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| Energy, Utilities & Chemicals Global Sector
Paris - March 5, 2012
A view of the European Energy Markets
Colette Lewiner
| Energy, Utilities & Chemicals Global Sector
A view of the European energy markets
Recent events are impacting the energy markets
They are changing the electricity and gas short- and longer-term security of supply
Present and future energy mix is evolving
Focus on the French Oil & Gas industry
Conclusions
2
| Energy, Utilities & Chemicals Global Sector
A view of the European energy markets
Recent events are impacting the energy markets
• Middle East events
• Fukushima accident
• Economic downturn
They are changing the electricity and gas short- and longer-term security of supply
Present and future energy mix is evolving
Focus on the French Oil & Gas industry
Conclusions
3
| Energy, Utilities & Chemicals Global Sector
Global demand for oil has increased in 2011
World oil demand increased in 2011 by 0.88 million
barrels per day (mbpd), i.e. +1.01% (to 87.82 mbpd)
compared with 2010 (86.94 mbpd)
According to the latest OPEC projections, worldwide oil
consumption is expected to increase by 1.07% in
2012 (to 88.76 mbdp)
4
„000 b/d „000 b/d
Source: OPEC Monthly Oil Market Report – February 2011
Quarterly world oil demand growth
World oil demand outlook
Source: World Oil Outlook 2011, OPEC
Primary factors driving demand are economic growth and increased requirements in the developing world
Libya, Yemen, Syria, Egypt and Iran… political situation may place global production and transportation at risk
60.0
70.0
80.0
90.0
100.0
110.0
120.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
2010 2015 2020 2025 2030 2035
mbpdmbpd
Other transition economies
Russia
OPEC
China
Southeast Asia
South Asia
Middle East & Africa
Latin America
OECD Pacific
Western Europe
North America
World (right axis)
| Energy, Utilities & Chemicals Global Sector
The rising political tensions in Iran are particularly worrying
for global oil supply
5
Iran‟s oil exports (Jan to June 2011)
After China, the EU is the largest importer of Iranian
oil (about 20%)
In response to the failure of the negotiations on Iran’s
nuclear program, the US and Europe decided sanctions
against Iran, who threatened to close the Strait of Hormuz:
• Strengthening of the US military presence in the Gulf
• Oil embargo from the EU (decided in January 2012 and
due to start in July) which should hit 450,000 to 550,000
barrels a day of Iranian oil exports
But Iran banned crude oil supply to France and the UK
right away
In addition, Japan, South Korea, Taiwan and India could
reduce their purchases (up to 250,000 bl/d). In total,
between 25% and 35% of Iran‟s oil exports could be
impacted
Sourc
e: F
inancia
l T
imes
Source: Financial Times
This situation is benefitting notably Russia and keeps oil prices high.
Traders estimate that if the situation deteriorates, oil prices could rise
towards $150/bl or beyond 35%
of all seaborne traded oil
20%
of oil traded worldwide
14 crude oil tankers
Almost 17 million barrels
Average daily oil flow
through the Strait of
Hormuz (2011)
| Energy, Utilities & Chemicals Global Sector
Refineries closures are putting pressure on oil price volatility
6
Global refining capacity The refinery industry in developed countries
(mainly the US and Europe) is facing an
unprecedented crisis:
• Since the 2008-2009 financial crisis, 2.6 mbd of
refining capacities have disappeared in
developed countries
• An additional cut of 1 mbd* in 2012 is expected
• In the US, refineries currently run at 86% of their
capacity vs. 93% in 2001
• Since mid 2008, nine refineries have closed in
Europe
• Refinery margin have been mostly negative in
2011
On the contrary, due to their strong economic
growth, emerging countries are developing their
refinery capacities
• Between 2008 and 20011, 36 new refinery
facilities were commissioned in India, China,
Middle East and Brazil
• 25 new other refineries are expected to be built
by 2015
Petroplus (a pure refinery player) bankruptcy
is highlighting refineries difficulties
*Merril Lynch estimation
US fuel suppliers could be forced to import gasoline from Europe due to the US
refineries‟ closure while Europe may need to buy diesel from the US, increasing
transportation costs
| Energy, Utilities & Chemicals Global Sector
Oil prices are still driving many other energy prices
Oil prices forecasts uncertainty is increased by
speculation: each barrel traded on the physical
market is traded 35 times on the financial markets
There is some consumption/price elasticity
High present oil prices are linked to tensions in
Middle East and Iran
In euros, the crude oil spot price is at its highest
There is currently a $20 spread between WTI and
Brent, a the consequence of a localized logistic
phenomenon at Cushing, Oklahoma, where WTI is
priced
7
High oil prices impact economic growth (EU‟s oil import costs up 44% in 2011 compared to 2010) and trade exchanges balance
Oil prices
Source: Focus Gaz, February 17, 2012
130
120
110
100
90
80
70
March 2011 Feb 2012 July 2011 Nov 2011
Brent
WTI
Crude oil spot – Brent vs. WTI
Source: Ycharts Source: France inflation
Crude oil spot – Brent in US dollars and in Euros
| Energy, Utilities & Chemicals Global Sector
Fukushima accident first safety lessons learned
Exceptional circumstances: 9.0-magnitude undersea
earthquake off the coast of Japan on March 11, 2011
triggering a tsunami that travelled up to 10 km inland.
Fukushima nuclear plant: 6 boiling water reactors
(BWR) maintained by TEPCO have been hit by the
earthquake and tsunami:
• Reactors 4, 5 and 6 were shut down prior to the earthquake
for maintenance.
• Remaining reactors shut down automatically after the
earthquake. Grid electricity supply for cooling purposes
collapsed and then the tsunami flooded the plant, knocking
out emergency generators.
• 20 km radius evacuation around the plant from March 12
Highest rating (level 7) on the International Nuclear
Event Scale. Second level 7 rating in history, following
Chernobyl
Need to design plant infrastructures for really exceptional
earthquakes and tsunamis
Simultaneous Natural Catastrophes have to be taken
into account
Spent fuel storage and management policy to be
rethought
Emergency measures to be revisited
Cooling systems redundancy to be re-assessed
Radiological permanent control on the site and around
Crisis management and crisis communication to be re-
designed
Nuclear bodies and governance
8
In December 2011, the Japanese Prime Minister, Yoshihiko Noda, confirmed that the four Fukushima Daiichi nuclear units of Tokyo Electric Power Company have been brought to a
condition “equivalent to „cold shutdown‟”
The accident First safety lessons learned
| Energy, Utilities & Chemicals Global Sector
0 50,000 100,000 150,000 200,000 250,000
Switzerland
Brazil
Czech Republic
Finland
Spain
Sweden
Turkey
Vietnam
South Africa
Germany
Saudi Arabia
UAE
Canada
Ukraine
United Kingdom
South Korea
France
Japan
India
Russia
USA
China MWe
Operable
Under construction
Planned
Proposed
Nuclear new build:
the vast majority in Asia, Russia and Middle East Worldwide, 434 reactors are in operation, 61 under construction and 495 planned or proposed
(February 2012, World Nuclear Association)
9
Source: World Nuclear Association
The vast majority of new constructions and existing plants in operation should continue with some delays and more safety focus. In addition, lifetime extension of Spanish and French
reactors has been authorized The IEA** forecasts that nuclear output will rise by more than 70% over the period to 2035
Overview of existing nuclear plants and project capacities (as of February 2012) The final number of planned or proposed reactors
is difficult to assess. However, two points are clear:
• The proportion of new, safer “Generation 3 reactor”
builds will increase
• The new projects will also be impacted by economic
factors (low gas prices)
It is worthwhile mentioning that:
• TVA in the US has decided to complete Bellefonte 1
reactor, that the Nuclear Regulatory Commission has
certified the design of Westinghouse Electric Co.'s
AP1000 reactor and that Southern Company is
building 2 new nuclear plants in Vogtle, Georgia
• Argentina inaugurated its third nuclear power plant,
Atucha II
• Finland announced a new build, the first
announcement of a new site anywhere in the world
since the Fukushima accident
• Russian Rosenergoatom has received a license for
building the Kaliningrad plant
• No.1 nuclear unit in Zhejiang Sanmen (China) has
restarted the infrastructure construction project
*IEA: International Energy Agency **World Energy Outlook 2011
| Energy, Utilities & Chemicals Global Sector
1
43
1 1 1 1 12 2
1
1110
5
10
18
910
3
11
7
5
23 3
5
1
3 3
1 1
0
5
10
15
20
4 9 11 13 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 38 39 40 42 44
Nu
mb
er
of
un
its
Reactors' age (in years)
Distribution of reactors under operations by age (EU-27)
Sourc
e: W
orld
Nucle
ar
Associa
tio
n
The safety inspections launched on existing plants should
lead to additional investments
Safety tests aim to assess:
• Plants’ resistance to simultaneous and exceptional catastrophes
(flooding and earthquakes)
• On site emergency preparedness and information
• Radiation protection of people and the environment
• And in Japan, change of governance around nuclear safety questions
For all 14 EU nuclearized Member States, national nuclear
regulators have released their “stress tests” reports
• No country will be required to take any of its plants off line
10
Provided reactors are run safely, the consequences of the Fukushima accident should be less important than viewed just after the accident
• France: ASN (French Safety Authorities) stated in December 2011 that no plants needed to be immediately shut down, but that steps should be
taken as "soon as possible" to improve safety at the 58 reactors (investments estimated between €10 to 15 billion)
• UK: “No fundamental weaknesses in design and resilience at UK nuclear power plants“ according to the Office for Nuclear Regulation
• Spain: according to the Nuclear Safety Council (CSN), all reactors would be able to withstand earthquakes and floods
Outside Europe, nuclear stress tests are also on-going:
• China: 34 reactors passed the safety checks of which 26 were being built. A new China National Plan for Nuclear Safety is being formulated, and
approval for new projects should follow its adoption, at a pace of three or four per year, which represents slower growth than before.
• US: inspections carried out at all 104 operating nuclear reactors. The nuclear regulator (NRC) stated that “every plant has the capability to effectively
cool down reactor cores and spent fuel pools following extreme events”
• Japan: stress tests consistent with IAEA standards. For the first 2 examined units (Ohi 3 & 4), the nuclear regulator (NISA) stated that the Utility
(Kansai Electric Power) has taken sufficient measures to prevent a similar accident to the one at the Fukushima Daiichi plant. Still, 52 reactors out of
54 are stopped
Additional CAPEX and OPEX will push nuclear electricity costs up. Nevertheless, nuclear energy stays competitive.
| Energy, Utilities & Chemicals Global Sector
-2% -3%-1%
-3%-2%
0% -4%0%
1%
-2%
-5%
-10%-8%
-10%
-7%
-16%
-12%
-4%-6%
-2%-4%
-12%-14%
-22%
Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11
Electricity
Gas
There is some elasticity between the economic situation and
the energy consumption
In 2009, electricity and gas consumption dropped in Europe (-4.7% and -6.1% respectively) due to the crisis, in 2010,
they increased again (+4.1% and +7.0%) thanks to the economic recovery and colder than average winter
temperatures. Wholesale electricity and gas prices followed the same trend.
In 2011, European electricity and gas consumption decreased respectively by 2.7%* and 8-9%**, mainly due to a
mild weather. In France, electricity consumption decreased by 6.8% (weather-adjusted: +0.8%) and gas
consumption by 13.4% (weather-adjusted: -1.9%).
11
Source: ENTSO-E, BP – Capgemini analysis, EEMO13
Evolution of electricity and gas consumption (M/M-12) non-weather-adjusted
Source: SG Energy Pulse – Capgemini analysis, EEMO13
A second economic slowdown would impact negatively the energy consumption and prices
EU electricity and gas consumption
(non-weather-adjusted)
* Société Générale Energy Pulss (Focus group representing 63% of European electricity consumption) **Cedigaz provisional figure
3,294
5,336
3,136
5,010
3,265
5,363
3,177
4,880
Electricity Gas
2008 2009 2010 2011
-4.7%+4.1%
-6.1% +7.0%
-2.7%
-8-9%
| Energy, Utilities & Chemicals Global Sector
A view of the European energy markets
Recent events are impacting the energy markets
They are changing the electricity and gas short- and longer-term security of supply
• Electricity
• Gas
Present and future energy mix is evolving
Focus on the French Oil & Gas industry
Conclusions
12
| Energy, Utilities & Chemicals Global Sector
Peak loads are increasing year-on-year threatening security of
supply on cold days
Sourc
e: E
NT
SO
-E –
Capgem
ini analy
sis
, E
EM
O13
&
&
&
&
&
(&
&
&
&&
& (& & &
& &&
& & &
( & & &
9.1%
3.6%
2.1%
3.9%
1.5%
-0.1%2.2%
0.1%
0.1%
1.6%5.8% 0.3% -1.4%
9.3% 6.8% 6.6%
0.2% 10.3%0.1%
2.1% 10.2% 9.3%
-23.6% 7.9% 3.0% 1.9% 1.5%
&
&
&
&
&
&
& &
&
(
&
&
&
& & &&
&&
& & &
( & ( & &
9.5%
4.7%
8.8%
0.1%
2.6%
6.2%3.2% 9.3%
1.0%
-0.6%1.7%
4.8%
3.6%
1.1% 2.0% 2.6%1.0%
0.3%1.1% 1.1% 4.1% 5.1%
-0.4% 1.8% -1.3% 4.9% 6.8%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
DE FR IT ES UK SE PL NO NL AT BE CH FI CZ PT RO DK GR BG HU IE SK LT SI LV EE LU
Tota
l genera
tion c
apacity
and p
eak lo
ad [
MW
]
CO2 emitting generation capacityNon-CO2 emitting generation capacityPeak load 2010Total generation capacity evolution 2010 vs. 2009 (notified if below or above +/-3%: +3.4%)Peak load evolution 2010 vs. 2009 (notified if below or above +/-3%: +3.4%)
Total installed capacity for Europe in 2010: 882,712 MW(+3.7% compared to 2009)
Peak load, generation capacity and electricity mix (2010)
Nine countries registered an all-time high peak loads in 2010 due to cold temperatures. During the cold wave early 2012, France and Poland recorded all time record electricity
demands and Germany has activated its reserve coal power plants
13
Peak load 2012: 101,700 MW
Peak load 2012: 25,844 MW
| Energy, Utilities & Chemicals Global Sector
France recorded a new peak load on February 8, 2012 due to
the cold spell
14
A holistic approach to manage the peak load needs to be implemented. It should encompass: • Generation capacities
• Demand response: tariffs or other types of demand response programs • Incentives to build peak generation capacities
• Grids reinforcement • Incentives for energy savings
Oil-fired + peak
capacities5%
Coal5%
Gas3%
Nuclear58%
Wind2%
Hydro13%
Others6%
Imports8%
Source: RTE
Generation mix on February 8, 2012 at 19:00 The French peak load reached 101,700 MW at 19:00
• Nuclear plants‟ availability largely contributed: 59,165 MW (55 reactors
out of the 58 were in operation)
• France imported 7,845 MW from all its neighboring countries
• On EPEX Spot, day-ahead electricity prices jumped to €1,938/MWh
• RTE activated it EcoWatt demand response program in Brittany and PACA
regions which resulted in a consumption reduction of respectively 2% and 3%
• EnergyPool curtailed 20 MW of industrial consumption which have been
used for Brittany region
In 2011, net new generation capacities have been added:
• 850 MW of CCGT
• 1,250 MW of renewable energies
• 450 MW of fossil-fired plant have been decommissioned
In the meantime, tariff-related demand response capacities have
decreased from 6,000 MW in 2004 to 2,000 MW in 2011
| Energy, Utilities & Chemicals Global Sector
NO
DK
LIBYA
FR
ES
GR
IT
RO
BG
PL
SK
CZ
AT HU
SI
DE
LU
CH
FI
EE
LT
LV
IE
BE
RUSSIA
MedgazGALSI
SE
TGI
BBLNL
UK
ALGERIA
Interconnector projects –
AFRICA-EUROPE
GALSI
Capacity (bcm) 8
To be commissioned 2015
Interconnector projects – NORTH-
EAST EUROPE
Nord Stream
Capacity 2 x 27.5 bcm
To be commissionedEnd 2011
and 2012
TAP
PT
Interconnector projects - SOUTH-EAST EUROPE
NabuccoSouth
Stream
White
StreamTGI TAP
South-East
Europe
Capacity (bcm) 26-31 63 32 12 10+10 10
To be commissioned 2017End
20152016 2017 2017 n.a.
Pipeline projects
Projects of new pipelines (planned or under construction)
Built segments of pipelines under construction
Interconnection projects financially supported by the European Energy Recovery Plan (EERP)
LNG terminals
Existing
Under construction and/or included within Mandatory Planning
Under study or proposed
GALSIATLANTIC
65.9
123.3
EAST. MED
21.3
62.3
WEST. MED
56.2
87.9
BALTIC & NORTH SEA
33.1
108.7
Nominal annual capacity by receiving zone
(in bcm)
Existing Forecast by 2015
Source: GIE gle, IEA WEO 2011 – Gas, Capgemini analysis, EEMO13
Multiple southern pipelines routes are in competition. Their future will depend on gas substitution to nuclear generation,
unconventional gas development pace and economy
Map of pipelines and LNG
terminals projects (2010)
New pipelines and LNG terminals are increasing gas security
of supply
Nord Stream delivers
Russian gas since November
2011 (27.5 bcm/year
capacity, to double by the
end of 2012)
South Stream (63 bcm/year,
to be finalized in 2015)
• March 2011: EDF and
Wintershall (BASF subsidiary)
acquired 15% stake each. Eni
has 20% and Gazprom 50%.
Nabucco (31 bcm/year
expected capacity by 2018)
• Budget of €7.9 billion to
potentially rise to €15 billion
Trans Adriatic Pipeline
(TAP), supported by Statoil
TGI, supported by Edison
and DEPA
15
South-East Europe (10 bcm/year),
supported by BP
| Energy, Utilities & Chemicals Global Sector
Unconventional gas is changing the picture
Unconventional gas accounts for 4% of the world total of proven gas reserves and for 12% of global production in
2010 (to increase to 30% by 2040*).
The US account for 3/4 of global unconventional output, increasing production 4 fold since 1990 (420 bcm in 2010).
The latest US Energy Information Administration report shows significantly larger unconventional gas resources in Europe
• France: resources estimated at 5,000 bcm (around 100 years of consumption). They are equally situated in two basins (North and South-East)
• Germany: resources amount to 20 times less and British resources to 9 times less
• Only Poland would have equivalent resources to France
It would be regrettable if the present French decision to cancel exploration permits prevents shale gas exploration
16
Shale gas changes the gas perspective: • It increases the total gas resources to 250 years of consumption
• It is widely distributed • It is cheap ($3/Mbtu in the US)
• It allows to repatriate gas consuming industries as chemicals and to fight against deindustrialization
Source: EIA
Global unconventional natural gas resources (tcm)
16
* ExxonMobil Energy Outlook, December 2011
NO: 2,324
FR: 5,040
PL: 5,236
SE: 1,148
FR: 5,040 Largest technically recoverable shale gas resources (bcm)
| Energy, Utilities & Chemicals Global Sector
A view of the European energy markets
Recent events are impacting the energy markets
They are changing the electricity and gas short- and longer-term security of supply
Present and future energy mix is evolving
• Gas
• Renewables
• Electricity costs
Focus on the French Oil & Gas industry
Conclusions
17
| Energy, Utilities & Chemicals Global Sector
The Fukushima accident has triggered a debate on the
present and future energy mix
There is a debate on nuclear phase-
out. Before asking ourselves if it is
feasible, one needs to ask if it is
desirable. An immediate nuclear
phase-out is challenging.
A long-term phase-out is possible but
needs to be assessed against the
following criteria:
• Sustained development: global
warming / greenhouse gas emissions
decrease
• Security of supply
• Electricity generation costs
• Social acceptance
The IEA* has examined a Low Nuclear
Scenario (no new nuclear plant is built
in OECD countries, non-OECD
countries build only half of the projected
nuclear plants and the operating
lifespan of existing nuclear plants is
limited to 45 years) which
consequences would be to:
18
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
BE BG CH CZ DE ES FI FR UK HU IT LT NL PL RO SE SI SK
Solar + Biomass
Wind
Hydro
Other fossil
Gas
Lignite + Coal
Nuclear
2010 mix: lef t-hand side bar
2025 mix: right-hand side bar
2010 and 2025 electricity mix (as of June 2011)
Nuclear energy should slightly decrease its worldwide share while gas and renewables should
increase theirs, leading to electricity costs increase
Source: ENTSO-E – Capgemini analysis and estimations, EEMO13
* AIE: Agence Internationale de l‟énergie , WEO 2011
• Put additional upward pressure on energy prices
• Raise additional concerns about energy security
• Make it harder and more expensive to combat
climate change:
| Energy, Utilities & Chemicals Global Sector
Power plant’s consumption is the main cause for gas demand
growth
In the new IEA GAS* scenario:
• Gas share of primary energy consumption
reaches 25% in 2035 (more than coal, slightly
less than oil)
• CO2 emissions are not compliant with
climate change objectives and lead to a high
+3.5°C temperature increase instead of an
acceptable +2°C
19
On the longer term, increased gas consumption for flexible electricity
generation will require more flexibility in storage and pipeline management
* GAS: Golden Age of Gas, IEA WEO 2011
World primary natural gas demand by sector and scenario
Source: World Energy Outlook 2011: Golden Age of Gas Report
CO2 emissions in the GAS relative to the New Policies, 2035
Source: World Energy Outlook 2011: Golden Age of Gas Report
| Energy, Utilities & Chemicals Global Sector
Long-term contracts price Spot price
Gas is not a global market. Very different regional pricing systems
US spot prices could go up on the mid-term triggered by the new EPA
(Environment Protection Agency) regulation on air pollution (Cross State Air
Pollution Rule) that could lead to 20% of US coal-fired plants phase-out and their
replacement by gas
Beginning of 2012, Gazprom has agreed to reduce by 10% the price of its
long-term contracts to Europe
20
US spot gas prices are 1/3 of long-term European gas prices. For how long?
Source: Focus Gaz January 2012
Source: Gas Exchanges web sites, SG Commodities Research, BMWI – Capgemini analysis, EEMO13
Gas spot prices Gas prices evolution
In €/MWh ($4.4/MBtu=€10.6 /MWh)
Europe versus US gas prices 0
20
40
60
80
100
0
10
20
30
40
50
Bre
nt p
rice
[€/b
l]
Ga
s p
rice
s [€
/MW
h]
DE - Import price NL - TTF
BE - Zeebrugge UK - NBP
DE - NCG FR - PEG Nord
Brent month ahead
| Energy, Utilities & Chemicals Global Sector
Renewable energies have continued their development
21
A stable governmental policy is key for renewables development as they still need governmental subsidies.
The eurozone sovereign debt issues should lead to a decrease of those subsidies
Sourc
e: E
ur’O
bserv
er
baro
mete
rs –
Capgem
ini analy
sis
, E
EM
O13
Growth rate of renewable energy sources
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150
Gro
wth
(%
)
Electricity production (TWh)
Solar PV
Growth (abs.)Capacity Growth (%)
DE
IT
CZ
SK
FR
SI
DE
CZ
FR
2005
2010
2009
2008
2007
2006
Top 3 countries ranked by:
Capacity installed* Growth** (absolute)
2. ES
1. DE
3. IT
2. FR
1. SK
3. SI
* Volume for wind, small hydro, geothermal and solar PV in MW and for biogas and biomass in TWh
** Relative growth additionally displayed for solar PV and wind
Wind
Growth (abs.)Capacity Growth (%)
DE
ES
IT
ES
DE
FR
RO
BG
PL
Biomass
DE
FI
SE
PL
SE
NL
+
2005 2006
2007 2008 2009
2010
2009
As of May 2011, 10% of the
generation plants under
construction are from renewable
energy sources (vs. 7% in 2009)
In 2010, wind power provided the
largest output (147 TWh) but had a
declining growth due to onshore
favorable sites saturation and local
negative reactions
Many governments have or are
launching large offshore wind
programs
• September 2010: 300 MW offshore
wind farm inaugurated in the UK
• In July 2011, France launched a
tender for 3,000 MW
• North Sea: 400 MW (Germany) and
325 MW (Belgium) under
construction
• Nuclear phase out in Germany should
boost wind power
In 2010, solar PV power had the
fastest growth (+80%)
Fluctuating governmental policies
on solar subsidies are damageable
(Germany, Spain, France, Italy, …).
Several solar companies went bust
and China is dominating the market
| Energy, Utilities & Chemicals Global Sector
1,450
1,500
1,550
1,600
1,650
1,700
1,750
1,800
1,850
1990 1995 2000 2005 2010 2015 2020
EU
-27
Pri
ma
ry e
ne
rgy c
on
su
mp
tio
n [M
toe
]
Historical evolution of primary energy consumptionPath to reach 2020 target2020 target for EU-27
Projection with current measures in place(as per the March 2011 EU Energy Ef f iciency Plan)
-20%
-9%
80
85
90
95
100
105
110
1990 1995 2000 2005 2010 2015 2020
EU
-27
GH
G e
mis
sio
ns [b
ase
ye
ar=
10
0] Historical evolution of GHG emissions
Path to reach 2020 target2020 target for EU-27
-20%
Status on the 2020 EU objectives
The 2009 economic crisis and its consumption reduction
had a positive effect on EU greenhouse gases (GHG)
emissions that dropped by 7.1%
In 2010, with the economic recovery, GHG emissions
increased by 2.4% (+3.8% for the ETS sectors). For
2011, experts project a slight increase of the CO2
emissions for the ETS sector (+2.6%*)
In its March 2011 Energy Efficiency plan, the EU
estimated that with current measures only half of the
objective would be attained and developed a new draft
Directive in June 2011 focusing on:
• Triggering better energy efficiency of public buildings
• Demand response programs through smart meters roll out
• White Certificates mechanisms
• Better usage of cogeneration especially for district heating
• In 2013, the EU will re-assess the situation
22
Sourc
e: B
P s
tatistical r
eport
2011,
Euro
pean E
nvironm
ent
Agency,
Eur’O
bserv
er
– C
apgem
ini analy
sis
, E
EM
O13
An economic slowdown would push CO2 emissions and energy consumption down but would negatively impact
renewable‟s share in the final consumption
EU-27 GHG emissions
EU-27 primary energy consumption
*Deutsche Bank Forecast
| Energy, Utilities & Chemicals Global Sector
39 4249.5 49.5 54.45 56.95 57.5
35
554.95
2.5 0.5
43
75
0
10
20
30
40
50
60
70
80€/MWh
Champsaur ARENH
French Court of Auditors
2010
Lifetime extension 2011-25
Decommissioning Radioactive waste management
Full cost
Energies 2050
Historical nuclear 2030
New nuclear 2030
Extensive analysis have been carried out on the nuclear
generation costs and energy mix scenarios in France
23
Nuclear generation costs in France
Source: Les coûts de la filière nucléaire, January 2012 and Energies 2050, February 2012 – Capgemini analysis
A working group, Energies 2050, set up by the
French Minister of Industry, Energy and the Digital
Economy examined four energy scenarios:
1. Lifespan extension of existing reactors
2. Quicker adoption of 3rd generation nuclear reactors
3. Progressive reduction of nuclear energy in the mix
4. a. Nuclear phase out (more fossil fuel energy)
4. b. Nuclear phase out (more RES)
The final price to end-customers is a combination of:
• Energy generation: 40%
• Transportation and distribution: 33%
• Taxes: 27%
50 60 70 80 90 100 110
Nuclear phase out (more RES)
Nuclear phase out (more fossil fuel energy)
Progressive reduction of nuclear energy in the mix
Quicker adoption of 3rd generation nuclear reactors
Lifespan extension of existing nuclear reactors
Source: Energies 2050, February 2012 – Capgemini analysis
Assumptions on electricity generation costs by 2030 (€/MWh w/o taxes)
Energies 2050 commission recommends extending nuclear
reactors lifespan
1
2
3
4a
4b
| Energy, Utilities & Chemicals Global Sector
A view of the European energy markets
Recent events are impacting the energy markets
They are changing the electricity and gas short- and longer-term security of supply
Present and future energy mix is evolving
Focus on the French Oil & Gas industry
Conclusions
24
| Energy, Utilities & Chemicals Global Sector
France produces only a fraction of its oil and gas
consumption
25
Final energy consumption in France (2010)
Oil
Natural gas
Coal
Electricity (81% from
nuclear energy)
Other
Source: UFIP
Oil Natural gas
Oil and gas fields in France
In addition to Total, foreign players are
operating on the oil and gas E&P
French market:
• Vermilion (Canadian-based company)
already the first E&P operator in France,
has increased its market share (reaching
75% of the French oil production) thanks
to the purchase of a large part of Total’s
assets in November 2011
French oil and natural gas production
covers respectively only 1% and 2% of
the country‟s needs (annual oil
production of 896,000 t and natural gas
production of 745 mcm, however:
Providing hydraulic fracturing prohibition law is revisited, allowing shale gas exploration and production and the
discovery off the French Guiana materializes, France could improve its energy security
Oil production by company as of
January 2011
Source: UFIP
• Recent discovery made by Tullow, Total, Shell and Northpet off the French
Guiana coast could multiply by 5 the current oil production
• Shale gas reserves could be of 5,000 bcm, i.e. 100 years of consumption. The
figure is still theoretical since the government repealed all shale gas permits for
exploration in October 2011
| Energy, Utilities & Chemicals Global Sector
The French refinery industry is facing an unprecedented crisis
with negative refining margins
26
Final oil products consumption in France (2010)
Source: UFIP
Gasoline
Jet fuel
Diesel fuel
Heating fuel
Heavy fuel
Naphtha
The five operators (Total, Esso, Petroplus, Petrochina-Ineos and
LyondellBasell) have a total refining capacity of 81.8 Mt/year, in line
with the demand (82 Mt/year) but unbalanced (France produces mainly
gasoline but consumes mainly diesel fuel)
• In 2010, France imported 18 Mt of diesel fuel (i.e. half of its consumption) and
exported 5 Mt of gasoline (i.e. 39% of its production)
• France implemented the most favorable fiscal policy to diesel fuel in Europe,
resulting in 2010 in 73% of registration of diesel vehicles (vs. 50% in Europe)
Overcapacity in refinery due to energy efficiency improvements, oil
products substitution and industrial activity decrease has worsened
since 2009 in Europe and in France
• Refined products are sometimes sold at a price close to the crude oil price
on the Rotterdam market
• In Europe, refining margins dropped by 60% since 2009
• In France, the refining margin stood at €14/t in 2011 vs. fixed and variable
costs between €20 and €25/t
• The US is a traditional importer of European gasoline but the demand is
expected to decrease by 2020 and US refineries turned again competitive due to
the rapid shale gas development
Shell has agreed to help Petroplus French refinery of Petite Couronne
to restart activity for six months
Since 2009, the French refining industry lost over €2 billion. It is estimated that over €8 billion are needed to transform
the European refinery facilities to produce more diesel
European oil products demand in 2030 vs.
refinery production in 2007
European
production in 2007
European demand
in 2030
LPG
Naphtha
Gasoline
Jet fuel
Diesel fuel /
Heating fuel
Lubricants and
specialties
Heavy fuel
So
urc
e: U
FIP
| Energy, Utilities & Chemicals Global Sector
A view of the European energy markets
Recent events are impacting the energy markets
They are changing the electricity and gas short- and longer-term security of supply
Present and future energy mix is evolving
Focus on the French Oil & Gas industry
Conclusions
27
| Energy, Utilities & Chemicals Global Sector
Conclusions
Recent events are putting Energy questions in the spot light
• BP accident in Gulf of Mexico highlighting the deepwater production
difficulties and strengthening regulations
• Nuclear Fukushima plant accident slowing down the nuclear
« renaissance »
• Middle East and Arab countries political instability threatening oil and
gas supply
In the short-term: the energy consumption (post 2009 economic
crisis) growth could be stalled by EU country’s recession
In the long-term, we can expect:
• Higher energy prices
• Decreased security of supply
• More greenhouse gases emissions
• Increased need for investments
In all cases, customers in developed countries should change
their behavior and increase their energy savings focus
28
Governments and Regulators have a key role to play: • To make the needed investments happen
• To implement a sound energy and CO2 savings policy
« Energy Orb » (PG&E) gives visual
indications to clients involved in energy
demand management programs
| Energy, Utilities & Chemicals Global Sector
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consulting, technology and outsourcing services. The Group reported 2011 global revenues of EUR 9.7
billion. Together with its clients, Capgemini creates and delivers business and technology solutions that fit
their needs and drive the results they want.
A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative
Business ExperienceTM, and draws on Rightshore ®, its worldwide delivery model.
With EUR 670 million revenue in 2011 and 8,400 dedicated consultants engaged in Utilities projects
across Europe, North & South America and Asia Pacific, Capgemini's Global Utilities Sector serves the
business consulting and information technology needs of many of the world’s largest players of this
industry.
More information is available at www.capgemini.com/energy.
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About Capgemini
29
| Energy, Utilities & Chemicals Global Sector
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