7. The role of futures markets
• Oil price formation, is OPEC really a cartel?
• Nymex and ICE
• Producers and consumers hedging
• Non commercial and swap traders
7
8. November 2004: from short-term price increases to
LT adjustments in expectations
• November 2004: Crude Oil "Forward Curves"
- prompt prices doubled 70
Note: 2/06
- forward prices also doubled this is a 10/06 3/07
60 year 11/05
- OPEC “suspended” the $22- 10 10
after Iraq
$28/b target price band II
3/05
50
• A conjunction of causes: 11/04
Higher
- 2004 oil demand surge out year
40 prices
$ / barrel
- Iraq recovery delayed 3/04
3/03
- Spare capacity ran out 30
3/00
- Buoyant “asset demand” for
oil futures 20
3/02
- Non-OPEC supply growth Old OPEC
10 price band
limited
3/99
• The new $60-80 price band seems
0
to hold '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12
8
13. Oil demand: OECD has peaked,
China growth more than offsets
Net imports of oil in the WEO 2011 New Policies Scenario
14
mb/d
2000
12
2010
10
2035
8
6
4
2
0
China India European United Japan
Union States
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
15. The changing energy mix
(IEA view, nov. 2011)
World primary energy demand by fuel
in the WEO 2011 New Policies Scenario
5 000
Mtoe
Additional
to 2035
4 000
2009
3 000
2 000
1 000
0
Oil Coal Gas Renewables Nuclear
Renewables & natural gas collectively meet almost two-thirds
of incremental energy demand in 2010-2035
16. The age of fossil fuels is far
from over, but their
dominance declines (WEO 2011)
Shares of energy sources in world primary energy demand
in the New Policies Scenario
50% Oil
Coal
40%
Gas
30% Biomass
Nuclear
20% Other renewables
Hydro
10%
0%
1980 1990 2000 2010 2020 2030 2035
Oil remains the leading fuel though natural gas demand rises the most in absolute terms
18. 5. Risk as experienced by investing companies, 2011
• Technical risk: the Macondo well debacle
• Environmental risk, local: Chevron in Brazil
• Environmental risk, global: Durban COP on climate
• Market risk, energy: the crash in US natural gas prices
• Market risk: soft growth and the euro crisis risk
• Country risk: the Arab spring,
• Geopolitical risk: Iran nuclear program
• Resource curse:
AND
• A new oil & gas frontier in US, Africa and Brazil
18
22. Offshore Terminals - Energy Bridge™ System Overview
Reinforced LNG
High Pressure Pumps Storage Tanks
And Vaporizers Oversized
Boiler
The Energy
Bridge™ system is Traction
based on proven Winch
technology used for
over a decade in the
Buoy
harsh North Sea
Compartment
marine environment
Energy Bridge™
Regasification Vessel
When not in use, the
buoy will remain 80
to 90 feet below the
surface
23. How Shell –and followers– will expand LNG production to stranded
fields and overcome siting challenges with 600,000 ton behemoths