13 47 749294 BPStatisticalReviewofWorldEnergy-Brussels September2008

BP Statistical Review of World Energy
An Update: The Long Term and the Short Term

Christof Rhl Chief Economist Brussels, September, 2008
BP 2008
Outline
Introduction High Energy Prices The Long Term and the Short Term The Oil Market Other Fuels Conclusion
BP Statistical Review of World Energy 2008
BP 2008
Energy Consumption and Energy Prices

Oil
y-o-y
8% 6% 4% 2% 0% -2% -4% 98 00 02 04 06 08
Gas
$/bbl
120 100 80 60 40 20 0
98 00 02 04 06 08
Coal
$/Mmbtu
12 10 8 6 4 2 0
98 00 02 04 06 08
$/t
120 100 80 60 40 20 0
BP 2008
Real Commodity Prices

Index: average 1970-2008 = 100
400 350 300 250 200 150 100 50 0 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008
BP Statistical Review of World Energy 2008 BP 2008
Oil
Wheat
Iron & Steel
GDP and Primary Energy Growth

Growth
7% 6% 5% 4% 3% 2% 1% 0% 1967 1969 1971 1973
1970s
2000s
Primary energy
GDP (PPP)
2001
2003
2005
2007
BP 2008
Contributions to Growth
GDP
5-year moving average
4% OECD Non-OECD
OECD Non-OECD
Primary energy
3%
2%
1%
0% 1991 1995 1999 2003 2007

1991 1995 1999 2003 2007
BP 2008
Power Generation and Primary Energy

Power generation
Average growth p.a.
7% 6% 5% 4% 3% 2% 1% 0% 1991-2000 2001-2007 OECD Non-OECD
2007 global growth

7% 10-year average 6% 5% 4% 3% 2% 1% 0% Power Generation Primary Energy GDP
BP 2008
Economic Growth and Oil Consumption Growth

Average annual growth of oil production and consumption
Contribution to GDP growth Oil Consumption growth Mb/d
Share of growth
100% 80% 60% 40%
1.4
Non-OECD Non-OECD
1.2 1.0 0.8 0.6
Non-OECD
Non-OECD
OECD
20% 0% 1990-2000
OECD
0.4 0.2 0.0
OECD OECD
1990-2000 2000-2007
BP 2008
2000-2007
Turn of the Commodity Price Cycle?

Index: Average for 2000-08 = 100
350 300 250 200 150 100 50 0 2000 2003 2006 Baltic Dry Freight Rates GSCI wheat index Iron ore & steel scrap HWWI index Brent
100 = average for 2000-08
Dec
Feb
Apr
Jun
Aug
2008
BP Statistical Review of World Energy 2008 BP 2008
The Oil Market
BP 2008
Real and Nominal Crude Oil Price

$/bbl
140 120 100 80 60 40 20 0 1973 1978 1983 1988 1993 1998 2003 2008
$ 106.74 per barrel in December 1979
Nominal price
Real price
$ 98.46 per barrel in Sep 2008
BP 2008
Global Oil Demand Growth Has Slowed

Exporters and importers
Kb/d
Taxes and subsidies
1000 800 600 400 200 0 -200 -400 -600 Oil Non-OECD OECD oil exporters oil importers importers
10-year average
Heavy Moderate Moderate subsidies subsidies taxes
Heavy taxes
BP 2008
And Remains Price Sensitive

Kb/d
100 0 -100 -200 -300 -400 -500 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08
Source: EIA BP 2008
US Gasoline Consumption Growth
$/gallon
4.40 4.00 3.60
Pump price
3.20 2.80 2.40 2.00
Recap: Supply Management 2007

Average annual change, 2003-2007
Mb/d
Change 2007
Mb/d 2.0
2.0 ROW 1.5 1.0 0.5 0.0 OECD -0.5 -1.0 -1.5 Growth Decline OPEC10 FSU Other OPEC
1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 Growth Decline

BP 2008
ROW FSU Other OPEC OECD OPEC10
And OECD Commercial Inventories 2007

Mbbls
2800 2002-2006 range Stocks in 2007 Brent oil price (rhs)
$/bbl
100
2700
90
2600
80
2500
70
2400
60
2300 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
50
Sources: IEA, Platts BP 2008
2007 Oil Production: Largest Changes

Kb/d -500
Decrease
-400 -300 -200 -100 0 100
Increase
200 300 400
Angola
Non-OPEC FSU OPEC

Iraq Sudan Canada Nigeria Venezuela Mexico Norway Saudi Arabia
Azerbaijan Russia
BP 2008
Production Increase in Saudi Arabia

OPEC-10 Crude Production
Y-o-Y Change, Mb/d
2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 Jan-05 Jan-06 Jan-07 Jan-08 60 40 20 0
25 2006 2007 2008 2009
BP 2008
Call on OPEC-10 Crude

Mb/d
140 120
28
Saudi Arabia
Other OPEC-10
Oil price (rhs)
100 80
27
26
... And What a Difference a Year Makes

Mbbls
Range 03-07
2007
2008 and forecast
2800 2700 2600 2500 2400 2300 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
BP 2008
But Risk is to the Downside: Global Demand Growth

GDP
y-o-y growth Kb/d
Base case (2.1%) Low-growth case (1.5%)
Oil consumption
600 400 200
10% 8% 6% 4% 2% 0%
0 -200 -400 -600 -800

US Japan Europe China S&C Am. ME World US Japan Europe China S&C Am. ME World
BP 2008
Project Delays Continue to Mount

Mb/d
14 12 10 8
1.5
Mb/d
Production with Original Start Dates Currently Expected Production
3.0
2006 Assessment
2.5 2.0
2007 Assessment 2008 Assessment
6 4 2 0 2003 2006 2009 2012

1.0 0.5 0.0 2007 2008 2009 2010 2011 2012
BP 2008
Russian Oil Production

y-o-y growth
12% 10%
Mb/d
10.0
9.8
8% 6% 4%
9.6
9.4
2% 0% 2001 2003 2005 2007
9.2
2005 2006 2007 2008
Source: Russian Ministry of Industry and Energy BP 2008
2007 Refining Capacity Additions

Kb/d
0 Asia Pacific ex China China Africa Middle East Europe & Eurasia S. & Cent. America N.America 200 400 600 800 1000 1200 1400
World 2007 World Av. 2002-2005

BP 2008
Financial Investment in Energy

Energy prices
$/boe
180 WTI 150 Heating Oil Henry Hub 120
Non-commercial net length

000 contracts
Open interest
Million contracts
150 75 0 -75
3.0 2.5 2.0 1.5 1.0 0.5 0.0 Jan-07
90
-150
60
-225 -300 Jan-07
30 Jan-07 Sep-07 May-08
Sep-07
May-08
Sep-07
May-08
Sources: CFTC, Platts
BP 2008
Other Fossil Fuels
BP 2008
2007 Natural Gas: Largest Changes

Production
Billion m3
-10 0 10 20 30 40
Consumption
Billion m3
-10 0 10 20 30 40
US China Qatar Nigeria Turkmenistan Azerbaijan Russia Canada UK
US China Russia Japan Turkey Chile Germany
BP 2008
2007 LNG Market Diversification

Number of export markets
0 Algeria Trinidad Egypt Nigeria Qatar Oman Australia Malaysia UAE Eq. Guinea Indonesia Norway Brunei 2 4 6 8 10 12 Japan South Korea Taiwan Spain India US France Turkey UK China Mexico Belgium Greece
Source: Cedigaz BP 2008
Number of suppliers
0 2 4 6 8 10 12
Atlantic Basin Middle East Pacific Basin
Fuel Switching in Power Generation 2005-07

Gas Share
70%
UK gas vs. coal
100%
US gas vs. oil
60%
95%
50%
90%
40%
85%
30%
Gas is not competitive Gas is competitive
80%
Gas is not competitive Gas is competitive
20% -60 -40 -20 0 20
75% -6 -3 0 3 6
Gas competitiveness vs. coal (/MWh)

Gas competitiveness vs. resid ($/Mmbtu)

Sources: EIA, BERR, Platts, McCloskey, ECX
BP 2008
2007 Coal Production and Consumption
Production
Asia Pacific North America
Consumption
Asia Pacific North America
20% 2% 59% 14% 5%

Africa
S & Cent. America
19% 1% 60% 17% 3%

Africa
S & Cent. America
Europe & Eurasia
Europe & Eurasia
BP 2008
Coal Production Outside China

Biggest coal producers
Mtoe
Largest production growth, 1998-2007

Mtoe
600 500 400 300 200 100 0

US tralia India frica ssia esia A s Ru don h t Au u In So
80 70 60 50 40 30 20 10 0
12.3%
Average annual growth 3.8% 3.7%
3.1% 2% 8.3%
ia sia tralia India ssia frica b e Ru th A olom on Aus d n C u I So

BP 2008
GDP and Power Generation

Growth in China, 2003-2007
Average growth p.a.
Global breakdown
Share 100%
20% GDP Primary energy 16% Power Coal
80%
OECD
12%
60%
8%
40%
Other nonOECD India China
4%
20%
0%
0% GDP Power Coal

BP 2008
Other Fuels
BP 2008
Global Oil Reserves

Billion bbls
1600 Middle East Europe & Eurasia North America Other oil sands S. & Cent. America Africa Asia Pacific
1200
800
400
0 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
BP 2008
2007 Carbon Emissions Growth

y-o-y growth
6% 5% 4% 3% 2% 1% 0% -1% -2% World Europe FSU North Middle America East S. & Cent. America Africa Asia Pacific 10-year average
BP 2008
Changes in Nuclear and Hydroelectric Output

Nuclear
y-o-y growth
6% 5% 4% 3% 2% 1% 0% -1% -2% 2004 2005 2006 2007 2004 2005 2006 2007
Hydro
10-year average
BP 2008
Contribution to Electricity Generation Growth from Renewables*

Share of electricity generation growth, 3-year moving average
16% World 12% OECD
8%
4%
0% 2004 2005 2006 2007

* Wind, photovoltaics and geothermal BP Statistical Review of World Energy 2008 BP 2008
Renewables
Electricity generation in Germany
TWh
70 60 50 40 30 20 10 0 2001 2003 2005 2007 Hydro Other renewables
Volume of ethanol in US gasoline

Share
5% Share (lhs) 4% 3% 2% 1% 0% 2001 2003 2005 2007
Sources: BDEW, EIA BP 2008
Kb/d
500 400
Ethanol consumption (rhs)
300 200 100 0
Conclusion
High economic growth and improvements in energy intensity The long tern: Importance of developing world Oil market constrained, gas market integrating, global coal market emerging Volatility will increase - prices are effective, where allowed to work
BP 2008

13 47 749294 BPStatisticalReviewofWorldEnergy-Brussels September2008

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13 47 749294 BPStatisticalReviewofWorldEnergy-Brussels September2008

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BP Statistical Review of World Energy

An Update: The Long Term and the Short Term

BP Statistical Review of World Energy 2008

Energy Consumption and Energy Prices

BP Statistical Review of World Energy 2008

Real Commodity Prices

Iron & Steel

GDP and Primary Energy Growth

BP Statistical Review of World Energy 2008

0% 1991 1995 1999 2003 2007

BP Statistical Review of World Energy 2008

Power Generation and Primary Energy

2007 global growth

BP Statistical Review of World Energy 2008

Economic Growth and Oil Consumption Growth

100% 80% 60% 40%

1.2 1.0 0.8 0.6

0.4 0.2 0.0

BP Statistical Review of World Energy 2008

Turn of the Commodity Price Cycle?

100 = average for 2000-08

The Oil Market

BP Statistical Review of World Energy 2008

Real and Nominal Crude Oil Price

$ 98.46 per barrel in Sep 2008

BP Statistical Review of World Energy 2008

Global Oil Demand Growth Has Slowed

Taxes and subsidies

Heavy Moderate Moderate subsidies subsidies taxes

And Remains Price Sensitive

US Gasoline Consumption Growth

3.20 2.80 2.40 2.00

BP Statistical Review of World Energy 2008

Recap: Supply Management 2007

1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 Growth Decline

ROW FSU Other OPEC OECD OPEC10

BP Statistical Review of World Energy 2008

And OECD Commercial Inventories 2007

BP Statistical Review of World Energy 2008

Sources: IEA, Platts BP 2008

2007 Oil Production: Largest Changes

Non-OPEC FSU OPEC

Production Increase in Saudi Arabia

Call on OPEC-10 Crude

Oil price (rhs)

BP Statistical Review of World Energy 2008

... And What a Difference a Year Makes

2008 and forecast

BP Statistical Review of World Energy 2008

But Risk is to the Downside: Global Demand Growth

0 -200 -400 -600 -800

BP Statistical Review of World Energy 2008

Project Delays Continue to Mount

2007 Assessment 2008 Assessment

6 4 2 0 2003 2006 2009 2012

BP Statistical Review of World Energy 2008

Russian Oil Production

BP Statistical Review of World Energy 2008

Source: Russian Ministry of Industry and Energy BP 2008

2007 Refining Capacity Additions

World 2007 World Av. 2002-2005

Financial Investment in Energy

Non-commercial net length