Asia’s Oil and Gas Outlook Mikkal E. Herberg The National Bureau of Asian Research IPAA 2005 Mid-Year Meeting San Francisco, California June 17, 2005

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 production prospects Poor 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

Source: IEE Japan

Asia = 67% Global Oil Demand Growth (MBD) WorldAsia China WorldAsia China , ,459 1, , , , , , ,464 1, ,714 10,557 4,424 15,714 10,557 4,424 Source: BP

Source: IEE Japan

Asian Oil Supply and Demand (MBD) Demand Production Imports Source: BP

Asia’s Future Oil Import Needs Source: IEA WEO 2004 Imports  Imports to grow by more than current ME production

China’s Oil Imports Rising Source: IEA WEO 2004

Asia and Mid-East Exports (MMBD) Change Total ME Asia North America Western Europe Other Asia Share 58% 67% Source: IEE Japan  60% of current ME oil exports go to Asia  80% of future export growth will go to Asia

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

Source: IEE Japan

Asia’s Natural Gas Imports SE Asia to NE Asia Persian Gulf to NE Asia 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 of which Persian Gulf Russia 0 41 Southeast Asia  Total Asian gas imports nearly triple  Imports from outside region rise five-fold  Outside import share rises from 29% to 58% IEA WEO 2004

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 OPEC OPEC

Source: IEE Japan