International Market

Top 50 Energy Companies by Market Capitalisation, end 2000, %

Other Oil19.3

ExxonMobil16.6

Royal Dutch/Shell11.7

TotalFinaElf6.0

BP10.0

Power &gas firms

36.4

Total$1.8tmTotal

$1.8tm

Source: Petroleum Finance Company

International “Oil & Gas Deals”

• Concession from country (10-20 years)• Structure: 40% company and 60% country• Multi-national financing, project financing,

debt financing (debt for equity swap)• World Bank, EBRD

O& G Journal - 9/25/2000

International PerspectiveDeveloped and Developing

Countries•Fossil Fuels•Climate Change•Market Economies•Political Alliances•$2 trillion/yr Global Energy Market

Energy Consumption per Head*, 1995

Source: World Energy Assessment

North America

Western Europe

Central andEastern Europe

Pacific Asia

Latin America

Sub-SaharanAfrica

South Africa

0 50 100 150 200 250 350300 gigajoules

* Includes non-commercial energy

Global Primary Energy Consumption

12,000

10,000

8,000

6,000

0

14,000

4,000

2,000OECD

Development countries

80 85 90 95 2000 05 10 15 20

Forecast

Source: International Energy Agency

Transition economies

Millio

n To

nne

s of O

il Eq

uiva

len

t

Energy issues

• Europe (Green movement/ nuclear)

• Russia/FSU (E. Europe, the “Stans” ) market share (v. OPEC)

• Latin American (opportunity)

• SE Asian (production, demand, control)

• Africa (war, politics, corruption)

Kyoto Accord Discord

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Oil Price, Supply and Demand, Inequities

• Physical constraints (pipelines, refineries)• Economic conditions (poor economy-price

increase hurts; strong economy-price increase not as significant)

• Taxes (discourage consumption; favor one fuel over another; fund gov’t services; environment)

• Developing countries may subsidize consumption to stimulate economy

• Leaders subsidize cost to stay in power (unsustainable)

World Natural Gas Reserves

• Gas is of increasing significance worldwide

• Est. 900 of the 2,000 tcf of world undiscovered gas reserves “stranded”

• New technologies/solutions: LNG, GTL

• “Clean fuels” strategies become more important world wide

LNG

• The large LNG plants are in Indonesia, Algeria, Nigeria and Trinidad. One of largest underway at Sakhalin (9.6mmt/yr)

• LNG is one way to move “stranded gas” to market. Some countries, eg. Japan, rely heavily on LNG imports.

• LNG in the US: is it economic? Environmental pros/cons; energy security/balance of payments issues

Russia

• Heavily dependent on oil revenue• Russia needs $18.50/bbl to meet its budget

obligations• Daily output of 7mmbo• Increased drilling by 50%• Govt building 2 new pipelines to Baltic and

Black seas. EU market share• Privatized energy companies• World leader in proven gas reserves• Siberia far from market

Caspian Production Potential

• Caspian reserve est: 40 billion barrels oil*

strategic location

• World reserve est: 1 trillion barrels oil

* ~4% of world reserves

O& G Journal - 8/21/2000

Tengiz Field, Caspian Region

• Permian carbonate reefs• 1000’ pay• H2S• Overpressured• Jurassic salt (great seal)

Venezuela

• Exports 50% of oil production to US• Have South America’s largest proven gas

reserves (147 tcf). Ranks 8th in world gas.• Hope to generate $1billion new investment

in (non-oil assoc) gas exploration (2001-2005) w/ international investment

• Foster domestic use of natural gas• Market LNG a goal• Economy dependent on energy revenues• Political instability?

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Global Energy Systems Transition

Source: GHK Company

0

20

40

60

80

100

Per

cen

t o

f M

arke

t

1997

Increasingly sustainableeconomic growth

Decentralised,less capital-intensive

technologies

1850 1900 1950 2000 2050 2100 2150

Non-sustainableeconomic growth

Centralised,capital-intensive

technologies

hydrogen

wood & hay

coal & nuclear

gase

ssolids

liquidswhale oil

oil & naturalgas liquids

oil & hydroelectric

petroleum oil

“city gas” hydrogen

natural gas

natural gas

World Consumption of End-Use Fuels, %

Coal

Renewables

Heat

Electricity

Gas

Oil

1997 2020Forecast

9,117Mtoe*

11

1

4

17

18

49

8

2

3

20

18

49

Source: International Energy Agency

5,808Mtoe

* Million tonnes of oil equivalent

End

O& G Journal - 8/21/2000