1. Asia and Global Oil & Gas Markets and Geopolitics Mikkal E. Herberg The National Bureau of Asian Research Independent Petroleum Association of America “Mid-Year Meeting and Executive Conference” Naples, Florida June 14, 2006

2. Asian Oil and Gas Trends to 2020 Oil demand, imports will drive global market Oil demand, imports will drive global market 67% of recent growth, 50% of future growth 67% of recent growth, 50% of future growth Economic growth, rising per capita incomes Economic growth, rising per capita incomes Motorization, vehicle boom Motorization, vehicle boom Poor oil production prospects Poor oil production prospects Weak demand management policies Weak demand management policies Largest future incremental natural gas market Largest future incremental natural gas market China to account for 20% global energy demand growth, largest incremental oil market (20-25% of global growth) China to account for 20% global energy demand growth, largest incremental oil market (20-25% of global growth) India oil and gas demand growth second only to China India oil and gas demand growth second only to China Energy security concerns growing, Asia-ME nexus Energy security concerns growing, Asia-ME nexus Asia NOCs becoming serious competitors, partners Asia NOCs becoming serious competitors, partners

3. Source: IEE Japan Asia to Dominate Global Energy Demand Growth

4. Source: IEE Japan Oil and Coal Largest Shares, Gas Growing Rapidly from Low Base

5. Asia = 67% Global Oil Demand Growth (MBD) WorldAsia China WorldAsia China 1990 1,229841 -6 1991 -46597 158 1992 733963 252 1993 -199685 251 1994 1,459 1,109 232 1995 1,127993 245 1996 1,523766 282 1997 1,917843 263 1998 446 -364 112 1999 1,616926 370 2000 904808 568 2001 501105 46 2002 793579 349 2003 1,248599 412 2004 2,464 1,109 893 15,714 10,557 4,424 15,714 10,557 4,424 Source: BP

6. Asia Will Drive Oil Demand Growth 2002-2025 Source: DOE 2005 Total = 41 MMBD

7. Source: IEE Japan China and India to Account for 70% of Asian Oil Demand Growth

8. Asia’s Oil Demand Increasingly Met by Imports from Outside the Region Demand Production Imports 14.7 4.5 Source: BP MBD

9. Asia’s Future Oil Imports Will Grow by More than Current PG Exports Source: IEA WEO 2004 Imports 2002 14.4 2030 36.0 Demand Supply

10. Mid-East Oil Exports and Asia (MMBD) 20012020 Change Total ME 16.2 25.2 9.0 Asia 9.4 16.8 7.4 North America 2.8 3.2 0.4 Western Europe 3.1 3.9 0.8 Other 0.9 1.3 0.4 Asia Share 58% 67% Source: IEE Japan 3-04  60% of current ME oil exports go to Asia  80% of future export growth will go to Asia

11. China’s Oil Imports Rising Source: IEA WEO 2004

12. Cumulative Gas Demand Growth 2001-2030  Asia’s gas demand to nearly triple by 2030 Source: IEA WEO 2004

13. Source: IEE Japan 3-04 Gas Demand Growth Strong Across the Asian Region

14. Total Asian Natural Gas Imports Nearly Triple LNG and Pipeline Supplies to Grow Dramatically 20022030 SE Asia to NE Asia 69 104 Persian Gulf to NE Asia 29 57 Alaska to NE Asia 1 0 SE Asia to China 0 10 Persian Gulf to China 0 13 Persian Gulf to India 0 44 Russia to NE Asia 0 22 Russia to China 0 19 Total 99 269 of which Persian Gulf 29 114 Russia 0 41 Southeast Asia 69 114  Imports from outside region rise five-fold  Outside import share rises from 29% to 58% IEA WEO 2004

15. Some Conclusions Asia, China to drive global oil demand, markets, prices Asia, China to drive global oil demand, markets, prices Huge rise in gas consumption, thriving LNG, pipeline gas projects in Asia Huge rise in gas consumption, thriving LNG, pipeline gas projects in Asia Asia only modest upstream oil play – India, SE Asia, E. Siberia; stronger upstream natural gas play Asia only modest upstream oil play – India, SE Asia, E. Siberia; stronger upstream natural gas play Asia NOCs inflating prices in global E&P market Asia NOCs inflating prices in global E&P market NOCs changing competitive landscape for IOCs NOCs changing competitive landscape for IOCs China, Asia to become big players in global energy geopolitics China, Asia to become big players in global energy geopolitics Persian Gulf Persian Gulf Central Asia Central Asia Russia Russia IEA IEA

16. Background

17. Source: IEE Japan