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Copyright Anthony H. Cordesman, all rights reserved.
CSIS_______________________________Center for Strategic and International Studies
1800 K Street N.W.Washington, DC 20006
(202) 775-3270
TheChanging Geopolitics of
Energy – Part II
Global Oil and Gas Production and Reserves
Anthony H. CordesmanWith the Assistance of Sarin Hacatoryan
Strategic Energy InitiativeCenter for Strategic and International Studies
August 11, 1998
The Changing Geopolitics of Energy II 8/12/98 Page 2
Copyright Anthony H. Cordesman, all rights reserved.
Table of ContentsIMPACT OF OIL AND GAS ON PRESENT AND FUTURE GLOBAL ENERGY DEMAND..................... 4
KEY OIL ISSUES ............................................................................................................................................... 5Estimated Growth of Oil and Gas Use: 1970-2020 ....................................................................................... 6Growing World and US Dependence on Imported Oil: 1990-2020................................................................ 7In the Past, the West Has Driven the Rise in Demand for Oil with Little Impact from Developing Asia: WorldOil Consumption: 1960-1996....................................................................................................................... 8Asia, However, has Become a Major Oil Consumer: .................................................................................... 9Asian Oil Consumption: 1960-1996 ............................................................................................................. 9Asia Will Drive Most of the Future Increase in Demand for Oil: Total World Oil Consumption by Region:1990-2020 ..................................................................................................................................................10Comparative Growth in Demand for Oil by Region: 1990-2020...................................................................11Middle Eastern Trade with Asia Must Change Fundamentally and Recycling “Petro-Yen” Will Not Be Easy...................................................................................................................................................................12
KEY GAS ISSUES .............................................................................................................................................13North America, the FSU, and Western Europe Will Stay the Largest Consumers, but Asia Will Drive Most ofthe Increase in Gas Demand .......................................................................................................................14Comparative Growth in Demand for Gas by Region: 1990-2020 .................................................................15Asia Will Make Major Increases in its Gas Imports:....................................................................................16Asian Gas Consumption: 1990-2020 ...........................................................................................................16
GEOPOLITICAL IMPACT OF OIL AND GAS RESERVES .......................................................................17
OIL RESERVES AND GEOPOLITICS ....................................................................................................................18Shifts in the Regional Balance of Oil Reserves.............................................................................................19The Middle East and the Gulf Dominate Future Oil Supply: World Oil Reserves by Region as a Percent ofWorld Total ................................................................................................................................................20OPEC versus Non-OPEC Production, Reserves and Refining Capacity .......................................................21OPEC Status by Country ............................................................................................................................22The Middle East and the Gulf Dominate Future Oil Supply: World Oil Reserves by Region in Billions ofBarrels .......................................................................................................................................................23Comparative World Oil Reserves by Region................................................................................................24Reserves By Region & Major Producer Country .........................................................................................25Reserve to Production Ratios By Region & Major Producer........................................................................26The Life of Oil Reserves is an Issue for Everyone ........................................................................................27Oil Reserves Are Technology as Well as Price Dependent: US Reserves in the Lower 48 as a Test Case ......28
GAS RESERVES AND GEOPOLITICS ...................................................................................................................29Shifts in the Regional Balance of Gas Reserves ...........................................................................................30The Middle East and the Gulf Dominate Future Gas Supply: World Oil Reserves by Region as a Percent ofWorld Total ................................................................................................................................................31The FSU and the Middle East Dominate Future Gas Supply: World Oil Reserves by Region in Trillions ofCubic Meters ..............................................................................................................................................32World Gas Reserves by Key Nation.............................................................................................................33World Gas Reserve to Production Ratios by Key Nation..............................................................................34Gas Reserves Are Also Technology as Well as Price Dependent: US Reserves in the Lower 48 as a Test Case...................................................................................................................................................................35
UNCERTAINTIES AFFECTING KEY SUPPLIERS AND EXPORTERS...................................................36
KEY AREAS OF UNCERTAINTY IN GLOBAL SUPPLY ...........................................................................................37World’s Growing Dependence on the Gulf and Middle East: Projected Total Global Oil EXPORTS bySource in 1995 and 2020 ............................................................................................................................38World’s Growing Dependence on the Gulf and Middle East: .......................................................................39Projected Total Global Oil IMPORTS by Source in 1995 and 2020 .............................................................39Rising Asian Demand is Met by Rising Middle Eastern Production: Net Balance of Regional Imports andExports: 1995-2015 ....................................................................................................................................40
The Changing Geopolitics of Energy II 8/12/98 Page 3
Copyright Anthony H. Cordesman, all rights reserved.
Large Amounts of Oil Production and Exports Are at Risk ..........................................................................41in Key Exporting Countries: 1995-2015 ......................................................................................................41Cumulative Risk: Estimated Total Demand for Exports from Countries with Sensitive or High Risk OilProduction Capacity Affects 50% of World Supply ......................................................................................42The FSU, Saudi Arabia, and Iraq are the Three Most Critical Future Exporters ..........................................43Today’s “Rogues” Had Damn Well Better Be Tomorrow’s Suppliers: 1995-2020........................................44Pattern of Oil Exports Could Sharply if the FSU Does Not Meet Estimated Production Levels and ChinaCannot Exploit New Fields: Prices Rises Likely ..........................................................................................45Domestic energy Demand Can Radically Change the Energy Available For Export: Middle EasternDomestic Energy Demand As a Test Case ...................................................................................................46IEA/OECD Estimate of Middle Eastern Domestic Energy Demand..............................................................47Downstream Operations Can Also Have Major Geopolitical Impacts: Gulf Cooperation Council vs. WorldPetrochemical Design Capacities: 1993......................................................................................................48
The Changing Geopolitics of Energy II 8/12/98 Page 4
Copyright Anthony H. Cordesman, all rights reserved.
Impact of Oil and Gas onPresent and Future Global
Energy Demand
The Changing Geopolitics of Energy II 8/12/98 Page 5
Copyright Anthony H. Cordesman, all rights reserved.
Key Oil Issues• Oil and gas energy use rises by 75% in BTUs between 1997 and
2020.
• Industrialized world and US become steadily more dependent onimports, with economic growth and Enhanced Oil Recovery(EOR) acting as the major uncertainty.
• Demand from the industrialized world, however, no longerdominates growth.
• Asian demand has leapt since early 1960s.
• Asia will become the dominant consuming region by 2010.
• Asia’s Imports will increase accordingly.
• China is actively competing in the “Great Game” forCentral Asia oil and has outbid US firms in some areas.
• The Middle East and the Gulf are projected to dominateincreases in oil supply.
• The growing domestic demand for oil in other developingregions will become a major factor and with steadily limit theexport capabilities of the Middle East, Africa, and FSU.
• Pipeline, port, and tanker geopolitics will change fundamentallyduring 1998-2020.
• Iran, Iraq, Libya, and Russia represent “high risk” oil supplierswith major potential geopolitical impacts.
The Changing Geopolitics of Energy II 8/12/98 Page 6
Copyright Anthony H. Cordesman, all rights reserved.
Estimated Growth of Oil and Gas Use: 1970-2020(Quadrillion BTU)
1970 19901995 1996
2000 20052010
20152020
Natural Gas
Oil
Oil
Natural Gas
0
50
100
150
200
250
Natural Gas 36.1 72 78.1 82.2 94.8 113.8 133.3 152.5 174.2
Oil 97.8 134.9 142.5 145.7 157.8 176.3 195.5 215.3 237.3
1970 1990 1995 1996 2000 2005 2010 2015 2020
Source: Adapted by Anthony H. Cordesman from EIA, Internet, July 4, 1996, and International Energy Outlook, 1998,DOE/EIA-484(97), p. 8 and 135.
The Changing Geopolitics of Energy II 8/12/98 Page 7
Copyright Anthony H. Cordesman, all rights reserved.
Growing World and US Dependence on Imported Oil: 1990-2020(Average Daily Domestic Production vs. Demand in Millions of Barrels Per Day)
19901996
20002005
20102015
2020
US Domestic Production
US Total Demand
Industrialized World Production
Industrialized World Demand
0
10
20
30
40
50
60
US Domestic Production 9.7 9.4 9.1 9 8.9 8.7
US Total Demand 17 18.3 19.6 21.3 22.7 23.7
Industrialized World Production 20.1 23 24.7 25.4 24.8 23.7
Industrialized World Demand 39.5 43.4 45.6 48.4 51.1 53.3
1990 1996 2000 2005 2010 2015
Source: DOE/EIA, International Energy Outlook, 1998, p. 136 and 175.
The Changing Geopolitics of Energy II 8/12/98 Page 8
Copyright Anthony H. Cordesman, all rights reserved.
In the Past, the West Has Driven the Rise in Demand for Oil with LittleImpact from Developing Asia: World Oil Consumption: 1960-1996
(in Millions of Barrels Per Day (MMBD)
South Korea
India
China
Japan
US
OECD
World
0
10
20
30
40
50
60
70
80
Source: Adapted by Anthony H. Cordesman from EIA Annual Energy Review, 1998, http://www.eia.doe.gov/bookshelf.html
The Changing Geopolitics of Energy II 8/12/98 Page 9
Copyright Anthony H. Cordesman, all rights reserved.
Asia, However, has Become a Major Oil Consumer:Asian Oil Consumption: 1960-1996
(in Millions of Barrels Per Day (MMBD)
China
Japan
South Korea
India
0
2
4
6
8
10
12
14
Source: Adapted by Anthony H. Cordesman from EIA Annual Energy Review, 1998,http://www.eia.doe.gov/bookshelf.html .
The Changing Geopolitics of Energy II 8/12/98 Page 10
Copyright Anthony H. Cordesman, all rights reserved.
Asia Will Drive Most of the Future Increase in Demand for Oil: TotalWorld Oil Consumption by Region: 1990-2020
(Millions of Barrels per Day)
North America
Western Europe
Middle EastAfrica
Latin America
Asia
FSU/E. Europe
0
20
40
60
80
100
120
140
FSU/E. Europe 10 5.9 5.7 5.9 6.7 7.8 9 10.1
Asia 13.8 18.3 19 21 24.8 28.5 33 38.4
Latin America 3.4 3.9 4 5.2 6.2 7.3 8.5 9.8
Africa 2.1 2.3 2.4 3.1 3.7 4.1 4.6 5.1
Middle East 3.4 4.1 4.2 4.4 5 5.6 6.3 7.1
Western Europe 12.9 14.1 14.3 14.3 14.6 14.9 15.2 15.4
North America 20.4 21.3 22 23.7 25.6 27.6 29 30.1
1990 1995 1996 2000 2005 2010 2015 2020
Source: Adapted by Anthony H. Cordesman from DOE/EIA, International Energy Outlook, 1996, Washington, DOE, EIA-0484(96), May,1996, p. 92, and International Energy Outlook, 1998, April, 1998, DOE/EIA-484(97), Reference Case, p. 136.
The Changing Geopolitics of Energy II 8/12/98 Page 11
Copyright Anthony H. Cordesman, all rights reserved.
Comparative Growth in Demand for Oil by Region: 1990-2020(Millions of Barrels per Day)
1990 1995 1996 2000 2005 2010 20152020
Middle East
Africa
Latin America
FSU/E. Europe
Western Europe
Asia
North America
0
5
10
15
20
25
30
35
40
Middle East 3.4 4.1 4.2 4.4 5 5.6 6.3 7.1
Africa 2.1 2.3 2.4 3.1 3.7 4.1 4.6 5.1
Latin America 3.4 3.9 4 5.2 6.2 7.3 8.5 9.8
FSU/E. Europe 10 5.9 5.7 5.9 6.7 7.8 9 10.1
Western Europe 12.9 14.1 14.3 14.3 14.6 14.9 15.2 15.4
Asia 13.8 18.3 19 21 24.8 28.5 33 38.4
North America 20.4 21.3 22 23.7 25.6 27.6 29 30.1
1990 1995 1996 2000 2005 2010 2015 2020
Source: Adapted by Anthony H. Cordesman from DOE/EIA, International Energy Outlook, 1996, Washington,DOE, EIA-0484(96), May, 1996, p. 92, and International Energy Outlook, 1998, April, 1998, DOE/EIA-484(97),Reference Case, p. 136.
The Changing Geopolitics of Energy II 8/12/98 Page 12
Copyright Anthony H. Cordesman, all rights reserved.
Middle Eastern Trade with Asia Must Change Fundamentally andRecycling “Petro-Yen” Will Not Be Easy
(Trade Patterns in 1996 in $US Current Millions)
36.2
15
1.40.6
12.1
5.7
1.5 1.8
48.3
20.7
2.9 2.4
-24.1
-9.3
0.11.2
- 3 0
- 2 0
- 1 0
0
1 0
2 0
3 0
4 0
5 0
J apan S out h Kor ea Indones i a M a l ay s i a
I m por t s Ex po r t s T o t a l Ba l a nc e
Note: Arabia and the Gulf includes Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, UAE, and Yemen. EasternMediterreanean includes Egypt, Israel, Jordan and Syria. North Africa includes Algeria, Morocco, Libya, Tunisia, and Sudan.All Arab includes previous countries less Iran and Israel. Middle East and North Africa includes all countries listed above.
Source: Adapted by Anthony H. Cordesman from EIU, Internet data base, December 16, 1997.
The Changing Geopolitics of Energy II 8/12/98 Page 13
Copyright Anthony H. Cordesman, all rights reserved.
Key Gas Issues• Massive uncertainties exist regarding the size of reserves and
major changes could occur in current estimates by 2020.
• Iran is a key uncertainty.
• Changes in gas liquids technology could change the definition ofeconomic reserves, the value of gas, and the entire market forgas.
• Pipeline geopolitics are even more important for gas than for oil.
• North America, Europe, and FSU will dominate gas use, butAsian demand will rise sharply.
• The growth of gas use in the Pacific Rim states will beparticularly high.
• Tanker traffic will increase because of both oil and gasdemand.
• Russia may create pipelines to service China, Korea, and Japan -- altering current estimates of dependence on oil.
The Changing Geopolitics of Energy II 8/12/98 Page 14
Copyright Anthony H. Cordesman, all rights reserved.
North America, the FSU, and Western Europe Will Stay the LargestConsumers, but Asia Will Drive Most of the Increase in Gas Demand
(Total World Gas Consumption by Region: 1990-2015, Trillion Cubic Feet, EIA Reference Case)
1990 1995 1996 2000 2005 2010 2015 2020
Africa
Industrial Asia
Middle East
Latin America
Developing Asia
Western Europe
FSU/E. Europe
North America
0
5
10
15
20
25
30
35
40
45
Africa 1.4 1.7 1.8 1.7 1.9 2.4 2.9 3.4
Industrial Asia 2.6 3.1 3.3 3.3 3.7 4.1 4.3 4.6
Middle East 3.6 4.7 5.2 5.4 6 6.8 7.8 8.9
Latin America 2 2.6 2.9 3.1 5 7.2 9.8 13
Developing Asia 3 4.7 5.3 9.5 14.1 18.5 22.6 27.7
Western Europe 10.3 12.7 14.1 16.2 19.9 23.5 27.7 32.1
FSU/E. Europe 28.1 23.4 23.7 26.8 31 35.2 38.7 42.7
North America 22 25.4 26 28.5 31.5 34.4 36.9 39.4
1990 1995 1996 2000 2005 2010 2015 2020
Source: Adapted by Anthony H. Cordesman from DOE/EIA, International Energy Outlook, 1996, Washington,DOE, EIA-0484(96), May, 1996, p. 92, and International Energy Outlook, 1998, April, 1998, DOE/EIA-484(97),Reference Case, p. 137.
The Changing Geopolitics of Energy II 8/12/98 Page 15
Copyright Anthony H. Cordesman, all rights reserved.
Comparative Growth in Demand for Gas by Region: 1990-2020(Millions of Barrels per Day)
1990 1995 1996 2000 2005 2010 2015 2020
Africa
Industrial Asia
Middle East
Latin America
Developing Asia
Western Europe
North America
FSU/E. Europe
0
5
10
15
20
25
30
35
40
45
Africa 1.4 1.6 1.8 1.7 1.9 2.4 2.9 3.4
Industrial Asia 2.6 3.1 3.3 3.3 3.7 4.1 4.3 4.6
Middle East 3.6 4.7 5.2 5.4 6 6.8 7.8 8.9
Latin America 3.9 5 5.6 5.8 8.8 12.4 16.6 21.8
Developing Asia 3 4.7 5.3 9.5 14.1 18.5 22.6 27.7
Western Europe 10.3 12.7 14.1 16.2 19.9 23.5 27.7 32.1
North America 22 25.4 14.1 16.2 19.9 23.5 27.7 32.1
FSU/E. Europe 28.1 23.4 23.7 26.8 31 35.2 38.7 42.7
1990 1995 1996 2000 2005 2010 2015 2020
Source: Adapted by Anthony H. Cordesman from DOE/EIA, International Energy Outlook, 1996, Washington,DOE, EIA-0484(96), May, 1996, p. 92, and International Energy Outlook, 1997, April, 1997, DOE/EIA-484(97),Reference Case, p. 119.
The Changing Geopolitics of Energy II 8/12/98 Page 16
Copyright Anthony H. Cordesman, all rights reserved.
Asia Will Make Major Increases in its Gas Imports:Asian Gas Consumption: 1990-2020
(Trillion Cubic Feet of Consumption, EIA Reference Case)
Australasia
Pacific Rim
Japan
India
China
0
5
10
15
20
25
30
35
China 0.5 0.6 0.7 1.4 2.4 3 3.3 3.7
India 0.4 0.6 0.7 1.5 2.3 3.3 4.5 5.9
Japan 1.9 2.2 2.4 2.2 2.5 2.8 2.9 3.2
Pacific Rim 2.1 3.5 4 6.7 9.4 12.1 14.8 18.1
Australasia 0.8 0.9 0.9 1.1 1.2 1.3 1.3 1.4
1990 1995 1996 2000 2005 2010 2015 2020
Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, p. 137.
The Changing Geopolitics of Energy II 8/12/98 Page 17
Copyright Anthony H. Cordesman, all rights reserved.
Geopolitical Impact of Oiland Gas Reserves
The Changing Geopolitics of Energy II 8/12/98 Page 18
Copyright Anthony H. Cordesman, all rights reserved.
Oil Reserves and Geopolitics• Enhanced Oil Recovery (EOR) is steadily change reserve
estimates and help the US and Northern Europe maintainreserve ratios for much longer than previously expected.
• Asia is “oil poor” in reserves, and reserves are depleting fasterthan new discoveries.
• China is having little success in finding new reserves.
• Offshore oil reserves in South China Sea may be myth.
• India has virtually no oil.
• Enhanced oil recovery (EOR) unlikely to provide muchhelp.
• Russia’s ability to exploit its reserves is economically andtechnically uncertain. Siberia is a particular problem.
• Gulf has about two-thirds of world’s known oil reserves. Algeriaand Libya have major reserves, and Egypt, Syria, and Tunisiahave some oil.
• North African reserves exceed reserves of all Sub-Saharanstates: Angola, Nigeria, etc.
• Far Eastern reserves are comparatively low, with littlepotential for major new discoveries.
• Other regions have a faster growth of domesticconsumption as a ratio of reserves.
• Gulf and Middle Eastern oil reserves are just as important evenif ultimate oil reserves are considered.
• New reserves in other regions tend to be offset by depletion ofexisting reserves.
The Changing Geopolitics of Energy II 8/12/98 Page 19
Copyright Anthony H. Cordesman, all rights reserved.
Shifts in the Regional Balance of Oil Reserves(Billions of Barrels)
0
1 0 0
2 0 0
3 0 0
4 0 0
5 0 0
6 0 0
7 0 0
Nor t h
A m er i ca
S & C
A m er i ca
Eur ope FSU M i ddl e Eas t A f r i ca A s i a/ Pac
1 9 7 7
1 9 8 7
1 9 9 6
1 9 9 8
1977 56.9 26.4 30.3 75 365.8 59.2 39.71987 93 65.7 24.2 69 564.7 55.3 37.81996 85.9 79.1 20.5 65.5 676.3 67.5 42.41998 76.6 86.2 20.2 65.4 676.9 70 42.3
Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 4.
The Changing Geopolitics of Energy II 8/12/98 Page 20
Copyright Anthony H. Cordesman, all rights reserved.
The Middle East and the Gulf Dominate Future Oil Supply: World OilReserves by Region as a Percent of World Total
(Based on Oil and Gas Journal Forecast for and a World Total of 1,037.6 billion barrels)
North America
7%
S&C America
8%
Europe
2%
FSU
6%
Gulf
65%
N. Africa
4% S. Africa
3%Asia/Pacific
4%
Other Middle East
1%
Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 4.
The Changing Geopolitics of Energy II 8/12/98 Page 21
Copyright Anthony H. Cordesman, all rights reserved.
OPEC versus Non-OPEC Production, Reserves and Refining Capacity
29.9
797.1
8
44.2
244.2
70.4
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Oil Production in
MMBD
Reserves in Billions of
Barrels
Refining Capacity in
MMBD
Non-OPEC
OPEC
Source: DOE/EIA, Non-OPEC Fact Sheet, 3/98.
The Changing Geopolitics of Energy II 8/12/98 Page 22
Copyright Anthony H. Cordesman, all rights reserved.
OPEC Status by Country(Thousands of Barrels Per Day
Country 1997 Quota 1998 Quota 1998 Cutbacks* Crude Oil Production 1997 3/98
Algeria 750 909 50,000 847 860
Indonesia 1,300 1,456 70,000 1,366 1,340
Iran 3,650 3,942 140,000 3,629 3,600
Iraq 1,200 1,314 0 1,182 1,820
Kuwait 2,000 2,190 125,000 2,038 2,210
Libya 1,390 1,522 80,000 1,446 1,450
Nigeria 1,865 2,042 125,000 2,217 2,270
Qatar 378 414 30,000 614 700
Saudi Arabia 8,000 8,761 525,000 8,562 8,460
UAE 2,161 2,366 125,000 2,236 2,400
Venezuela 2,359 2,583 325,000 3,275 3,370
TOTAL OPEC 25,033 27,500 - 27,457 28,480
Mexico - - 200,000 - -
Norway - - 100,000 - -
Oman - - 30,000 - -
Yemen - - 20,000 - -
TOTAL - - 1,945,000 - -
* Combined from the March 22, 1998, March 30 OPEC, and June 4 Amsterdam agreements.
Source: Adapted by Anthony H. Cordesman from DOE/EIA OPEC Fact Sheet, June, 1998, and Oil ProductionAgreements of 1998, June 5, 1998.
The Changing Geopolitics of Energy II 8/12/98 Page 23
Copyright Anthony H. Cordesman, all rights reserved.
The Middle East and the Gulf Dominate Future Oil Supply: World OilReserves by Region in Billions of Barrels
(Based on Oil and Gas Journal Forecast for and a World Total of 1,037.6 billion barrels)
42.3
27.2
42.8
6.7
670.2
20.2
86.2
76.6
65.4
0 1 0 0 2 0 0 3 0 0 4 0 0 5 0 0 6 0 0 7 0 0
A s i a/ Pac i f i c
Subsahar an A f r i ca
Nor t h A f r i ca
Ot her M i ddl e Eas t
Gul f
FSU
Eur ope
S& C A m er i ca
Nor t h A m er i ca
Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 4.
The Changing Geopolitics of Energy II 8/12/98 Page 24
Copyright Anthony H. Cordesman, all rights reserved.
Comparative World Oil Reserves by Region (Billions of Barrels)
GulfEurasia
OECDOther
OPECOther
Identified Reserves
Ultimate Resources - Low
Estimate
Ultimate Resources - High
Estimate
0
100
200
300
400
500
600
700
800
900
1000
Identified Reserves 583 163.7 156.4 123.4 76.7
Ultimate Resources - Low
Estimate
834.2 383.5 450.2 250.4 175.7
Ultimate Resources - High
Estimate
992 636.6 605.7 317.1 255.6
Gulf Eurasia OECD Other OPEC Other
Source: Adapted by Anthony H. Cordesman from DOE/EIA, International Energy Outlook, 1997, April, 1997,DOE/EIA-484(97), Reference Case, p. 35.
The Changing Geopolitics of Energy II 8/12/98 Page 25
Copyright Anthony H. Cordesman, all rights reserved.
Reserves By Region & Major Producer Country(Billions of Barrels in 1997)
42.3
70
676.9
65.4
20.2
76.6
76.6
5
4.3
24
16.8
29.5
9.2
97.8
261.5
96.5
112.5
93
8
48.6
7
5
10.4
71.7
40
6.8
29.8
0 1 0 0 2 0 0 3 0 0 4 0 0 5 0 0 6 0 0 7 0 0
Indones i a
Indi a
Chi na
A s i a/ Pac
Ni ger i a
Li by a
A l ger i a
A f r i ca
UA E
Saudi
Kuw ai t
Ir aq
Ir an
M i ddl e Eas t
Kazakhs t an
Russ i a
A zer bai j an
FSU
UK
Nor w ay
Eur ope
Venezuel a
S & C A m er i ca
M ex i co
Canada
US
Nor t h A m er i ca
Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 4.
The Changing Geopolitics of Energy II 8/12/98 Page 26
Copyright Anthony H. Cordesman, all rights reserved.
Reserve to Production Ratios By Region & Major Producer(Reserves/Production Ratios in 1997)
15.6
25
87.7
42.5
24.7
8.2
37.3
16
9
20.5
20.2
55.6
18.8
100
79.5
100
100
69
21.7
59.5
33.6
10
0 2 0 4 0 6 0 8 0 1 0 0
Indones i a
Chi na
A s i a/ Pac
Ni ger i a
Li by a
A l ger i a
A f r i ca
UA E
Saudi
Kuw ai t
Ir aq
Ir an
M i ddl e Eas t
Kazakhs t an
Russ i a
FSU
Eur ope
Venezuel a
S & C A m er i ca
M ex i co
US
Nor t h A m er i ca
Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 4.
The Changing Geopolitics of Energy II 8/12/98 Page 27
Copyright Anthony H. Cordesman, all rights reserved.
The Life of Oil Reserves is an Issue for Everyone (Years of Proven Reserves at Average Rate of Production in 1996)
Canada
Indonesi a
Nor w ay
Uni t ed St at es
Om an
A l ger i a
Ni ger i a
A ngol a
Chi na
Russ i a
M ex i co
Kazakhs t an
Li by aI r an
Saudi A r abi aA zer bai j an
Ir aqKuw ai t
UA E
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 0 0
Note: Iran and Saudi Arabia probably have major additional reserves. Countries shown as 100 years havesubstantially larger reserve life, but it is impossible to determine how much.Source: British Petroleum and the Economist, August 2, 1997, p. 80.
The Changing Geopolitics of Energy II 8/12/98 Page 28
Copyright Anthony H. Cordesman, all rights reserved.
Oil Reserves Are Technology as Well as Price Dependent: US Reserves inthe Lower 48 as a Test Case
(in Billions of Barrels)
26 26
102
92
0
20
40
60
80
100
120
140
1990 Technology 2020 Technology
Unproved
Proved
Source: Adapted by Anthony H. Cordesman from EIA, Annual Energy Outlook, 1998, p. 59.
The Changing Geopolitics of Energy II 8/12/98 Page 29
Copyright Anthony H. Cordesman, all rights reserved.
Gas Reserves and Geopolitics• The Middle East plays a critical role in Gas Reserves, but the
FSU has the largest reserves.
• North American and Asian gas reserves are much higher asa ratio of current demand, but fall far short of FSU andGulf.
• Asia must become a major net gas importer from the Gulf,although the FSU will be a critical supplier.
• North African reserves again exceed Sub-Saharan reserves, butNorth African gas reserves are not high relative to worldreserves or future demand.
• The FSU and Iran present a cumulative massive analyticproblem because:
• Data on oil reserves of Caspian states, Central Asia, andIran are very uncertain.
• Little meaningful data exist on the gas reserves of Russia,Caspian states, Central Asia, and Iran.
• The economic value of given types of gas reserves is muchmore uncertain than for oil.
• The geopolitics of gas reserve are currently transportationlimited!
• New gas liquids technologies might change this.
• Gas may substitute for oil in many exporting countries,increasing their oil export potential.
The Changing Geopolitics of Energy II 8/12/98 Page 30
Copyright Anthony H. Cordesman, all rights reserved.
Shifts in the Regional Balance of Gas Reserves(Trillions of Cubic Meters)
0
1 0
2 0
3 0
4 0
5 0
6 0
Nor t h
A m er i ca
S & C
A m er i ca
Eur ope FSU M i ddl e Eas t A f r i ca A s i a/ Pac
1 9 7 7
1 9 8 7
1 9 9 6
1 9 9 8
1977 8.44 2.22 4.21 26.05 20.36 5.88 4.191987 10.23 4.25 7.01 41.06 30.7 7.04 7.231996 8.53 5.9 5.42 57.28 45.79 9.3 9.111998 8.36 6.29 6.29 56.71 48.88 9.87 9.08
Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 20.
The Changing Geopolitics of Energy II 8/12/98 Page 31
Copyright Anthony H. Cordesman, all rights reserved.
The Middle East and the Gulf Dominate Future Gas Supply: World OilReserves by Region as a Percent of World Total
(Based on Oil and Gas Journal Forecast for a World Total of 144.76 Trillion Cubic Meters)
North America
6%
South and Central America
4%
Europe
4%
FSU
39%
Middle East
34%
Asia/Pacific
6%
Africa
7%
Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 20.
The Changing Geopolitics of Energy II 8/12/98 Page 32
Copyright Anthony H. Cordesman, all rights reserved.
The FSU and the Middle East Dominate Future Gas Supply: World OilReserves by Region in Trillions of Cubic Meters
9.08
9.87
48.88
56.71
5.57
8.36
6.29
0 1 0 2 0 3 0 4 0 5 0 6 0
A s i a/ Pac i f i c
A f r i ca
M i ddi l e Eas t
FSU
Eur ope
S& C A m er i ca
Nor t h A m er i ca
Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 20.
The Changing Geopolitics of Energy II 8/12/98 Page 33
Copyright Anthony H. Cordesman, all rights reserved.
World Gas Reserves by Key Nation (Trillions of Cubic Feet in Reserves)
1,700
810
300
204.9
190.5
166.5
143.1
130.6
114.9
109.8
79.8
72.3
66.2
65
65
63.9
61.3
52.9
52.3
46.3
41
39.6
30
17.4
0 2 0 0 4 0 0 6 0 0 8 0 0 1 , 0 0 0 1 , 2 0 0 1 , 4 0 0 1 , 6 0 0 1 , 8 0 0
Russ i a
I r an
Qat ar
UA E
Saudi
US
Venezuel a
A l ger i a
Ni ger i a
I r aq
M al ay s i a
Indones i a
Uzbek i s t an
Canada
Kazakhs t an
M ex i co
Net her l ands
Kuw ai t
Nor w ay
Li by a
Chi na
Uk r ai ne
A zer bai j an
Indi a
Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 20..
The Changing Geopolitics of Energy II 8/12/98 Page 34
Copyright Anthony H. Cordesman, all rights reserved.
World Gas Reserve to Production Ratios by Key Nation (Nations with At Least 100 Trillion Cubic Feet in Reserves)
85.9
100
100
100
100
8.8
100
54.8
100
100
0 2 0 4 0 6 0 8 0 1 0 0
Russ i a
Ir an
Qat ar
UA E
Saudi
US
Venezuel a
A l ger i a
Ir aq
Ni ger i a
Source: Oil and Gas Journal, and BP Statistical Review of World Energy, 1998, p. 20..
The Changing Geopolitics of Energy II 8/12/98 Page 35
Copyright Anthony H. Cordesman, all rights reserved.
Gas Reserves Are Also Technology as Well as Price Dependent: US Reservesin the Lower 48 as a Test Case
(in Trillions of Cubic Feet)
169 169
1186
870
0
200
400
600
800
1000
1200
1400
1600
1990 Technology 2020 Technology
Unproved
Proved
Source: Adapted by Anthony H. Cordesman from EIA, Annual Energy Outlook, 1998, p. 59.
The Changing Geopolitics of Energy II 8/12/98 Page 36
Copyright Anthony H. Cordesman, all rights reserved.
Uncertainties Affecting KeySuppliers and Exporters
The Changing Geopolitics of Energy II 8/12/98 Page 37
Copyright Anthony H. Cordesman, all rights reserved.
Key Areas of Uncertainty in Global Supply
• Global and regional economic growth and energy demand.
• Russian stability and ability to produce.
• Chinese ability to find new oil and gas reserves and sustainproduction. Search for alternative sources of energy.
• Algerian stability.
• Sanctions Affecting Iran, Iraq, and Libya.
• Creation of new energy transportation infrastructure: Pipelines,ports, tankers, etc.
• The impact of domestic energy demand on export capacity,particularly in the Middle East.
• Possible impact on China on US coal exports.
The Changing Geopolitics of Energy II 8/12/98 Page 38
Copyright Anthony H. Cordesman, all rights reserved.
World’s Growing Dependence on the Gulf and Middle East: Projected TotalGlobal Oil EXPORTS by Source in 1995 and 2020
(MMBD, EIA Reference Case)
0
20
40
60
80
100
120
Asia
West Africa
North Sea
North Africa
FSU
South America
Carribean
Persian Gulf
Middle East
TOTAL
Asia 0.3 0.7
West Africa 2.3 2.1
North Sea 4.1 4.6
North Africa 2.5 2.3
FSU 5.6 2.6
South America 4.3 2.6
Carribean 6 4.2
Persian Gulf 41.8 15.4
Middle East 44.3 17.7
TOTAL 111.2 52.2
2020 1995
Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, DOE/EIA-0484 (97),April 1997, p. 36.
The Changing Geopolitics of Energy II 8/12/98 Page 39
Copyright Anthony H. Cordesman, all rights reserved.
World’s Growing Dependence on the Gulf and Middle East:Projected Total Global Oil IMPORTS by Source in 1995 and 2020
(MMBD, EIA Reference Case)
0
5
10
15
20
25
30
China
Industrial Asia
Other Developing
North America
Pacific Rim
Europe
Asia
The West
China 7.5 0.6
Industrial Asia 8.5 6.1
Other Developing 15.7 4.7
North America 15.2 8.9
Pacific Rim 11.7 5.1
Europe 12.3 11.7
Asia 27.7 11.4
The West 27.5 20.6
2020 1995
Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, DOE/EIA-0484 (97),April 1997, p. 36.
The Changing Geopolitics of Energy II 8/12/98 Page 40
Copyright Anthony H. Cordesman, all rights reserved.
Rising Asian Demand is Met by Rising Middle Eastern Production: NetBalance of Regional Imports and Exports: 1995-2015
(Millions of Barrels per Day, EIA Reference Case)
-50
-40
-30
-20
-10
0
10
20
30
40
1990 1995 200 2005 2010 2015Asian Imports
OECD Imports
North American Imports
EE/FSU Exports
Middle East Exports
African Exports
Latin American Exports
1990 1995 2000 2005 2010 2015Asian Imports 7.2 10.6 14.5 18.7 22.5 26.7OECD Imports 8.3 7.5 7.2 8.5 9.3 10.5North American Imports 5.7 6.6 8.5 10.1 11 11.4EE/FSU Exports -1.7 -1.5 -1.4 -1.3 -1.5 -1.2Middle East Exports -19.4 -21.3 -28.2 -32.5 -36.6 -43.6African Exports -1.9 -2.3 -2.5 -2.4 -2 -1.5Latin American Exports -1.6 -1.8 -2.7 -3.1 -3.2 -2.9Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1996, pp. 116-122.
The Changing Geopolitics of Energy II 8/12/98 Page 41
Copyright Anthony H. Cordesman, all rights reserved.
Large Amounts of Oil Production and Exports Are at Risk in Key Exporting Countries: 1995-2015
(EIA Reference Case Estimate in MMBD)
73 75 80 85 90 96 0 5 10 15 20
Libya
China
Iraq
Iran
FSU
Saudi
0
5
10
15
20
25
Libya 2.175 1.48 1.787 1.059 1.5 1.5 1.5 1.6 1.7 1.6 1.5
China 1.09 1.49 2.122 3 3 3.1 3.4 3.5 3.6 3.6 3.5
Iraq 2.018 2.62 2.514 1.433 2.2 0.6 0.6 2.1 3.2 5.9 7.8
Iran 5.681 5.35 1.662 2.25 3.2 3.9 4 4.3 4.5 5.7 6.8
FSU 8.32 9.532 11.11 11.585 11 7.1 7.5 9.5 12.1 12.6 13.2
Saudi 7.596 7.075 9.9 3.388 8.6 10.6 10.9 11.2 13.5 17.2 23.8
73 75 80 85 90 96 0 5 10 15 20
Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, DOE/EIA-0484 (97),April 1997, pp. 175, and EIA, Monthly Energy Review, April, 1997, pp. 130-131. Note that total world productionis 69.7 MMBD in 1990, 73.0 MMBD in 1995, 81.4 MMBD in 2000, 90,5 MMBD in 2005, 98.1 MMBD in 2010,and 106.9 MMBD in 2015.
The Changing Geopolitics of Energy II 8/12/98 Page 42
Copyright Anthony H. Cordesman, all rights reserved.
Cumulative Risk: Estimated Total Demand for Exports from Countries withSensitive or High Risk Oil Production Capacity Affects 50% of World
Supply(EIA Reference Case Estimate in MMBD)
Saudi Arabia
Iran
IraqLibya
China
FSU
0
10
20
30
40
50
60
FSU 8.32 9.532 11.11 11.59 12 7 7.7 9.1 9.8 10.6 13.2
China 1.09 1.49 2.122 3 3 2.99 3.1 3.2 3.3 3.5 3.5
Libya 2.175 1.48 1.787 1.059 1.375 1.39 1.8 2.2 2.4 2.5 1.5
Iraq 2.018 2.62 2.514 1.433 2.04 0.56 4.3 5.8 7 7.4 7.8
Iran 5.681 5.35 1.662 2.25 3.088 3.643 4 5.1 5.5 5.9 6.8
Saudi Arabia 7.596 7.075 9.9 3.388 6.41 8.231 11.4 13.3 15.8 22.3 23.8
1973 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, DOE/EIA-0484 (97), April 1997, pp. 175, andEIA, Monthly Energy Review, April, 1997, pp. 130-131. Note that total world production is 69.7 MMBD in 1990, 73.0 MMBD in 1995, 81.4MMBD in 2000, 90,5 MMBD in 2005, 98.1 MMBD in 2010, and 106.9 MMBD in 2015.
The Changing Geopolitics of Energy II 8/12/98 Page 43
Copyright Anthony H. Cordesman, all rights reserved.
The FSU, Saudi Arabia, and Iraq are the Three Most Critical FutureExporters
(EIA Reference Case Estimate in MMBD)
Saudi Arabia
Iraq
FSU
0
5
10
15
20
25
30
35
40
45
50
FSU 8.32 9.532 11.11 11.59 12 7 7.7 9.1 9.8 10.6 13.2
Iraq 2.018 2.62 2.514 1.433 2.04 0.56 4.3 5.8 7 7.4 7.8
Saudi Arabia 7.596 7.075 9.9 3.388 6.41 8.231 11.4 13.3 15.8 22.3 23.8
1973 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, DOE/EIA-0484 (97), April 1998,pp. 175, and EIA, Monthly Energy Review, April, 1997, pp. 130-131. Note that total world production is 69.7 MMBD in 1990,73.0 MMBD in 1995, 81.4 MMBD in 2000, 90,5 MMBD in 2005, 98.1 MMBD in 2010, and 106.9 MMBD in 2015.
The Changing Geopolitics of Energy II 8/12/98 Page 44
Copyright Anthony H. Cordesman, all rights reserved.
Today’s “Rogues” Had Damn Well Better Be Tomorrow’s Suppliers: 1995-2020
(EIA Reference Case Estimate in MMBD)
73 75 8085 90 96
0 510
15 2020
Libya
Iraq
Iran0
1
2
3
4
5
6
7
8
Libya 2.175 1.48 1.787 1.059 1.5 1.5 1.5 1.6 1.7 1.6 1.5
Iraq 2.018 2.62 2.514 1.433 2.2 0.6 0.6 2.1 3.2 5.9 7.8
Iran 5.681 5.35 1.662 2.25 3.2 3.9 4 4.3 4.5 5.7 6.8
73 75 80 85 90 96 0 5 10 15 2020
Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, DOE/EIA-0484 (97), April 1998,pp. 175, and EIA, Monthly Energy Review, April, 1997, pp. 130-131. Note that total world production is 69.7 MMBD in 1990,73.0 MMBD in 1995, 81.4 MMBD in 2000, 90,5 MMBD in 2005, 98.1 MMBD in 2010, and 106.9 MMBD in 2015.
The Changing Geopolitics of Energy II 8/12/98 Page 45
Copyright Anthony H. Cordesman, all rights reserved.
Pattern of Oil Exports Could Sharply if the FSU Does Not Meet EstimatedProduction Levels and China Cannot Exploit New Fields: Prices Rises Likely
(Estimated Demand vs. Production Capacity in MMBD, EIA Reference Case)
19901996
20002005
20102015
2020
China-Production
China-Demand
FSU-Demand
FSU Production
0
2
4
6
8
10
12
14
China-Production 2.8 3.1 3.4 3.5 3.6 3.6 3.5
China-Demand 2.3 3.5 4.4 5.6 7 8.8 11.2
FSU-Demand 8.4 4.4 4.4 5.1 5.9 6.7 7.5
FSU Production 11.4 7.1 7.5 9.5 12.1 12.6 13.2
1990 1996 2000 2005 2010 2015 2020
Source: Adapted by Anthony H. Cordesman from EIA, International Energy Outlook, 1998, pp. 136, 175. Notethat total world production is 69.7 MMBD in 1990, 73.0 MMBD in 1995, 81.4 MMBD in 2000, 90.4 MMBD in2005, 98.1 MMBD in 2010, and 106.9 MMBD in 2015.
The Changing Geopolitics of Energy II 8/12/98 Page 46
Copyright Anthony H. Cordesman, all rights reserved.
Domestic energy Demand Can Radically Change the Energy Available ForExport: Middle Eastern Domestic Energy Demand As a Test Case
(IEA Estimate in MTOE)
55
289
577
508
35
189
358
316
21
130
200
178
12
37
9383
0
1 0 0
2 0 0
3 0 0
4 0 0
5 0 0
6 0 0
1 9 7 1 1 9 9 3 2 0 1 0 CC 2 0 1 0 ES
Pr i m ar y Ener gy Fi nal Cons um pt i on Oi l Gas
CC = Capacity Constrained or maximum production ES = Energy Savings, or reduced energy use.Source: Adapted by Anthony H. Cordesman from IEA, World Energy Outlook, 1996, pp. 153-158.
The Changing Geopolitics of Energy II 8/12/98 Page 47
Copyright Anthony H. Cordesman, all rights reserved.
IEA/OECD Estimate of Middle Eastern Domestic Energy Demand(IEA Estimate in MMBD)
Basic Energy Demand Trends
Category 1971 1993 2000 2010 Capacity Energy Constraints SavingsPrimary EnergyConsumption (MTOE) 55 289 - 577 508
Final Consumption 35 189 - 358 316 Solids 0 1 - 2 2 Oil 21 130 - 200 178 Gas 12 37 - 93 83 Electricity & Heat 2 21 - 62 54
Energy Intensity(TOE/$1000) - 0.7 - 0.8 0.7
Energy Per Capita (TOE)0.8 2.0 2.0 - 2.7 2.4
Fuel Shares in Primary Demand(%) Solids 1 2 2 2 - Oil 70 64 56 50 - Gas 29 34 39 46 - Hydro & Other 1 1 2 2 -
Growth in Energy Primary Demand & Intensity: 1975-1993
GDP Primary Energy Energy IntensityIran 0.4 5.9 5.4Saudi Arabia 3.4 12.1 8.7Other 11 Countries 1.0 7.0 5.9Total Middle East 1.3 7.6 6.2
Final Energy Consumption Growth Trends 1993-2000 2000-2010 1993-2010Capacity Constraints 3.5 4.0 3.8Energy Savings 2.9 3.2 3.1
Source: Adapted by Anthony H. Cordesman from IEA, World Energy Outlook, 1996, pp. 173-177.
The Changing Geopolitics of Energy II 8/12/98 Page 48
Copyright Anthony H. Cordesman, all rights reserved.
Downstream Operations Can Also Have Major Geopolitical Impacts: GulfCooperation Council vs. World Petrochemical Design Capacities: 1993
(Thousand Tons)
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
Et hy l ene Et hy l ene Gl y c ol M et hanol M T BE
GCC Wor l d
6.%
of
World
10.0%
of
World
9.5%
of
World
4.8%
of
World
Source: Adapted by Anthony H. Cordesman from IEA, World Energy Outlook, 1996, pp. 179-181.