VENTURA SECURITIES LTD.World Crude Oil

Drops left in Ocean.•

I t -,. - i[VENTURA:

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World Oil DiscoveriesWorld Oil Discovery vs. Oil Consumption

70

6050

III Q)"-40"-

ell.QC 300.Q

20 I

10o j~DU

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

years

OilDiscovery-Oil Discovery,5yr tvNA -Oil Consurrption,5yr tvNA

Source: www.energiekrise.de/e/aspo _news/aspo/Newsletter091

~ World Oil discoveries peaked in early 80's since then there has not beensignificant oil finds.

~ 1990 marked the point in time, when world oil consumption first exceededthe oil find and since then we have been eating into the reserves.

~ Today the annual consumption of oil is 30 billion barrels.

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World Oil ReservesOil Reserves Depletion Not Factoring Peak Oil

_J

Reserves at 630 bbl

Vs

BP Reserves at 1250 bbl

Reserves at 950 bbl

0.0

&@~~~&~h~~~~~~~~~~~~~~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~- ~ 0/ # # # # ~~~y

o Base Case Reserves De·pletion 0 Base Case Estimate 1

1200.0

1000.0Ul

800.0~ •...a 600.0 I~ :B

400.0

200.0

Source: Collin Cambel peak oil study

Oil reserves actually peaked in 1980

As per our estimates the reserves of oil stand at 630 bbl, the British Petroluem StatisticalEnergy Review (BPSER) estimates reserves at 1258 bbl. BPSER keeps increasing annualreserves about stated discoveries. These figures are not audited by BP and taken at facevalue as reported by the oil producing countries.

This large discrepancy in data is due to the overstating of oil reserves by OPEC countries inthe 80s.

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Spurious ReservesSelected Reported Reserves (billion bbl) with Suspect Increases

Abu

SaudiSpurious

Year

DhabiDubaiIranIraqKuwaitArabia*VenezuelaAmount

1980

281.4583165.4163.3517.870

1981

291.457.53065.916517.950

1982

30.61.275729.764.48164.620.30

1983

30.511.4455.3141.00?64.23162.421.511.3

1984

30.41.44514363.916624.850

1985

30.51.4448.544.590.00?16925.8526.1

1986

311.447.8844.1189.77168.825.590

1987

311.3548.847.191.92166.57250

1988

92.21?4.00?92.85?100.00?91.92166.9856.30?192.11

1989

92.21492.8510091.92169.9758.080

1990

9249310095258.00??5988.3

Spurious Claims = 317.54 billion bbl

-

Source: http://www.hubbertpeak.com/summary.htm

• The spurious reserves are so defined as the countries' upgraded oil reserves without any supporting evidence ofnew finds or upgradation to the proven category.

• In the 1980's, OPEC embarked on oil production quotas which were based on the oil reserves of the producingcountry. The OPEC countries in order to garner a larger production quota fudged their reserves.

• The extent of overstating the reserves corresponds to 10 years of oil supplies at the present rate of consumption(approx 30 bb p.a.)

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Typical Production Profile of an Oil well

6 0

(U a>.

~ 400L

:: 3 0o(I"j

-0 200(Uen

::J 1 0..c.•....

a

a o 1 20

Y ars of production

30

~ The point of maximum production, after which there is a decline isknown as Peak Oil.

.

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Depletion Profile of major Oil fields

Alaska's Prudhoe Bay Field displays the profile of constrained production:buildup, followed by plateau, followed by irreversible decline.

20112007

1980 • max, production '.189 bin bbl

1999 2004 20091994

250 mn bbll year

200

150

100

50

o

1999 2003

Forecast to 2011

1989.•

1979 1984

o

1969 1974

500

250

750

1000

Samotlor productionsince 1969

1 250 mln bbll year

2005 2010 2015o1975 1980 1985 1990

400

Prudhoe Bay Production Profile700

.•..

~ 600

g 300'n-5 200e0.

100(5

:8 500c:,9

'E

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900

800700:a

600

.0500

c:: ~400 "

:0300

200100 'Of,

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Peak Oil

Peak Oil

t35.0

World Oil Forecast30.0

25.0

:a20.0 .0

c::

15.0 ~:0

l 10.0

5.0

_ Base Case Reserves -5.6% Depletion -7% Depletion Rate -9% Depletion Rate------- -

Source: BP Yearly Statistical Analysis 2008 & Zorbaquants estimates

• World Oil production plateaud in 2004-5 as the oil producing countries used EaR (e hanced oil recovery) techniques

to extract oil before the depletion profile sets in.

• The peak of oil production, we believe, should occur no latter than 2010-11. It may have already set in, but cannot bepinpointed accurately due to lack of credible data. Recently Dr. Fatih Sirol, Chief Economist at lEA, remarked in aninterview that the Peak Oil would be hit in year 2010.

• We have assumed 5.6% as the base case of depletion of World Oil Production, keeping in mind the presenteconomic recession. Incase of moderate growth the depletion should happen at an accelerated rate of 7% and a fullblown recovery in economic conditions would lead to a 9% depletion rate.

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World Production Profile

World Oil Production35

30

•.• 25IIIGl

~ 20:c.cc: 15.2

:c 10

5

o

10.0%

8.0%6.0%.s::.

4.0%-

3:0•..2.0%Cl

~00.0%-2.0%-4.0%

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

year

-World Production, 5 yr MVA, LHS -% Growth, 5 year MVA, RHS

Source: BP Statistical Review of World Energy, 2009

• Oil production growth crashed since the early 1970s during the economic recession until themid 80s. After 1985, the production rate picked up until it peaked at 2% in 1991 (marked byarrow)

• This point in time (1991-92) coincides with the peaking of oil discoveries. It is clearly noticeablethat despite increased production since then, the production rate was unable to ramp up above2%. This flat rate of growth, we believe, is due to the EaR techniques used by producingnations to sustain the oil production.

,

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Crude Supply

World Oil Supply

30.0

10.0-0 ~•

~ 20.0"-

co.0c:o.0

0.0 ~ r

(:..\::) (:..~ (:..1:>.(:..X:J (:..fQ ~\::) ~~ ~I:>. ~X:J ~fQ R,\::) R,~ R,I:>. R,X:J R,fQ ~\::) ~~ ~I:>. ~X:J ~fQ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

- Peak Oil Countries, 5 yr rvrv A - World Production, 5 yr rvrv A

- Non Peak Oil Countries, 5 yr rvrvA-, ~~~ ===---

Source : BP Statistical Review of World Energy, 2009

• The major oil producing countries peaked as early as 2001-02. However the Middle east countries were yet to peak.

• Infact the production in these countries was ramped up to replace the diminishing supply from the "peaked" countries.Saudi Arabia with its prolific reserves emerged as the "swing producer."

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Peak Oil CountriesV E N T U R A SEe U R I TIE S LTD.

Country YearPeak Production (billion bbl)2008 ProductionDecline Rate

US

19704.12.54.38%

Mexico20041.41.26.09%

Argentina

19980.30.20.76%

Colombia19990.30.20.89%

Venezuela19981.40.94.34%

Norway

20011.20.95.02%

United Kingdom

19991.10.65.54%

Uzbekistan19980.10.00.29%

Nigeria

20050.90.84.99%

Australia20000.30.21.15%

Indonesia19910.60.41.46%

Egypt

19930.30.30.53%

Libya

19701.20.71.45%

Oman20000.40.31.07%

Syria

19950.2..

0.1 0.56%

Trinidad & Tobago

19780.10.10.10%

Total14.09.3

Source : BP Statistical Review of World Energy, 2009

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Mexican Reserves

• The Mexican case is a strikingexample of how the productionprofile declines sharply postpeaking.

•••••••••• Rate of Decline". -3.7

..........

...............

60

50

10

40:c.cc: 30~ii5 20

o I-

OJ'Or::, OJ'O'l,, Oj~ OJ'Oro OJ'O'O OjOjr::, OjOj'l" Ojet OjOjro OjOj'O ~r::,r::, r::,r::,'l" r::,cl" r:;,r::,ro r:;,r::,'O~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~year

_~_~ __ J

Source : BP Statistical Review of World Energy, 2009

• Application of EOR techniquesenhances production but kills theultimate oil recovery in the declinestage of production.

Cantarell Oil Production

2.5

>- 2'"

::!2:c 1.5.cc:

~ 1E 0.5

o

• The Cantarell oil fields in which

nitrogen injection technique wasutilized used to produce over2mbd per day. Today it barelyproduces 0.7 mbd

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

years

Source: BP Statistical Review of World Energy, 2009

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Oil Consumption of Oil Producers .Oil countries Consumption as % of Production

50%

45%

l: 40%o'u 35% i:l~ 30%C. 25%

~ 20%

~ 15%

'if!. 10%

50/0

0%

• The 2 billion population of themiddle east is growing at anaverage of 2.67% (twice that ofWorld Population Growth)

year

Oil countries Consumption as % of Production

J

• Saudi Arabia and Iran, thelargest oil producers are growingat 3.67% and 2.75% respectively.

100.0%

90.0%l:80.0%

.2 U70.0%

::> " 60.0%0c..

50.0%c;;

40.0%~15

30.0%

~20.0%

10.0%0.0% + -LO

•....(J);:::.'"LO

<0<0<0 •....•....

(J) ~~~~~~

••••• (J)•.... •....(J) (J)

ro ~ ~ ~ ~ m ~ ~ ~m m m m m m m m mT""" T""" ,..... ,...... .,..... ..,...

year

m T""'" (f') U') f'-..0'> 0 0 0 0moo 0 0T""" N C\I C\I N

• This explains the increasingconsumption of the oil producingcountries as their energyrequire'ments increase.

-Saudi ArabiaSS-Mexico -Venezuela -Iran

Source: BP Statistical Review of World Energy, 2009

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World Oil DemandWorld Oil Demand Growth

4.50%4.00%

~ 3.50%~ 3.00%

[ 2.50%in 2.00%i 1.50%e 1.00%C) 0.50% ~~

0.00% -

-0.50% ~ RJ' RJ~ RJO:> s:t RJ0 RJ(() ~ RJCO RJC?> ~:P ~, ~~ ~O:> ~ ~0 ~(() ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

years

- BRIG - Developed Countries - World - Oil Producing..

Source : BP Statistical Review of World Energy, 2009

• World oil consumption has closely tracked the population growth of 1.5%

• The growth in the BRIG nations is the highest 3%, in line with high GDP growth.

• The demand growth in the developed world has been stagnant since 2002

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V E N T U R A S EC U R I TIE S LTD.

Other Asia Year -19905%

Europe ex

Germany

23%

o North America exUS

• US50

o Europe exGermany

o Germany

• Pacific ex Japan

o Japan

• China

o India

• Brazil

• Russia

o Iran

• Saudi Arabia

• Restof Widdle East

• Venezuela

• Africa

• S. & C. America

• Other Asia

Other Asia Year· 20078%

Europe ex

Germany18%

Source : BP Statistical Review of World Energy, 2009•.

• Comparison of Oil consumption in 1990 and 2007 reveals the following

• USA has mainatined its share. Currently it consumes 18.5 mbd of which the US military consumes almost 40%

• Declines are observed in Japan, Europe (ex Germany) and Russia.

• China has increased 3 fold and current consumption stands at 7 mbd.

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World Demand Projections

World Demand Projections

96.1 ••- - -

--

95.0

••93.4 __••••

.-~

-- -ia'

••••- -- --- -~

:::P--••- 90.7

~

87.2 •

f7

III 85.0J:l I:84.5

E79.8

75.0 ~

--100.0-- --97.3-- --94.6--

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020years

-Optimistic +28D - Pessimistic -28D - Base Case

• R-value of World oil consumption to GDP is .925 while that to World Population it is .0.979.

• We have assumed a weighted average correlation of GDP and population for demand forecasting.

• Based on our Demand Projection Model, world oil consumption should climb to 97.3 mbd with a 2 standard deviationfor best case (1.0.0 mbd) and worst case (94.6 mbd) scenarios.

• In full bloom economies the World per capita consumtion of oil has been .0..013 bpd (or 2 ..06 Ii) and in recessionarytimes it has never fallen below .0..012 bdp ( or 1.98 Ii). This clearly explains the inelastic nature of demand, noncorrelation of oil prices and consumption and how central oil is to human life.

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Demand & Supply

World Oil Demand vs. SupplyPrice

trajectory

140.0

120.0100.0'0 C. 80.0 ~0 .0 60.0l: E 40.0

20.00.0 t-

~ T-,

years

-Production BaseCase-Demand Bas Case

The assumption that oil demand will be satiated by ever increasing oil suppliesis wishful thinking. Till peak oil, World GDP was driving oil production, post peakoil, oil availability will govern World growth until the world embraces alternativesources of energy.

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