
Governments seek to overcome social
divides through populist and nationalistic
policies
2025 GDP:
40% higher in Open Doors vs.
Flags
3.8
3.1
2.6
0
1
2
3
4
5
Open Doors Low Trust
Globalisation
Flags
Implications
for energy and
mining
Three energy discontinuities
Three energy discontinuities
Energy demand growth
primarily in developing
world
0
100
200
300
400
2000 Flags
Low Trust
Globalisation
Open Doors
Developing world
Developed world
pipelines
major demand
N
a
t
u
n
a
M
a
l
a
m
p
a
y
a
Tarim
Sichuan
Ordos
major supply
Turkmenistan
Yakutsk
Sakhalin
West Baikal
Iran
LNG flows
Asian Gas Grid 2020
Oman
The Energy Ladder
0.1
1
10
1000 10000 100000
GDP (US$ per capita)
E
n
e
r
g
y

C
o
n
s
u
m
p
t
i
o
n

(
t
o
e

p
e
r

c
a
p
i
t
a
)
China India
Vietnam Sri Lanka
Indonesia Pakistan
South Korea Thailand
Malaysia Philippines
Turkey Algeria
South Africa Israel
Saudi Arabia Brazil
Chile Peru
Mexico Argentina
Spain Portugal
Greece Italy
Hungary Poland
Czech Republic Slovak Republic
J apan Australia
New Zealand Germany
United Kingdom France
Netherlands Austria
Belgium Ireland
Switzerland Finland
Norway Sweden
Denmark USA
Canada
Energy ladder the S
curve
India
China
USA
Germany
Brazil
Indonesia
United Kingdom
France
Japan
Canada
Peru
Argentina
Mexico
Chile
Increased energy intensity
of global economic growth
World Total Primary Energy Growth vs GDP Growth
GDP & Energy y-o-y Growth
GDP Energy Ratio
0%
3%
5%
66-70 71-75 76-80 81-85 86-90 91-95 96-00 01-05e
0.0
0.4
0.8
1.2
1%
Ratio Energy/GDP
0.1
1
10
1000 10000 100000
GDP (US$ per capita)
E
n
e
r
g
y

C
o
n
s
u
m
p
t
i
o
n

(
t
o
e

p
e
r

c
a
p
i
t
a
)
Energy ladder the S curve
China
USA
United Kingdom
South Korea
Japan
If by 2030 China consumes as much energy per
person as South Korea does today, its total
energy consumption would be 2.7 times the US
current consumption.
Chinas transport sector would then consume 1.6
times the energy used by the US transport sector
today.
Three energy discontinuities
Discovered volumes are
decreasing

0

10

20

30

40

50

60

70

80

90

1910

1930

1940

1950

1960

1970

1980

1990

2000

2010

2020

2030 2040
bln
boe

20-year average

Annual Discovered Volumes


1920
Big Oil: who the majors
really are
Oil and gas reserves 2004 (Source: CSFB)
0
50
100
150
200
250
300
350
A
r
a
m
c
o
N
I
O
C
Q
P
A
D
N
O
C
I
r
a
q

N
O
C

G
a
z
p
r
o
m
K
P
C
P
D
V
S
A
N
N
P
C
N
O
C

L
i
b
y
a
S
o
n
a
t
r
a
c
h
R
o
s
n
e
f
t
X
O
M
B
P
R
D
S
b
l
n

b
o
e
gas
oil
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0.00 2.00 4.00 6.00 8.00 10.00 12.00
Institutional Integrity Index (Transparency)
G
D
P
/
C
a
p
i
t
a

(
W
e
a
l
t
h
)
States accounting
for >80% of proven
Oil reserves
States accounting
for >80% of proven
Oil reserves
MRHs, Wealth, and
Transparency
Three energy discontinuities
The hydro-carbon industry
Global CO2 markets are
developing
What Shapes Long Term Energy
y metales?
The contributors
By 2050
demography: 8-10 billion people
incomes: average $15-25k/capita
urbanisation: 80% living in cities
liberalisation: markets increase possibilities
demand (2-3 times increase)
The contributors
demography
incomes
urbanisation
liberalisation
What Shapes Long Term Energy?
The critical
resource constraints
technology
social and personal priorities
million bbls per day
3,000 bln bbls
+ 350 bln bbls
of NGLs
+ 850 bln bbls
heavy oil and
bitumen
excluding shales
Ultimate
Recoverable
Resource
Source: based on USGS mean estimates, June, 2000
0
25
50
75
100
125
2% per
annum
7.5% per
annum
1950 1975 2000 2025 2050
The Oil Mountain
2010 2020 2030
G
a
s
?
Nuclear?
R
e
n
e
w
a
b
l
e
s
?
Branching Point 2025
Source: NREL, 2000
Diverse Storage
Thermal
Pumped hydro
Compressed air
Chemical
Ubiquitous Solar 2030
The Orderly Oil Transition
2040
A Highly Diverse and Complex
Energy System
EJ
Hydro
Nuclear
Biofuels
Solar Thermal
Geothermal
Solar PV
Wind
Biomass
Gas
Oil
Coal
Traditional
0
250
500
750
1000
1970 1990 2010 2030 2050
Thresholds Crossed
What options would 12 litres of fuel for 400 kilometres create?
Freedom
with
Fuel Convenience
Primary Energy Comparison
EJ
Hydro
Nuclear
Gas
Oil
Coal
Traditional
New
Renewables
Coal CH
4/
H
2
0
250
500
750
1000
1250
1970 1990 2010 2030 2050
EJ
0
250
500
750
1000
1970 1990 2010 2030 2050
Oil Price Comparison
2000 $ per barrel
Spirit of the Coming Age
Dynamics as Usual
0
10
20
30
40
1970 1980 1990 2000 2010 2020 2030
Fundamental questions that face
us all
No matter what happens, the US Navy is
not going to be caught napping
Frank Knox, U.S. Secretary of the Navy
4th December 1941
The Shell Global Scenarios
Thank you for your
attention
www.shell.com/scenarios
mario.matuk@latam.shell.com
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