© OECD/IEA 2011

Maria van der Hoeven Executive Director

International Energy Agency

International Seminar: “The Future of Energy” Mexico City, 29 February 2012

Global Energy Trends: Focus on oil & gas

© OECD/IEA 2011

Oil prices remain high

Crude prices remain high in historical terms. Oil burden in 2011 marginally exceeds 2008, in both

years standing above 5% of world GDP. Longer term trend to higher prices, but short-term risk

of derailing economic recovery.

Crude FuturesFront Month Close

708090

100110120130

Feb 11 May 11 Aug 11 Nov 11 Feb 12

$/bbl

NYMEX WTI ICE Brent

Source: Platts

World: Oil Burden & Price

0%1%2%3%4%5%6%7%8%9%

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

Nom

inal

Oil

Expe

nditu

res

as %

of

Nom

inal

GD

P

152535455565758595105115

$/bbl

Oil Burden WTI (real, 2008 base)

Contributing to the next shock?

1st oil shock

2nd oil shock

3rd oil shock

Post-recession recoveries

* ICE Brent from 2009 onwards

© OECD/IEA 2011

Oil prices remain high

Crude prices remain high in historical terms. Oil burden in 2011 marginally exceeds 2008, in both

years standing above 5% of world GDP. Longer term trend to higher prices, but short-term risk

of derailing economic recovery.

Crude FuturesFront Month Close

708090

100110120130

Feb 11 May 11 Aug 11 Nov 11 Feb 12

$/bbl

NYMEX WTI ICE Brent

Source: Platts

World: Oil Burden & Price

0%1%2%3%4%5%6%7%8%9%

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

Nom

inal

Oil

Expe

nditu

res

as %

of

Nom

inal

GD

P

152535455565758595105115

$/bbl

Oil Burden WTI (real, 2008 base)

Contributing to the next shock?

1st oil shock

2nd oil shock

3rd oil shock

Post-recession recoveries

* ICE Brent from 2009 onwards

© OECD/IEA 2011

2011- The year of supply surprises

2011 was the year of unwelcome supply surprises (Libya, outages in MENA countries, North Sea unplanned shut-ins)

But non-OPEC supply should recover in 2012

-50 -130 -180 -70 -20-140

-270-350

-190-160

-130

-360-360

-470 -590

-850

-650

-450

-250

-50

1Q11 2Q11 3Q11 4Q11 1Q12

kb/d Non-OPEC Supply 2011 and 1Q12 Selected Shut-ins & Maintenance

Planned Maintenance (N. Sea)Unplanned Outages (N.Sea)Other Unplanned Outages

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

1Q11 3Q11 1Q12 3Q12

mb/d Non-OPEC Supply - Yearly Change

NAM OECD EUR FSUChina Other Asia LAMPG & Biofuels Other Total

0.0

0.4

0.8

1.2

1.6

2.0

2010 2011 2012 2013 2014 2015 2016

mb/d Libyan Crude Oil Capacity

June 2011 December 2011

If 2010 was the year of the post-recession demand surge, then…

© OECD/IEA 2011

2011- The year of supply surprises

2011 was the year of unwelcome supply surprises (Libya, outages in MENA countries, North Sea unplanned shut-ins)

But non-OPEC supply should recover in 2012

-50 -130 -180 -70 -20-140

-270-350

-190-160

-130

-360-360

-470 -590

-850

-650

-450

-250

-50

1Q11 2Q11 3Q11 4Q11 1Q12

kb/d Non-OPEC Supply 2011 and 1Q12 Selected Shut-ins & Maintenance

Planned Maintenance (N. Sea)Unplanned Outages (N.Sea)Other Unplanned Outages

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

1Q11 3Q11 1Q12 3Q12

mb/d Non-OPEC Supply - Yearly Change

NAM OECD EUR FSUChina Other Asia LAMPG & Biofuels Other Total

0.0

0.4

0.8

1.2

1.6

2.0

2010 2011 2012 2013 2014 2015 2016

mb/d Libyan Crude Oil Capacity

June 2011 December 2011

If 2010 was the year of the post-recession demand surge, then…

© OECD/IEA 2011

2012 Uncertainties abound

Weak economic growth expected in 2012, keeping oil demand growth below 1.0 mb/d for 2012.

Iran increases the geopolitical risk premium

2012 likely to be year of two mutually counteracting forces – economic and geopolitical risks.

3.0

3.5

4.0

4.5

5.0

5.5

2010 2011 2012 2013

Y-o-Y, %Global GDP Growth Assumption Difference vs. Previous MTOGM

Current Previous

0

500

1000

1500

2000

2500

3000

0

250

500

750

1000

1250

1500

Jan-11 Apr-11 Jul-11 Oct-11

Iranian Crude Imports, 2011

Total (right) Japan/Korea China/IndiaOther non-IEA Gre/It/Sp/Tur Other Europe

kb/d

2.0

2.5

3.0

3.5

4.0

2010 2011 2012 2013 2014 2015 2016

mb/d Iran Crude Oil Capacity

June 2011 December 2011

© OECD/IEA 2011

2012 Uncertainties abound

Weak economic growth expected in 2012, keeping oil demand growth below 1.0 mb/d for 2012.

Iran increases the geopolitical risk premium

2012 likely to be year of two mutually counteracting forces – economic and geopolitical risks.

3.0

3.5

4.0

4.5

5.0

5.5

2010 2011 2012 2013

Y-o-Y, %Global GDP Growth Assumption Difference vs. Previous MTOGM

Current Previous

0

500

1000

1500

2000

2500

3000

0

250

500

750

1000

1250

1500

Jan-11 Apr-11 Jul-11 Oct-11

Iranian Crude Imports, 2011

Total (right) Japan/Korea China/IndiaOther non-IEA Gre/It/Sp/Tur Other Europe

kb/d

2.0

2.5

3.0

3.5

4.0

2010 2011 2012 2013 2014 2015 2016

mb/d Iran Crude Oil Capacity

June 2011 December 2011

© OECD/IEA 2011

Longer term, oil retains its importance

Renewables & natural gas collectively meet almost two-thirds of incremental energy demand in 2010-2035

But oil retains the largest fuel share at 28%

Additional to 2035

2010

World primary energy demand

0

1 000

2 000

3 000

4 000

5 000

Oil Coal Gas Renewables Nuclear

Mto

e

Source: World Energy Outlook 2011

© OECD/IEA 2011

Longer term, oil retains its importance

Renewables & natural gas collectively meet almost two-thirds of incremental energy demand in 2010-2035

But oil retains the largest fuel share at 28%

Additional to 2035

2010

World primary energy demand

0

1 000

2 000

3 000

4 000

5 000

Oil Coal Gas Renewables Nuclear

Mto

e

Source: World Energy Outlook 2011

© OECD/IEA 2011

Transport sector to drive oil demand

Change in primary oil demand by sector & region in the New Policies Scenario, 2010-2035

Transport net demand grows by 14 mb/d during 2010-2035, outweighing a decline of more than 1 mb/d in other sectors

- 4 - 2 0 2 4 6 8

OECD Americas OECD Europe

OECD Asia Oceania Latin America

E. Europe/Eurasia Africa

Other Asia Middle East

India China

mb/d

Transport

Buildings

Industry

Other

Source: World Energy Outlook 2011

© OECD/IEA 2011

Transport sector to drive oil demand

Change in primary oil demand by sector & region in the New Policies Scenario, 2010-2035

Transport net demand grows by 14 mb/d during 2010-2035, outweighing a decline of more than 1 mb/d in other sectors

- 4 - 2 0 2 4 6 8

OECD Americas OECD Europe

OECD Asia Oceania Latin America

E. Europe/Eurasia Africa

Other Asia Middle East

India China

mb/d

Transport

Buildings

Industry

Other

Source: World Energy Outlook 2011

© OECD/IEA 2011

Iraq is the largest source of oil supply growth

Major changes in world liquids supply in the New Policies Scenario, 2010-2035

The rise in MENA production is over 90% of the growth in global oil output to 2035, while companies operating elsewhere turn increasingly to more

difficult & costly sources

mb/d

Iraq

Saudi Arabia

Venezuela

UAE

Kuwait

0 1 3 4 6

OPEC

5 2

Non-OPEC

Brazil

Canada

Kazakhstan

United States

© OECD/IEA 2011

Iraq is the largest source of oil supply growth

Major changes in world liquids supply in the New Policies Scenario, 2010-2035

The rise in MENA production is over 90% of the growth in global oil output to 2035, while companies operating elsewhere turn increasingly to more

difficult & costly sources

mb/d

Iraq

Saudi Arabia

Venezuela

UAE

Kuwait

0 1 3 4 6

OPEC

5 2

Non-OPEC

Brazil

Canada

Kazakhstan

United States

© OECD/IEA 2011

Changing oil import needs shift concerns about oil security

Net imports of oil

US oil imports drop due to rising domestic output & improved transport efficiency: EU imports overtake those of the US around 2015; China becomes the largest importer around 2020

0

2

4

6

8

10

12

14

European Union

United States

Japan China India ASEAN

Mb/

d

2000

2010

2035

© OECD/IEA 2011

Changing oil import needs shift concerns about oil security

Net imports of oil

US oil imports drop due to rising domestic output & improved transport efficiency: EU imports overtake those of the US around 2015; China becomes the largest importer around 2020

0

2

4

6

8

10

12

14

European Union

United States

Japan China India ASEAN

Mb/

d

2000

2010

2035

© OECD/IEA 2011

Are we entering a Golden Age of Gas ?

Natural gas can enhance security of supply: global resources exceed 250 years of current production; while in each region, resources exceed 75 years of current consumption

© OECD/IEA 2011

Are we entering a Golden Age of Gas ?

Natural gas can enhance security of supply: global resources exceed 250 years of current production; while in each region, resources exceed 75 years of current consumption

© OECD/IEA 2011

The majority of energy subsidies still go to fossil fuels

Fossil-fuels subsidies amounted to $409 billion in 2010 – down from $550 billion in 2008 but still much larger than subsidies to renewables, which reached $66 billion in 2010

World subsidies to fossil fuels consumption & renewable energy

Fossil fuel consumption

Renewable energy production

0

100

200

300

400

500

600

2007 2008 2009 2010

Billi

on d

olla

rs (n

omin

al)

© OECD/IEA 2011

The majority of energy subsidies still go to fossil fuels

Fossil-fuels subsidies amounted to $409 billion in 2010 – down from $550 billion in 2008 but still much larger than subsidies to renewables, which reached $66 billion in 2010

World subsidies to fossil fuels consumption & renewable energy

Fossil fuel consumption

Renewable energy production

0

100

200

300

400

500

600

2007 2008 2009 2010

Billi

on d

olla

rs (n

omin

al)

© OECD/IEA 2011

Improving energy efficiency is the quickest and cheapest way to address energy security, environmental & economic challenges

The IEA has developed 25 recommendations for promoting energy efficiency which could save: 82 EJ/year by 2030 (17% of the current global energy demand)

Governments have a critical role to play in improving energy efficiency:

stimulate investment in energy efficiency

accelerate implementation through national energy efficiency strategies

monitoring, enforcement & evaluation

International collaboration is also vital

Unlocking the potential of energy efficiency

© OECD/IEA 2011

Improving energy efficiency is the quickest and cheapest way to address energy security, environmental & economic challenges

The IEA has developed 25 recommendations for promoting energy efficiency which could save: 82 EJ/year by 2030 (17% of the current global energy demand)

Governments have a critical role to play in improving energy efficiency:

stimulate investment in energy efficiency

accelerate implementation through national energy efficiency strategies

monitoring, enforcement & evaluation

International collaboration is also vital

Unlocking the potential of energy efficiency

© OECD/IEA 2011

0

5

10

15

20

25

30

35

40

2010 2020 2025 2030 2035

Delay until 2017 Delay until 2015

2015

Emissions from existing infrastructure

Energy is at the heart of the climate challenge

Without further action, by 2017 all CO2 emissions permitted in the 450 Scenario will be “locked-in” by existing power plants, factories, buildings, etc

45 6°C trajectory

2°C trajectory

CO2 e

mis

sion

s (g

igga

tonn

es)

© OECD/IEA 2011

0

5

10

15

20

25

30

35

40

2010 2020 2025 2030 2035

Delay until 2017 Delay until 2015

2015

Emissions from existing infrastructure

Energy is at the heart of the climate challenge

Without further action, by 2017 all CO2 emissions permitted in the 450 Scenario will be “locked-in” by existing power plants, factories, buildings, etc

45 6°C trajectory

2°C trajectory

CO2 e

mis

sion

s (g

igga

tonn

es)

© OECD/IEA 2011

Mexico in the global energy context

The IEA projects Mexico’s oil production to gradually decline in the medium term, but then to once again grow in line with the country’s resource potential

Thanks to its large reserves of unconventional gas, Mexico could be among the leaders in any potential ‘Golden age of Gas’

Energy efficiency: Mexico has already had considerable success with its end-use programme

With its vast potential in renewable energy, Mexico could become an avant-garde player in areas such as geothermal, solar and wind energy

Mexico has established itself as a proactive player in both national & international climate policy

© OECD/IEA 2011

Mexico in the global energy context

The IEA projects Mexico’s oil production to gradually decline in the medium term, but then to once again grow in line with the country’s resource potential

Thanks to its large reserves of unconventional gas, Mexico could be among the leaders in any potential ‘Golden age of Gas’

Energy efficiency: Mexico has already had considerable success with its end-use programme

With its vast potential in renewable energy, Mexico could become an avant-garde player in areas such as geothermal, solar and wind energy

Mexico has established itself as a proactive player in both national & international climate policy

© OECD/IEA 2011

Key Messages

In a world full of uncertainty, one thing is sure: rising incomes & population will push energy needs higher

Rising transport demand and upstream costs reconfirm the end of cheap oil

New options are opening up for natural gas, but ‘golden standards’ will be needed if it is to enter a ‘golden age’

Energy efficiency is the first step toward enhancing energy security & climate change mitigation

Despite steps in the right direction, the door to 2OC is closing

© OECD/IEA 2011

Key Messages

In a world full of uncertainty, one thing is sure: rising incomes & population will push energy needs higher

Rising transport demand and upstream costs reconfirm the end of cheap oil

New options are opening up for natural gas, but ‘golden standards’ will be needed if it is to enter a ‘golden age’

Energy efficiency is the first step toward enhancing energy security & climate change mitigation

Despite steps in the right direction, the door to 2OC is closing