Energy Security: A Global
Perspective
Bob Tippee, Editor, Oil & Gas Journal
International Energy Policy Conference
October 25, 2012
Security relativism
Importers
Security of supply
Exporters
Security of
demand
Affordable, stable Adequate, stable
price
price
Importers’ concerns
• Disruption to supply, economic disturbance
– To influence geopolitics
– Due to internal disruption
– Due to natural disasters
How
does all
this
constrain
• Price manipulation, shocks, volatility
foreign
• Non-commodity costs
policy?
– Defense of producers, trade routes
– Strategic storage (US ~ $200 MM/year)
Oil trade ‘choke points’
Source: US Energy Information Administration
Exporters’ concerns
• Revenue for domestic needs
– Funding growing national budgets
– Pacifying restive populations
• Uncertainty of huge, long-term investments
• Importers’ actions
– Off-oil initiatives
– Product taxes, tariffs, import fees, embargos
– Antagonistic rhetoric
The need for OPEC crude (MMbd)
OPEC’s
investment
requirements
in 2010-20
could range
from less
than $200
billion to
around $400
billion.
PMT=protracted market tightness; PSM=prolonged soft market;
DAU=dynamics as usual. Source: OPEC Long-Term Strategy
Responses—1
• Importers – International Energy Agency
– Established 1974; 28 members of OECD
– Strategic storage
– Information
• Exporters: International Energy Forum
– First meeting, 1991; charter, 2011; 88 members
– Producer-consumer dialogue
– Information
Responses—2
• Saudi-US relationship
– US defends Saudi Arabia, trade routes
– Saudi Arabia assures supply
• Moderation of OPEC price hawkishness
• Maintenance of 1.5-2 million b/d spare capacity
IEA-strategic storage
• Stocks to cover 90 days of net imports
• July 2012 coverage
– Total IEA: 187 days (111 industry, 96 public)
– IEA net importers: 151 days (87 industry, 64
public)
• Cooperation with non-IEA China, India, several
ASEAN members
IEA stock withdrawal capacity
Largest disruption: Iranian
revolution 1978-79, 5.6 MMbd
Venezuela
, Nigeria
Iraq,
Iran
Saudi
Arabia,►
Russia
IEA coordinated withdrawals
Event
1991 Gulf War
2005 hurricanes
2011 Libyan disruption
Lost supply
4.3 million b/d
1.5 million b/d
1.6 million b/d
Comparable disruptions have not triggered withdrawals: i.e.,
Iran-Iraq war 1980 (4.1 MMbd); 2001 disruption of Iraqi
exports (2.1 MMbd); 2003 Venezuelan strike (2.6 MMbd);
2003 invasion of Iraq (2.3 MMbd)
IEA—information
•
•
•
•
•
•
Oil Market Report (monthly)
World Energy Outlook (annual)
Individual member energy-policy reviews
Statistics
Books
Others
IEF—producer-consumer dialogue
• Biennial ministerial forums
• Business forums
– Precede ministerial forums
– Bilateral ministerial meetings
• NOC-IOC forums (two so far)
• IEA-IEF-OPEC symposia on energy outlooks
• IEA-IEF-OPEC joint workshops and regulators
forums (physical-financial market dialogue)
IEF—information: JODI
• Joint Organizations (ex-Oil) Data Initiative
• Data exchange; about 100 participants
• Evolution
– IEF ministers 2000
– APEC, Eurostat, IEF, IEA, OLADE, OPEC, UNSD
– IEF Secretariat assumed responsibility 2005
– JODI World Database unveiled 2005
JODI basic questionnaire
42 data points
Participants supposed to submit on 25th of month for two
most recent months.
Respondents vary in submission, timeliness,
completeness.
JODI expanded questionnaire
Work in progress since 2007.
Global shift 1: oil demand (MMbd)
Source: International Energy Agency, Medium-Term Oil Market Report 2012
Total net oil imports (IEA)
Global shift 2: refining (MMbd)
Total capacity additions:
6.8 MMbd
*From existing projects
Source: OPEC World Oil Outlook, 2011
Global shift 3: supply (MMbd)
Source: Maugeri, Leonardo, “Oil: The Next Revolution,” Discussion Paper
2012-10, Belfer Center for Science and International affairs, Harvard
Kennedy School, June 2012.
Global shift 3: supply (cont.)
Note: Before adjustments for
depletion, reserves growth;
excludes currently producing
fields unless under extensive
redevelopment.
Unrestricted =total planned
Adjusted=after accounting
for risk factors.
Source: Maugeri, Leonardo, “Oil:
The Next Revolution,” Discussion
Paper 2012-10, Belfer Center for
Science and International affairs,
Harvard Kennedy School, June
2012.
OPEC median budget breakeven
crude oil price
From Stevens, Paul, “Oil Prices, Energy Investment, Political Stability in the
Export Countries and OPEC’s Dilemma,” Chatham House, October 2012
Observations-1
• IEA:
– Focused on OECD—waning consumption, imports
– Oriented to strategic storage
– Well-developed information scheme
• IEF:
– Broader compass, producers and consumers
– Oriented to cooperation
– Developing information scheme
Observations-2
• Importers deploy “oil weapon” more than
exporters
• Supply threats come from nature, internal
politics of key exporters
• Production growth lowering supply
vulnerability in Western Hemisphere…
• …But supply disruption anywhere hurts
developed countries everywhere
Conclusions
• Market shifts softening IEA-OPEC opposition
• Strategic storage remains supply-shock buffer
• Value of strategic storage as deterrent to
exporter use of “oil weapon” has diminished
• Supply security comes mainly from mutuality
of buyer-seller interests
• Role of producer-consumer cooperation in
energy security will grow
Questions
• Will US, others acknowledge changes?
• Will new W. Hemisphere supply raise
questions re costs of storage, trade-route
defense?
• Will Arab Spring issues liberalize or harden
exporter regimes?
• How much will exporters pay for stability?
• How will changes affect US-Saudi bilateralism?
Auxiliary slides
What is energy security? – 1
Source: Bartis, James T., “Promoting International Energy Security, Vol. 1,
Understanding Potential Air Force Roles,” Rand Corp., 2012.
IEA stocks (Dec. 11; MMbbl)
IEA response options