International Association of Oil and Gas Producers

Oil and Gas Security of Supply for Europe

Athens, 3rd November, 2005

2

Agenda

Global Energy Demand

Oil and Gas Resources

EU Gas Issues

Investment, Demand Growthand Spare Capacity

Indigenous Production

Technology

Summary

3

Global energy demand - growth continues

0

10

20

30

40

50

60

80 90 00 10 20 30

0

50

100

150

200

250

300

350

400

80 90 00 10 20 30

1.71.7

1.41.4

2.22.2

1.51.5

1.21.2

0.80.8

2.12.1 9.59.5

1.51.5

2.72.7

2.22.2

1.01.0

1.51.5

5.95.9

2.22.2

Total Energy Other Energy Wind & Solar

HydroHydro

NuclearNuclear

Biomass,MSW

Biomass,MSW

Wind & SolarWind & Solar

OilOil

GasGas

CoalCoal

OtherOther

Growth Rate2003-2030, %Growth Rate2003-2030, %

SolarSolar

WindWind

MBDOE MBDOE MBDOE

Growth Rate1980-2003, %Growth Rate1980-2003, %

1.61.6 1.71.7

11.111.1

Source: ExxonMobil, 2004

Energy demand fuelled by economic and population growth

Fossil fuels will retain their market share

Renewables enjoy significant growth but remain marginal

Energy efficiency gains included in forecast

Energy price trends and developing countries’ demand remain uncertain

4

0

2

4

6

8

Conventional Oil Non-ConventionalOil

Conventional Gas Non-ConventionalGas

Gas Hydrates

... and large oil and gas resources exist

Trillion BarrelsOil Equivalent World Hydrocarbon Resources

Technically RecoverableAlready Produced

Source: IEA

5

...with substantial potential

Claude Mandil (IEA):

- “Quenching the world’s oil thirst …. is a major investment in modern technology.”

Source: IEA

Availability of oil resources as a function of economic price

6

Resources not a constraint

Oil resources

- Ample conventional resources exist

- Unconventional volumes untapped

Gas resources

- Significant upside to support growing demand

- Market incentives exist to develop remote resources

7

...with abundant gas reserves

Proven gas reserves

- 1984: 96 Tcm

- 1994: 143 Tcm

- 2004: 180 Tcm

Reserves-to-production ratio: 66.7 years

Highly concentrated

70–80% within economic reach of Europe

8% 4%4%

8%

36%

40%

Asia Pacific North America S. & Central America

Africa Europe & Eurasia Middle East

Technically recoverable conventional gas:~ 450 Tcm

8

Source : WoodMackenzie, Cedigaz, Total

550

650

2004 2010 20152004 2010 2015

40

100

715

140

... albeit from more distant sources

Europe*(EU34)

* EU25 + Bulg / Cro / Rom / Turk + Norw/Bos/Mac/Serb/Switz

255191 305

319 295 270Dom.Prod.

LNG Imports

Pipeline Imports

Demand

in Bcm

LNG

- Imports to triple

Pipeline gas

- Imports to grow by > 50%

Total imports by 2015:

- ~450 Bcm/y

Increased competition for supplies

9

... and Europe is well positioned

Nigeria LNG Algeria

Norway

LibyaEgypt

48 Tcm

30 Tcm

Qatar

IranIraq

Russia

Caspian9 Tcm

…but it needs

Supply diversification

Integration of gas networks

Dialogue with producing countries

Contractual flexibility

- Long term contracts

Regulatory stability

Improving market efficiency

- Interoperability

10

The development challenge

Resources + access + investment + technology + market + lead times ….

Production

11

Industry investment is increasing

Upstream investments

- Up nearly 60% since 1999

- In 2003 at $160 billion

Predictions for 2005

- $180 billion

Annual requirement to 2030

- $200 billion

Global Upstream Investment

Source : J.S Herold / Harrison Lovegrove

100

110

120

130

140

150

160

170

1999 2000 2001 2002 2003

$ B

illi

on

( m

on

ey

of

the

da

y)

0

10

20

30

40

50

60

$ p

er

ba

rre

l

Capex Oil Price

12

OPEC spare production capacity - historic lows

Source: DOE / EIA / BP

Recent oil price rise seems to reflect:

- Reduced spare capacity

- Risk premium

0

2

4

6

8

10

12

197019731976197919821985198819911994199720002003

Million Barrelsper Day

13

- 5.000 10.000 15.000 20.000

IndonesiaKuwaitNigeriaAlgeria

United Arab EmiratesVenezuela

ChinaMexico

IranCanada

EU and NorwaySaudi Arabia

USARussian Federation

Year 2004 production mboepd

Oil

Gas

European basin – a leading global producer

Source: BP Stat review 2004

5 10 15 20

Year 2004 Production Mboe per day

14

... with a major contribution to EU economy

Indigenous potential up to 100 billion boe

Supports European manufacturing and service Industry

Sustains employment

Contributes tax revenues

Facilitates access to global resources

15

... supported by new technologies

More oil becomes accessible

- Deep water

- Reservoirs with higher pressures

- Difficult geography

Recovery factor up

- Current average around 35%

- 1% increase = 1 year global energy consumption

17

...in summary

A shared challenge

18

Summary

Thank you for your attention!

19

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0

1991-1999

Average

2000 2001 2002 2003 2004 2005 2006

Mill

ion

Ba

rre

ls p

er

Da

y

US China Other

... to meet oil demand growth

Forecast History

Source: EIA, Short-Term Energy Outlook, September 2005

20

0

5

10

15

20

25

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Mrd

. m

³

German Gas – Growing Reserves through Technology

21

0

5

10

15

20

25

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Mrd

. m

³

1971 (Mayer Gürr)

German Gas – Growing Reserves through Technology

22

0

5

10

15

20

25

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Mrd

. m³

1971 (Mayer Gürr)1986 (Lübben)

German Gas – Growing Reserves through Technology

23

0

5

10

15

20

25

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Mrd

. m³

1971 (Mayer Gürr)1986 (Lübben)

German Gas – Growing Reserves through Technology

3D seismic, sub salt imaging, horizontal drilling, sour gas processing ….

24

0

5

10

15

20

25

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Mrd

. m

³

1971 (Mayer Gürr)1986 (Lübben)Ausblick 2002

Outlook

German Gas – Growing Reserves through Technology

3D seismic, sub salt imaging, horizontal drilling, sour gas processing ….