Energy Perspectives 2013 Long-run macro and market outlook

Presentation for Nätverket Olja & Gas 9 September 2013 Eirik Wærness, Chief Economist

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Classificati

on: Internal

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Draft

www.statoil.com/energyperspectives

• A 30-year macro and market outlook

• The global economy

– Growth close to historic average (2.8%)

– Two speeds – non-OECD catching up

• Overall energy market outlook

– 1.3% annual growth (oil 0.5%, coal: 0.7%)

– Moderate greening of energy mix

• Global oil and gas markets

– Oil demand peaks around 2030

– Gas demand increasing (1.6% per year)

• Strong growth in new renewables

– … but CO2 emissions grow until 2030…

2

Energy Perspectives 2013

Difficult to predict – a number of outcomes are possible

• The world is characterized by…

– Volatility, Uncertainty, Complexity, and

Ambiguity

– Conflicts are difficult to solve

– Growth is difficult to generate

– Sustainability is very difficult to ensure

3

A world of uncertainty framing the development

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A world of uncertainty framing the development

• The world is characterized by…

– Volatility, Uncertainty, Complexity, and

Ambiguity

– Conflicts are difficult to solve

– Growth is difficult to generate

– Sustainability very difficult to ensure

• … but also by

– High growth in emerging economies

– Movement out of poverty and into affluence

– Increasing life expectancy

– Technological progress and opportunities

Difficult to predict – a number of outcomes are possible

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100

120

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Classification: Internal 2011-12-06 5

The world’s most important commodity … is notoriously difficult to predict…

Mar 99

Dec 01 Oct 03

Aug 05

Apr 05

May 08

Mar 11

Aug 13

Economic gravity moves (back) to the east, and so does energy demand

Source: McKinsey (map), International Energy Agency (history), Statoil (projections).

The global economic centre of gravity Based on geographical weighting of GDP

A strong trend affecting economics and energy

Shifting energy demand Share in global energy demand, %

0

25

50

75

100

2000 2010 2020 2030 2040

Rest of world IndiaChina OECD PacificOECD Europe OECD North America

Non-OECD driving growth, energy efficiency to improve by almost 40%

Global energy demand TPED, bn toe

Growth and energy intensity Growth (%) and toe/million 2005-USD

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100

200

300

-4

0

4

8

1990 2000 2010 2020 2030 2040

TPED

GDP

Energy intensity (rhs)

0

5

10

15

20

1990 2000 2010 2020 2030 2040

International bunkers

Other non-OECD

Non-OECD Asia

OECD

Source: IHS Global Insight and International Energy Agency (history), Statoil (projections)

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Growth, efficiency and energy demand

Economic growth Annual change in GDP (%)

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2

4

6

8

OECD Non-OECDAsia

Othernon-

OECD

'91-00 '01-10 11-2021-30 '31-40

World energy mix Share of total energy demand (TPED, %)

Source: International Energy Agency (history), Statoil (projections)

… but fossil fuels constitute 72% of total energy demand in 2040

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20

40

60

80

100

2010 2040 2010 2040 2010 2040

Coal Oil Natural gas Nuclear Renewables

Energy mix Shareof total energydemand (TPED, %)

North America Europe China

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Gradual greening of energy mix

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20

40

60

80

100

1990 2000 2010 2020 2030 2040

Coal Oil Natural gas Nuclear Renewables

Emerging economies drive demand growth – oil demand peaks ~ 2030

Global oil demand ex bio fuels, mbd

Global gas demand 1000 bcm

Source: International Energy Agency (history), Statoil (projections)

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Fossil fuels are here to stay

0

25

50

75

100

125

150

1990 2000 2010 2020 2030 2040

International bunkers

Other non-OECD

Non-OECD Asia

OECD

0

1

2

3

4

5

6

1990 2000 2010 2020 2030 2040

International bunkers

Other non-OECD

Non-OECD Asia

OECD

Non-Opec production Mbd

*Biofuels, GTL, processing gains

Source: IEA, Statoil

Global oil supply from different sources Opec crude regaining importance, eventually

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40

60

80

2000 2010 2020 2030 2040

Other sources*Oil sandsNon-Opec NGLNon-Opec Tight oilNon-Opec Conv. crude

Opec oil production Mbd

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30

40

50

2000 2010 2020 2030 2040

Opec NGL Iraq crude

Saudi Arabia crude Other crude

Source: IEA, WoodMac, various research institutions, Statoil

New sources of oil are not cheap – economics and finance matter

Technology and prices affect new oil supplies

Break-even prices for new developments USD/bbl

Unconventional oil key to filling the gap

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40

60

80

100

120

2000 2005 2011 2015 2020 2025 2030 2035

Unconventional oil Processing gainsNGLs Conventional YTD/YTFCurrently producing "Scarcity""Abundance"

World oil supply by type IEA’s NP scenario and other views (mbd)

… in addition to fighting decline and continuing exploration – large uncertainty!

Sources: IEA World Energy Outlook 2012, Statoil. “Scarcity”: Aleklett, Kjell et al. 2010. The Peak of the oil age. Energy Policy 38 (3), 1398-1414. “Abundance”: Maugeri, Leonardo.

2012. Oil: The Next Revolution. Discussion Paper 2012-10. Belfer Center for Science and International Affairs. Harvard Kennedy School.

Additions to global annual oil supply 2010-2025 (mb/d), estimate range

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4

6

8

Oil demand depends on transport development

Energy mix in transport Bn toe

Use of oil by sector Bn toe

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1

2

3

4

2010 2020 2030 2040

Power Non-energyResidential IndustryOther stationary Transport

0

1

2

3

4

2010 2020 2030 2040

Coal Oil Gas Renewables Electricity Heat

… in addition to some other sectors…

Future oil demand is about transportation

Source: Statoil

Fuel efficiency L/100km

Growth in fleet, changing composition, tightening of performance standards

4

6

8

10

2010 2015 2020 2025 2030 2035 2040

EU 2013

China 2013

US 2013

Vehicle Fleet Composition Millions

0

1 000

2 000

2000 2010 2020 2030 2040

Th

ou

sa

nd

s

Gasoline DieselFFV Hybrid - GasolinePHEV FEVLPG CNG-LNG

Source: IEA, Statoil

LNG supply 2012-30 Bcm

Gas is the winner among fossil fuels - growing 1.6% per year

Global gas demand Bcm

Global gas markets – long-term growth

0

1000

2000

3000

4000

5000

6000

7000

1990 2000 2010 2020 2030 2040

International bunkers AfricaMiddle East Other non-OECD AsiaIndia ChinaOECD Pacific Other FSURussia Non-OECD EuropeOECD Europe Latin AmericaOECD North America

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400

500

600

700

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Africa Asia Europe

FSU Latin America Middle East

North America Oceania

Source: IEA (history), Statoil (projections)

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CO2 emissions level out around 2030 Lower growth, fuel efficiency, electrification, CCS

Global CO2 emissions billion tonnes

0

20

40

60

2010 2020 2030 2040

International bunkers Other non-OECD

Non-OECD Asia OECD

IEA NP IEA CP

IEA 450

Regional change in energy demand 2010-40 Bn toe

-1

0

1

2

3

Coal Oil Gas Nuclear Renewables

Rest of the world China

OECD Europe OECD North America

World

Assumptions on economic and energy demand growth differ, …

Total primary energy demand CAGR, %

Total oil demand CAGR, %

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Comparing different forecasts

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0,5

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1,5

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2,5

2010-2030

2010-2040

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1,42010-2030

2010-2040

Classification: Internal 2011-12-06 18

Thank you!

… and largest differences for new renewables

Total gas demand CAGR, %

Total new renewables demand CAGR, %

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Comparing different forecasts, cont.

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2,5

32010-2030

2010-2040

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2010-2040

Electrification becomes more important

Electricity as share of total final energy

consumption, %

New renewables as share of electricity %

20

Comparing different forecasts, cont.

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30

2010 2030 2040

Statoil

IEA

EIA

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2010 2030 2040

Statoil

Shell 1

Shell 2

IEA

EIA