1. Affordable, reliable and sustainable energy sources
Astana
September 7th, 2017
Pedro Miras
Role of oil in the future energy mix. Challenges and certainties
Chairman of the Committee of Programmes (CPC) of the WPC
Vice President Programme of the Executive Committee of the WPC
Chairman of Corporation of Strategic Reserves of Petroleum Products (CORES)

2. Cores is the Spanish Central Stockholding Entity
What is Cores?
Cores is the Spanish Central Stockholding Entity
Cores is the Central Stockholding Entity responsible for maintaining and controlling strategic reserves in Spain
Cores contributes to ensuring the security of supply for petroleum products, LPG and natural gas in the event of a supply crisis
Cores is the leading statistics and official information source in the hydrocarbon sector in Spain

3. Global oil demand will increase by 13-50% over the next 25 years
Role of oil in the future energy mix. Challenges and certainties
Global oil demand will increase by 13-50% over the next 25 years
Primary energy consumption in 2016 and forecasts for
Units: Mtoe
+49%
+50%
+30%
+36%
+13%
450
2016
2035
2040
NPS: New Policies Scenario; CPS: Current Policies Scenario; 450 Scenario: assumes a set of policies that bring about a trajectory of greenhouse- gas (GHG) emissions from the energy sector
Source: BP Statistical Review World Energy Outlook Bp Energy Outlook World Oil Outlook 2016 (OPEC)

4. Oil will remain equally important in the coming years
Role of oil in the future energy mix. Challenges and certainties
Oil will remain equally important in the coming years
Global primary energy consumption
Oil
Natural gas
Coal
Nuclear
Hydropower
Renewable
450
2016
2035
2040
NPS: New Policies Scenario; CPS: Current Policies Scenario; 450 Scenario: assumes a set of policies that bring about a trajectory of greenhouse- gas (GHG) emissions from the energy sector
Source: BP Statistical Review World Energy Outlook Bp Energy Outlook World Oil Outlook 2016 (OPEC)

5. Role of oil in the future energy mix. Challenges and certainties
Demand will vary based on the economy, environmental policies and energy efficiency
Global oil demand forecast under several scenarios
Unit: MBbl/day
OPEC
IEA-NPS
IEA-CPS
IEA-450 BP
NPS: New Policies Scenario; CPS: Current Policies Scenario; 450 Scenario: assumes a set of policies that bring about a trajectory of greenhouse- gas (GHG) emissions from the energy sector
Source: World Energy Outlook World Oil Outlook 2016 (OPEC). Bp Energy Outlook 2017

6. Demand from non-OECD countries will account for 2/3 of the total
Role of oil in the future energy mix. Challenges and certainties
Demand from non-OECD countries will account for 2/3 of the total
OECD vs. non-OECD oil demand in 2016 and forecast for 2040
Unit:
2016
2040
450
450
Non-OECD
OECD
NPS: New Policies Scenario; CPS: Current Policies Scenario; 450 Scenario
Source: BP Statistical Review World Energy Outlook World Oil Outlook 2016 (OPEC)

7. ¿? The future of oil is exposed to many uncertainties
Role of oil in the future energy mix. Challenges and certainties
The future of oil is exposed to many uncertainties
Peak demand 1
New competitive dynamics in the industry 6
Mobility models 2 ¿?
Digital and new technologies 5
Environmental regulation 3
Consumption mix 4

8. Expected slowdown in demand, uncertainty about maximum
Role of oil in the future energy mix. Challenges and certainties
Expected slowdown in demand, uncertainty about maximum
Peak demand 1
Growth in oil demand is expected to slow down over the next decade:
Greater efficiency
Electrical vehicles
Replacement of fuels
Oil demand could hit a high in 2024 if...
10%
+0.25%
Penetration of electrical vehicles (2030)
Greater efficiency gains
-0.5%
$+5
Lower growths in GDP
Higher oil prices
Source: The Future of Refining – Goldman Sachs, 24 July 2017

9. Different mobility models could change consumption patterns
Role of oil in the future energy mix. Challenges and certainties
Different mobility models could change consumption patterns
Mobility models 2
Promotion of low emission technologies
Euro 6 vehicles and ZERO Eco 100% fleet
Electrical vehicles
Alternative fuels
Promotion of railway transport
Local initiatives
ie Europe: Zero emission areas
Shared mobility and digitalisation

10. An example of environmental regulation: Restrictions on marine fuels
Role of oil in the future energy mix. Challenges and certainties
An example of environmental regulation: Restrictions on marine fuels
Environmental regulation 3
By 2020, sulphur in marine fuels will be limited to 0.5%
Many consequences in the oil sector
Increased demand for sweet crude oils
Increased investment in refining: secondary & desulfurization units
Redefining marine consumption mix: gasoil vs ULSFO vs LSFO vs HSFO
Shipbuilders: installation of scrubbers and fleet renewals
Maximum content of S Anex VI, MARPOL
Source: International Maritime Organization (IMO)
ECA zones, existing and possible
Source: International Maritime Organization (IMO)

11. An example of the change in consumption mix: non-refined products
Role of oil in the future energy mix. Challenges and certainties
An example of the change in consumption mix: non-refined products
Consumption mix 4
13% of oil demand is for non-refined products
Higher growth in demand for non-refined products
Breakdown of oil demand in 2005 and 2015
NGL: natural gas liquids; CTL: coal to liquids; GTL: gas to liquids
Source: IEA
Oil product demand changes Compound annual growth rates
Source: IEA

12. Digital and new technologies
Role of oil in the future energy mix. Challenges and certainties
New technologies and digitalisation as the driving force for a change in the sector
Digital and new technologies 5
Improved productivity
Digital revolution
1. Improved maintenance
2. Operation improvement
3. Optimised supervision
4. Security
5. Reinforcement
Optimised driving
Reduction in consumption
Cyber security
Drones to replace road transport

13. New business models will shape the competitive panorama
Role of oil in the future energy mix. Challenges and certainties
New business models will shape the competitive panorama
New industry competitive dynamics 6
What will compete with oil?
Who will my competitors be?
Oil companies, energy companies, startups...Google
How are we going to compete?
Through price, service, advertising, good social responsibility practices...using social media...

14. Are there other uncertainties affecting the future of oil?
Role of oil in the future energy mix. Challenges and certainties
Are there other uncertainties affecting the future of oil?
Economic uncertainties
Collaborative economies, delocalised 24/7 financial markets, new currencies (bitcoins)?
Changes in leadership models
Energy and corporate governance, real regulator?
Redefining workforce
Demographics, externalisation, talent management and robotics
A new role for consumers
Empowerment, influencers

15. Conclusions Oil will remain equally important in the coming years
Role of oil in the future energy mix. Challenges and certainties
Conclusions
Oil will remain equally important in the coming years
Fossil fuels will play a role in the transition to a sustainable energy system
Many uncertainties might determine the future
Peak demand
Mobility models
Environmental regulation
Consumption mix
Digital and new technologies
New competitive dynamics in the industry