Energy Security: A Global Perspective
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Transcript of Energy Security: A Global Perspective
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Energy Security: A Global Perspective
Bob Tippee, Editor, Oil & Gas JournalInternational Energy Policy Conference
October 25, 2012
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Security relativism
Importers ExportersSecurity of supply Security of
demandAffordable, stable
priceAdequate, stable
price
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Importers’ concerns
• Disruption to supply, economic disturbance– To influence geopolitics– Due to internal disruption– Due to natural disasters
• Price manipulation, shocks, volatility• Non-commodity costs
– Defense of producers, trade routes– Strategic storage (US ~ $200 MM/year)
How does all this constrain foreign policy?
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Oil trade ‘choke points’
Source: US Energy Information Administration
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Exporters’ concerns
• Revenue for domestic needs– Funding growing national budgets– Pacifying restive populations
• Uncertainty of huge, long-term investments• Importers’ actions
– Off-oil initiatives– Product taxes, tariffs, import fees, embargos– Antagonistic rhetoric
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The need for OPEC crude (MMbd)
PMT=protracted market tightness; PSM=prolonged soft market; DAU=dynamics as usual. Source: OPEC Long-Term Strategy
OPEC’s investment requirements in 2010-20 could range from less than $200 billion to around $400 billion.
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Responses—1
• Importers – International Energy Agency– Established 1974; 28 members of OECD– Strategic storage– Information
• Exporters: International Energy Forum– First meeting, 1991; charter, 2011; 88 members– Producer-consumer dialogue– Information
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Responses—2
• Saudi-US relationship– US defends Saudi Arabia, trade routes– Saudi Arabia assures supply
• Moderation of OPEC price hawkishness• Maintenance of 1.5-2 million b/d spare capacity
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IEA-strategic storage
• Stocks to cover 90 days of net imports• July 2012 coverage
– Total IEA: 187 days (111 industry, 96 public)– IEA net importers: 151 days (87 industry, 64
public)
• Cooperation with non-IEA China, India, several ASEAN members
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IEA stock withdrawal capacity
Venezuela, Nigeria
Iraq, Iran
Saudi Arabia, Russia
►
Largest disruption: Iranian revolution 1978-79, 5.6 MMbd
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IEA coordinated withdrawals
Event Lost supply1991 Gulf War 4.3 million b/d2005 hurricanes 1.5 million b/d2011 Libyan disruption 1.6 million b/d
Comparable disruptions have not triggered withdrawals: i.e., Iran-Iraq war 1980 (4.1 MMbd); 2001 disruption of Iraqi exports (2.1 MMbd); 2003 Venezuelan strike (2.6 MMbd); 2003 invasion of Iraq (2.3 MMbd)
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IEA—information
• Oil Market Report (monthly)• World Energy Outlook (annual)• Individual member energy-policy reviews• Statistics• Books• Others
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IEF—producer-consumer dialogue
• Biennial ministerial forums• Business forums
– Precede ministerial forums– Bilateral ministerial meetings
• NOC-IOC forums (two so far)• IEA-IEF-OPEC symposia on energy outlooks• IEA-IEF-OPEC joint workshops and regulators
forums (physical-financial market dialogue)
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IEF—information: JODI • Joint Organizations (ex-Oil) Data Initiative• Data exchange; about 100 participants• Evolution
– IEF ministers 2000– APEC, Eurostat, IEF, IEA, OLADE, OPEC, UNSD– IEF Secretariat assumed responsibility 2005– JODI World Database unveiled 2005
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JODI basic questionnaire
42 data pointsParticipants supposed to submit on 25th of month for two most recent months.Respondents vary in submission, timeliness, completeness.
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JODI expanded questionnaire
Work in progress since 2007.
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Global shift 1: oil demand (MMbd)
Source: International Energy Agency, Medium-Term Oil Market Report 2012
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Total net oil imports (IEA)
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Global shift 2: refining (MMbd)
*From existing projectsSource: OPEC World Oil Outlook, 2011
Total capacity additions: 6.8 MMbd
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Global shift 3: supply (MMbd)
Source: Maugeri, Leonardo, “Oil: The Next Revolution,” Discussion Paper 2012-10, Belfer Center for Science and International affairs, Harvard Kennedy School, June 2012.
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Global shift 3: supply (cont.)
Note: Before adjustments for depletion, reserves growth; excludes currently producing fields unless under extensive redevelopment.Unrestricted =total plannedAdjusted=after accounting for risk factors.
Source: Maugeri, Leonardo, “Oil: The Next Revolution,” Discussion Paper 2012-10, Belfer Center for Science and International affairs, Harvard Kennedy School, June 2012.
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OPEC median budget breakeven crude oil price
From Stevens, Paul, “Oil Prices, Energy Investment, Political Stability in the Export Countries and OPEC’s Dilemma,” Chatham House, October 2012
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Observations-1
• IEA:– Focused on OECD—waning consumption, imports– Oriented to strategic storage– Well-developed information scheme
• IEF:– Broader compass, producers and consumers– Oriented to cooperation– Developing information scheme
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Observations-2
• Importers deploy “oil weapon” more than exporters
• Supply threats come from nature, internal politics of key exporters
• Production growth lowering supply vulnerability in Western Hemisphere…
• …But supply disruption anywhere hurts developed countries everywhere
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Conclusions
• Market shifts softening IEA-OPEC opposition• Strategic storage remains supply-shock buffer• Value of strategic storage as deterrent to
exporter use of “oil weapon” has diminished• Supply security comes mainly from mutuality
of buyer-seller interests• Role of producer-consumer cooperation in
energy security will grow
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Questions
• Will US, others acknowledge changes?• Will new W. Hemisphere supply raise
questions re costs of storage, trade-route defense?
• Will Arab Spring issues liberalize or harden exporter regimes?
• How much will exporters pay for stability?• How will changes affect US-Saudi bilateralism?
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Auxiliary slides
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What is energy security? – 1
Source: Bartis, James T., “Promoting International Energy Security, Vol. 1, Understanding Potential Air Force Roles,” Rand Corp., 2012.
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IEA stocks (Dec. 11; MMbbl)
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IEA response options