Booz & Company

London, Dusseldorf

November 2012

Briefing Document

DRAFT

IEA World Energy Outlook 2012

Selected slides and themes

This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

Summary of selected themes from WEO 2012

The global energy map is changing, with potentially far-reaching consequences for energy markets and trade. It is being redrawn by the resurgence in oil and gas production in the United States and could be further reshaped by a retreat from nuclear power in some countries, continued rapid growth in the use of wind and solar technologies and by the global spread of unconventional gas production. Perspectives for international oil markets hinge on Iraqs success in revitalising its oil sector Taking all new developments and policies into account, the world is still failing to put the global energy system onto a more sustainable path. Global energy demand grows by more than one-third over the period to 2035 in the New Policies Scenario (our central scenario), with China, India and the Middle East accounting for 60% of the increase

Energy developments in US are profound and their effect will be felt well beyond North America and the energy sector. Recent rebound in US oil and gas production, driven by upstream technologies that are unlocking light tight oil and shale gas resources, is spurring economic activity with less expensive gas and electricity prices giving industry a competitive edge and steadily changing the role of North America in global energy trade. By around 2020, the United States is projected to become the largest global oil producer (overtaking Saudi Arabia until the mid-2020s) and starts to see the impact of new fuel-efficiency measures in transport. The result is a continued fall in US oil imports
Source: IEA World Energy Outlook 2012
Booz & Company DATE IEA WEO 2012_summary slides.ppt Prepared for client name

Selected slides

Booz & Company DATE

IEA WEO 2012_summary slides.ppt

Prepared for client name

Gas and renewables will have the higher growth rates in global energy demand and fossil fuels will still dominate in 2035
World Primary Energy Demand by Fuel
1990 2035 New Policies Scenario Million toe
18,000 16,000 14,000 12,000
1.6% CAGR 2010 2035 7.7% 1.6% 2.0% 1.9%

World Primary Energy Demand by Fuel

2010 New Policies Scenario Bioenergy Other renewables Hydro Coal 10% Nuclear 27% 6% 2% 1% 22% Gas 32% Oil

10,000 8,000
0.5%

World Primary Energy Demand by Fuel

2035 New Policies Scenario Other renewables Coal Hydro 11% 25% Nuclear 7% 3% 4% Bioenergy
0.8%

6,000 4,000 2,000 0

1990

2010

2015
Bioenergy

2020
Hydro

2030
Nuclear

2035
Gas Oil Coal

24% Gas

27% Oil

Other renewables

Source: IEA World Energy Outlook 2012; Booz & Company analysis
Booz & Company IEA WEO 2012_summary slides.ppt Prepared for client name

The non OECD countries and especially Asia will be the drivers of energy demand growth
World Primary Energy Demand by Region
Million toe
18,000 16,000 14,000

1990 2035 New Policies Scenario

Americas
Europe
OECD

12,000 10,000 8,000 6,000 4,000

Asia Oceania E. Europe / Eurasia

Asia
NON OECD

Middle East
2,000 0

Africa
Latin America 1990 2000 2010 2015 2020 2030 2035

Source: IEA World Energy Outlook 2012; Booz & Company analysis
Booz & Company IEA WEO 2012_summary slides.ppt Prepared for client name

Some US$19 trillion will need to be invested in oil and gas infrastructure and particularly in upstream
Cumulative Investment in Oil Infrastructure
2012 - 2035
Average capex spend of US$614bn/y. Required to increase capacity to meet higher demand & higher capital cost of new sources of supply (deep water and unconventional)

Cumulative Investment in Gas Infrastructure

2012 - 2035

Other Refining 10% 3%

Other
9%

Transmission and Distribution

24%

67% Upstream 87% Upstream

Total = US$10.2trn Total = US$8.7trn

Source: IEA World Energy Outlook 2012; Booz & Company analysis
Booz & Company IEA WEO 2012_summary slides.ppt Prepared for client name

Global oil demand is forecast to grow at 0.6% CAGR between 2011 and 2035 to reach ~100m bbls/d
World Oil Demand
Million bbls/d
100 90 80 70 60 50

1990 2035 New Policies Scenario

Americas
Europe Asia Oceania E.Europe / Eurasia Asia
OECD

40 30

NON OECD

Middle East
20 10 0

Africa Latin America Bunkers 1990 2011 2015 2020 2025 2030 2035

Source: IEA World Energy Outlook 2012; Booz & Company analysis
Booz & Company IEA WEO 2012_summary slides.ppt Prepared for client name

Globally there are some 6 trillion bbls of recoverable oil reserves (between conventional and unconventional)
Remaining Technically Recoverable Oil Resources
Conventional & End 2011 (Bn bbls)

Remaining Technically Recoverable Oil Resources

Unconventional & End 2011 (Bn bbls)

Light Tight Oil NGLs 16%

8%

Kerogen Oil 34% 59% EHOB

84%
Crude Oil
Total = 2,678bn bbls
Note: EHOB = extra-heavy oil and bitumen Source: IEA World Energy Outlook 2012; Booz & Company analysis
Booz & Company IEA WEO 2012_summary slides.ppt Prepared for client name

Total = 3,193bn bbls

With its large reserves of extra heavy oil in the Orinoco belt, Venezuela has now surpassed Saudi Arabia
Proven Oil Reserves in Top 10 Countries
0 50 100

End 2011 150

200

250

300 Bn bbls

Venezuela Saudi Arabia Canada Iran Iraq

R/P (bottom axis)

Kuwait UAE Russia Libya Nigeria

Civil war in Libya in 2011 dramatically reduced production hence the high R/P ratio

Proven Reserves

Years 0
Booz & Company

50
IEA WEO 2012_summary slides.ppt

100
Prepared for client name

150

200

250

300

Source: BP Statistical Review of World Energy 2012; OPEC; IEA World Energy Outlook 2012; Booz & Company analysis

Going forward the contribution of unconventionals to global oil supply will be modest
World Oil Supply by Type
Million bbls/d
100 90 80 70 60 50 40 30 20 10 0
CONVENTIONAL UNCONVENTIONAL

1990 2035 New Policies Scenario

1990
Coal-to-liquids

2011
Gas-to-liquids

2015
Venezuela extra-heavy oil

2020
Light tight oil

2025
Canada oil sands

2030

2035
Crude oil

Natural gas liquids

Source: IEA World Energy Outlook 2012; Booz & Company analysis
Booz & Company IEA WEO 2012_summary slides.ppt Prepared for client name

US and Brazil will become major oil producers outside of OPEC while Iraq will demonstrate greatest growth in OPEC
Non-OPEC Oil Production
Million bbls/d
35 30 25 20 15 10 5 0

OPEC Oil Production

Million bbls/d
35 30 25 20 15 10 5 0
Iraq growing production at ~5% CAGR between 20112035

Leading Countries 1990 - 2035

Leading Countries 1990 - 2035

By 2020 US will produce more than Saudi Arabia

1990

2011

2015
Brazil

2020
Canada

2025

2030

2035

1990
Libya

2011

2015

2020
Iran

2025
Iraq

2030

2035

Kazakhstan

United States

Venezuela

Saudi Arabia

Source: IEA World Energy Outlook 2012; Booz & Company analysis
Booz & Company IEA WEO 2012_summary slides.ppt Prepared for client name

however, it is the impact of shale gas revolution on US which is reshaping the global energy landscape
Shale gas revolution is boosting tight oil production with US becoming leading oil producer
000s bbls/d
12,000 11,000 10,000 9,000 8,000 7,000 6,000 1960

US Oil Production
1965 - 2011 11,000
US forecast to hit 11m bbls/d by 2020

Production growth stimulating US economic activity. Rising employment in extractive sector (growing at 6% CAGR between 2005 and 2012)
US benefiting from advantage of lower energy prices and feedstock prices which is boosting capital investment, particularly in chemicals (Shell looking to build ethane cracker in Pennsylvania) However, there are concerns around: Sustainability of this growth. Environmental impact of fracking and weaker oil prices could impact production economics US foreign policy role in Middle East given its growing energy independence. Will China step into breach as US extricates itself?
Booz & Company DATE IEA WEO 2012_summary slides.ppt Prepared for client name

1970

1980

1990

2000

2010

2020

Employees in US Oil & Gas Extraction industry

2000 2012 (Oct. YTD) 000s

200 180 160 140 120 100

+6%

2008

2000

2001

2002

2003

2004

2005

2006

2007

2009

2010

Source: IEA World Energy Outlook 2012; Bureau of Labor Statistics; BP Statistical review; Booz & Company analysis

2012 11

2011

According to an IEA survey, leading companies are broadly expected to increase upstream capex in 2012
Upstream Oil and Gas Investment by Company
US$bn
40 35 30 25 20
2011 (US$bn)

Selected Players - 2011 vs. 2012

Worldwide upstream oil and gas investment is budgeted to rise by around 8% in 2012 reaching a new record of $619 billion

15 10 5 0

2012 (US$bn)

Occidental

BG Group

Rosneft

Exxon Mobil

Petrochina

CNOOC

Gazprom

Chevron

Petrobras

Source: IEA World Energy Outlook 2012; Booz & Company analysis
Booz & Company IEA WEO 2012_summary slides.ppt Prepared for client name

ConocoPhillips

Sinopec

Apache

Shell

Pemex

Statoil

Eni

BP

Suncor

Total

Lukoil