Energy Security in an International Context:

The Challenges

Herzliya Conference January 2008Ann Eggington

Office of Global Energy DialogueInternational Energy Agency

Energy Security

DEMAND ENVIRONMENT

PHYSICAL SECURITY

GEOPOLITICSTECHNOLOGY

INVESTMENT

RESERVESAFFORDABILITY

Original Artwork By Marjory Spielman

Reference Scenario: World Primary Energy Demand

© OECD/IEA, 2007

Global demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms

Oil

Coal

Gas

BiomassNuclear

Other renewables

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

1970 1980 1990 2000 2010 2020 2030

Mto

e

Reference Scenario:

New Light-Duty Vehicle Sales in China

China’s oil imports jump from 3.5 mb/d in 2006 to 13 mb/d in 2030 – as car ownership increase 7-fold to 140 per 1 000 people

2

4

6

8

10

12

14

16

18

1995 2000 2005 2010 2015 2020 2025 2030

milli

on

Overtake US sales

Overtake Japan sales

0

© OECD/IEA, 2007

CO2 Emissions - 450 Stabilisation Case

By 2030, emissions are reduced to some 23 Gt, a reduction of 19 Gt compared with the Reference Scenario

10

15

20

25

30

35

40

45

2005 2010 2015 2020 2025 2030

Gt o

f CO 2

CCS in industryCCS in power generationNuclearRenewablesSwitching from coal to gasEnd Use electricity efficiency

End Use fuel efficiency

Reference Scenario

450 Stabilisation Case27 Gt

42 Gt

23 Gt

Energy-Related CO2 Emissions

© OECD/IEA, 2007

Proven Oil Reserves by Region, end-2005

179132

115104

9880

6039

3621

18151311119876

267

0 50 100 150 200 250 300

Saudi ArabiaCanada

IranIraq

KuwaitUAE

VenezuelaRussia

LibyaNigeria

United StatesChinaQatar

MexicoAlgeria

BrazilKazakhstan

NorwayAzerbaijan

India

billion barrels

( reserves-to-production ratio, years )

(213)(94)

(171)(117)

(109)(103)

(18)(65)

(41)

(14)(52)

(77)

(11)

(11)(23)(19)

(25)(8)(48)(24)

Proven Gas Reserves and Production by Region

Middle East

Transition economies

OECD North America

OECD Pacific

OECD Europe

Developing Asia

Africa

Latin America

0

50

100

150

200

250

300

0 200 400 600 800 1 000

production (bcm)

rese

rves

-to-p

rodu

ctio

n ra

tio (y

ears

)

© OECD/IEA, 2007

A Rocky Time for Energy MarketsA Rocky Time for Energy Markets

RussiaPolicy

RussiaPolicyUS

Refinery Bottlenecks

US Refinery Bottlenecks

EuropeGas Supplies

EuropeGas Supplies

EuropeOil Supplies

EuropeOil Supplies

IranNuclear Ambition

IranNuclear Ambition

Iraq: Sabotage

Iraq: Sabotage

NigeriaCivil Unrest

NigeriaCivil Unrest

VenezuelaResource Nationalism

VenezuelaResource Nationalism

N-KoreaNuclear Ambition

N-KoreaNuclear Ambition

US Hurricanes

US Hurricanes

ChinaDemand increase

ChinaDemand increase

Strait of Malacca Piracy

Strait of Malacca Piracy

IndonesiaLNG exports

IndonesiaLNG exports

TOWARDS A SOLUTION

• Improved transparency• Technology• Energy efficiency• AND…

Slide 10 of 12

The industry’s track record in pushing the limits of technology to access deepwater resources is impressive – and will continue towards reservoirs in

greater depths and farther away from the coastline.

Ongoing Evolution of Deepwater TechnologyOngoing Evolution of Deepwater Technology

Courtesy of Shell

Promote energy efficiency:The essential first step

0%

1%

2%

3%

1973 - 1990 1990 - 2004

Ave

rag

e an

nu

al p

erce

nt c

han

ge

Actual energy use

Energyefficiency

improvements

Actual energy use

Energyefficiency

improvements

Hypothetical energy use without energy efficiency improvements

Since 1990, the rate of energy efficiency improvement in IEA countries has been less than 1% per year

– much lower than in previous decades. We must - and we can - do better!

Source: Energy Use in the New Millennium (IEA, 2007)

Major World Oil Supply Disruptions

2.0

2.0

4.3

5.6

4.1

4.3

2.1

2.6

2.3

1.5

0.0 1.0 2.0 3.0 4.0 5.0 6.0

Nov 1956 - Mar 1957

Jun - Aug 1967

Oct 1973 - Mar 1974

Nov 1978 - Apr 1979

Oct 1980 - Jan 1981

Aug 1990 - Jan 1991

Jun - Jul 2001

Dec 2002 - Mar 2003

Mar - Dec 2003

Sep 2005

Gross Peak Supply Loss (mb/d)

Hurricanes Katrina\Rita

War in Iraq

Venezuelan Strike

Iraqi Oil Export Suspension

Iraqi Invasion of Kuwait

Outbreak of Iran-Iraq War

Iranian Revolution

Arab-Israeli War and Arab Oil Embargo

Six Day War

Suez Crisis

Unit: million barrels

Crude, NGLs and Feedstocks Finished Product

North AmericaEurope

Pacific

2

690

615 632

Public Industry

518

236170

387

Public Industry

245

385

12 182

Public Industry

Stockholding in IEA CountriesCurrent stocks

Total IEA Stocks by Region (end June 2007)

© OECD/IEA, 2007

North American Blackout

August 14th 2003, 16:00

© OECD/IEA, 2007

Italy left in the Dark

28th September 2003, 03:30

Spain

France

UK

Italy

© OECD/IEA, 2007

The Welfare Gap – Africa Permanently in the Dark