Energy Security: Markets and Policy

Transcription

1 Energy Security: Markets and Policy Pierre Noël EPRG, University of Cambridge Critical Infrastructure Conference, London, 20 April 2011

2 Contents Global Oil and the Middle East European Gas and Russia Japan Disaster: Lessons for Europe

3 One global oil market Key implications Demand Supply 1. No need to secure access to resources 2. US does not depend on the Middle East 3. China s upstream investment do not reduce our access to the oil market 4. Embargoes are never credible 5. Supply disruptions are felt by all consumers 6. The market itself provides security alternative supply always available

4 Oil supply has never been so diversified 100% 90% % 90% 80% 80% 70% 70% 60% 50% % 50% 40% 40% 30% 20% Middle East OPEC 30% 20% 10% 0% Top 5 suppliers top 10 suppliers 10% 0% Data source: BP Statistical Review 2010

5 Middle East = 30% of world oil Middle East Oil Production, % Left-hand scale 25 40% MM Mbd Right-hand scale 30% 20% Middle East ME/World (%) 5 10% 0 0% Sources: American Petroleum Institute, "Petroleum Facts & Figures", 1958 ; BP Statistical Review of World Energy, 2010

6 Massive strategic oil stocks US Strategic Petroleum Reserve barrels Million barrels ANNUAL INJECTION ANNUAL WITHDRAWAL STOCK (end of year) Million Data source: US DOE/EIA

7 Real Oil Price (05$/bl) % 2% 1% High prices limit our dependence AEO_04 AEO_05 AEO_06 AEO_07 AEO_07_HiPrice AEO_10_Ref AEO_10_HighPrice Middle East Production (MMbd) Oil Price v Change in Oil Intensity (USA, , 5-yr mov. average) on the Middle East Data sources: DOE/EIA, Annual Energy Outlook, various years 0% -1% -2% -3% on oil itself -4% -5% -6% -7% Source: US Bureau of Economic Analysis; BP Statistical Review of World Energy

8 Contents Global Oil and the Middle East European Gas and Russia Japan Disaster: Lessons for Europe

9 Russian gas: important, not dominant 100% 90% 80% 70% 60% 40 years of diversification 50% 40% 30% 20% 10% 0% Russian gas as a share of EU 27 gas imports Russian gas as a share of EU 27 gas consumption Russian gas as a share of EU 27 primary energy consumption Source: BP Statistical Review of World Energy; International Energy Agency; Eurostat accelerated by the LNG boom Jan-98 Dec-98 Nov-99 Oct-00 Sep-01 Aug-02 Jul-03 Jun-04 May-05 Apr-06 Mar-07 Feb-08 Jan-09 Dec-09 Nov-10 Bcm per year UK ITALY GREECE FRANCE BELGIUM SPAIN

10 Supply diversity is in Western Europe and there is little possibility to trade gas across Europe

11 Gas security in Russia-dependent EU Source: Noel & Findlater, 2010

12 Cost of improving security: Estonia Security premium 1,300 for an LNG 3 day's 1,100 terminal is ~ storage 7% Estonia -- Heat back-up versus LNG 7 day's storage Light fuel oil 15 day's storage 30 day's storage million over 30 years 100 Heavy fuel oil LNG -100 Disruption length over 30 years Source: Noel & Findlater, forthcoming

13 UK as EU Western gas corridor GWh , , , , , ,000-80% 70% 60% 50% 40% 30% 20% 10% 0% Interconnector Flow (GWh) LNG Norway Continent gross imports as % of total supply Data source: DECC UK imports are booming GB markets attracts gas Interconnector exports are growing despite fall in UK production When EU oil-indexed contracts out of the money, direct challenge from UK gas GB emerges as Europe s Western gas corridor UK has a very high level of gas supply security 0 01-Jan Jan Jan Jan Jan Jan Data source: Interconnector UK

14 Contents Global Oil and the Middle East European Gas and Russia Japan Disaster: Lessons for Europe

15 Japan: some lessons for Europe Energy markets create solidarity between consumers speeches and treaties don t UK pays more for gas to help Japan deal with the crisis because there is a global LNG market But would not pay more for gas if Poland was cut-off because there is no European gas market International hydrocarbon markets are a source of energy security Electricity market integration improves security Japan lost GW our of 200+ and Tokyo experiences severe shortages of electricity Japan is poorly integrated, with regional monopoly suppliers