World Energy Outlook

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WORLD ENERGY OUTLOOK 2005 Middle East North
Africa Insights14th Forum Energy Day in
CroatiaZagreb, 25th November 2005
Marco Baroni Economic Analysis Division Internatio
nal Energy Agency
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Objectives, Scope Approach

• Quantitative assessment of global energy market
  prospects
• Special focus on MENA domestic energy demand,
  production export availability
• Detailed country-by-country projections
• Middle East Iraq, Iran, Kuwait, Qatar, Saudi
  Arabia, UAE
• North Africa Algeria, Egypt, Libya
• Three scenarios depict markedly different energy
  futures
• Reference Scenario No new government policies
  adopted
• Deferred Investment Scenario Assumes MENA
  upstream oil investment is constant as share of
  GDP at level of past decade
• World Alternative Policy Scenario Assumes
  environmental energy-security policies now
  under consideration are adopted

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Global Energy Trends
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World Primary Energy Demand
Oil, gas and coal together account for 83 of the
growth in energy demand between now and 2030 in
the Reference Scenario
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CO2 Emissions by Region
Global emissions grow more than 50 between now
2030, with developing countries emissions
overtaking OECDs in the 2020s
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CO2 Increase, 2003-2030
OECD CO2 additions only three quarters of Chinese
CO2 rise, but OECD emissions per capita still two
times higher in 2030
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Cumulative Energy Investment, 2004-2030
The power sector absorbs more than 60 of
developing countries investment needs
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MENA Energy Trends
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World Proven Oil and Gas Reserves
MENA share of global oil and gas reserves is much
higher than its share of current production,
suggesting strong potential for growth
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MENA Crude Oil NGL Production by Country
MENAs share of world oil production rises from
35 in 2004 to 44 in 2030 in the RS, with Saudi
production rising to over 18 mb/d
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MENA Natural Gas Exports
MENA becomes the worlds leading gas exporter,
with most of the increase in exports meeting
surging European and US LNG demand
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Share of CWP in Power-Generation Capacity
Additions in MENA Countries, 2003-2030
Combined Water and Power will account for more
than half of the power generation capacity
additions in Saudi Arabia, the UAE, Libya,
Kuwait, Algeria and Qatar combined
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Deferred Investment Scenario
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Deferred Investment Scenario

• How would global energy markets evolve if
  investment MENA upstream oil industry grew slower
  than in the Reference Scenario?
• Investment is assumed to remain constant as share
  of GDP in each country
• MENA oil production is lower compared to the
  Reference Scenario, and the gap with the RS is
  widening over time
• Oil prices are driven higher - an increase of 32
  over the Reference Scenario in 2030 - dragging up
  gas, coal and electricity prices
• MENA gas production is also lower compared to the
  Reference Scenario due to
• Reduced global gas demand call on MENA gas
• Lower associated oil/gas output

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MENA Crude Oil Production (including NGLs)
MENAs share of global oil production falls from
35 in 2004 to 33 in the DIS. Saudi production
reaches 14 mb/d in 2030
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MENA Net Natural Gas Exports
MENA gas exports are much lower in the DIS, as
higher gas prices and lower GDP choke off demand
in the main importing regions
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World Alternative Policy Scenario
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World Alternative Policy Scenario (WAPS)

• Analyses impact of new environmental
  energy-security policies worldwide
• OECD Policies currently under consideration
• Non-OECD Also includes more rapid declines in
  energy intensity resulting from faster deployment
  of more-efficient technology
• Impact on fuel mix, CO2 emissions investment
  needs
• Basic macroeconomic population assumptions as
  for Reference Scenario, but energy prices change

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Oil/Gas Demand Growth in the Alternative Scenario
Savings Relative to the Reference Scenario,
2003-2030
Oil gas demand in the Alternative Scenario are
both 10 lower in 2030 due to significant energy
savings and a shift in the energy mix
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Global Energy-Related CO2 Emissions
In 2030, CO2 emissions are 16 lower than in the
Reference Scenario, but are still more than 50
higher than 1990
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Difference in Cost of Oil Consumption in the
Alternative and Deferred Investment vs. Reference
Scenario, 2005-2030
Alternative Scenario
Net savings
In the Alternative Scenario, the cost of
additional investments in energy efficiency are
more than offset by savings in fuel cost
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Key Messages

• If governments stick with current policies,
  global energy needs will be more than 50 higher
  in 2030 than today
• In any plausible scenario, MENA oil gas
  resources will be critical to meeting the world
  energy needs
• Countries like Saudi Arabia, Iran, Iraq, Qatar
  and Algeria will play key roles
• Underinvestment in oil and gas would drive up
  prices depress global GDP growth, eventually
  harming producers too
• Major importing countries are already considering
  more vigorous policies to curb demand growth
  reduce reliance on oil and gas
• Even with these policies, global energy use still
  increases MENA exports still grow
  significantly
• But benefits are greater and costs are less than
  deferring investment
• Continued need for dialogue between producers and
  consumers to find mutually beneficial outcomes