1. Jean-Pierre Favennec jpfavennec@yahoo.fr
Washington, September 24, 2018
USAEE Conference
Towards a new oil shock ?
Jean-Pierre Favennec

2. Worldwide energy flows (Mtoe)

3. The parameters of oil price
Demand
Production
Reserves
Investments
Climate change

4. The demand for Oil Oil demand 2010 : 88.5 Mbd
(Source BP Statistical Review)
Demand more than 100 Mbd now

5. World reserves (Gtoe) R/P = 93 Possible 2800 Proven Enhanced recovery
(1) Quantities which can be recovered for less than 130 $/kg
(2) Quantities which can be recovered for less than 260 $/kg
(3) Present technology (Pressurized Water Reactor)
(4) R/P: Proven Reserves/Production ratio
2800
Including
Non-conventional
Proven
Enhanced
recovery
R/P = 153
R/P = 51y. (4)
Yet to be
discovered
360
460
163
R/P = 52
659
R/P = 93
140
Yet to be
discovered
Proven
All existing recoverable gas resources are estimated to 920 trillion m3 – about 300 times more than the current annual global consumption (source: IEA)
Proven
189
15 (2)
50 (1)
240
166
Liquid Hydrocarbons
Including Non Conventional,
Oil Sands, Extra-heavy Oil
Natural Gas
Coal & Lignite
Uranium (3)
Source : BP Statistical Review 2018 , CEA, FP/DEE, EIA

6. Investments Investments in the Oil and Gas industry
Billion US dollars
Billion US dollars
Billion US dollars
Billion US dollars
Billion US dollars (estimate)
Investments in renewables : 350 Billion US Dollars (of which China 40 %)

7. Oil companies investment decline
Source: WoodMackenzie, Annual reports

8. Oil majors oil production
Source: Annual reports

9. Oil discoveries decline
Source: Rystad

10. Global investment in E&P
Middle East
Europe
CIS
Asia Pacific
Latin America
Africa
United States + Canada
Source: IFPEN - Investment in exploration-production and refining in 2016.

11. Crude oil price (WTI)
Speculation
Arab Springs
Katrina
Rita
hurricanes
Eco
crisis
Staff attacks in S. Arabia
disturbances in Iraq, Nigeria
OPEC
quotas
Iran/Iraq
war
Iraq
events
Kuwait
crisis
Nationalization
of oil fields
Netback
contracts
OPEC Quotas
Asian crisis
OPEC
Quotas
Sept 11th
OPEC
domination
3rd OIL
SHOCK
2nd OIL SHOCK
Agreement Mexico,
Venezuela, Saudi Arabia
Iranian
revolution
1st OIL SHOCK
Yom Kippur war
1970
1975
1980
1985
1990
1995
2000
2005
2010
2016
Source: IMF

12. Crude oil price (Brent)
Source: EIA

13. The market situation
Fair demand because of low prices recently (2014 – 2016)
Oil production limited or decreasing in several countries :
Venezuela – political and economical situation – lack of investment
Libya : decrease of production from 1.8 to Mbd depending upon political situation
Nigeria : production less than 2 Mbd compared to 2.4 in 2012
Angola : decreasing production, lack of investment
Sudan : decreasing production
Etc…
And the coming of US sanctions on Iran (November 5)

14. Situation in Iran Production in Iran was close to 4.4 Mbd
US (and European) sanctions in 2012 : decrease in Iran production by 0.6 – 0.8 Mbd
After the nuclear agreement (5+1 and Iran) production back to nearly 5 Mbd recently
Iranian exports : around 2 Mbd. US strategy : reduce these exports to zero
Iranian threats on the Hormuz Straits (around 18 Mbd – near 20 % of oil supplies go through the Strait)

15. What will happen on November 5 ? Thank you for your attention
Conclusion
What will happen on November 5 ? Thank you for your attention