1. Energy in the Middle East John Ridgway

2.  Global Energy Outlook  Middle East Outlook Safety of our people – Protection of the environment Agenda

3. 1.Will there be sufficient energy to fuel continued growth? 2.Will that energy be secure? 3.Will it be sustainable? 4.What is the story for the Middle East? Key Questions

4.  Global energy consumption will rise by 41% by 2035  Primary energy consumption growth slows – from 2.2% (2005 – 2015) to 1.7% (2015-2025) and 1.1% (to 2035)  Slow down is driven by non-OECD (China & India)  World is more energy efficient  Oil, gas and coal continue to evenly share approx. 90% of consumption – with coal and oil showing the slowest growth (circa 1% pa) and gas the fastest (1.9% pa)  New sources (renewable, hydro, nuclear) continue to help supply Overview

5.  Demand increases by 41% between 2012 & 2035  Average slows: from 2.2% (2005- 2015) to 1.7% (2015-2025) and 1.1% (to 2035)  Leaving phase of high energy consumption growth led by industrialisation of non-OECD  95% of the above growth is in non- OECD  Slowdown in China – India matches China in last decade Energy Outlook Primary Energy Consumption Growth Slows

6.  All fuels show growth over period  Among fossil fuels, gas is the fastest growing (1.9% pa)  Oil (0.8% pa) shows slowest growth  Coal’s contribution to growth diminishes rapidly (China) Energy Outlook Consumption by Fuel

7.  Regional energy imbalances suggest trading relationships will significantly change.  North America – net exporter  Asia – 2035 accounts for 70% of inter- regional net imports  Middle East remains the largest net regional energy exporter.  Russia the worlds largest exporting country  Carbon emissions continue to grow (1.1% pa) Energy Outlook The security & sustainability of energy supply

8. Energy Outlook Oil Prices Remain in $100 – $110/ bbl range

9.  Global liquids consumption is projected to reach 109 Mb/d by 2015 – but growth slows (from 1.3% pa in 2000-2012 to 0.6% for 2025 – 2035)  OECD consumption projected to fall to lowest since 1985  Non OECD consumption will be 60% higher than in 2012  China’s demand surpasses USA in 2029. India and Middle East are the next largest contributors.  India becomes the largest contributor to demand growth from 2030 to 2035.  Middle East overtakes the USA to become largest per capita consumer of oil in 2033 Energy Outlook Asia & Middle East Drive Liquids Demand Growth

10.  Since Arab Spring supply disruptions have become the norm.  By end of 2013 – disruptions had removed over 2 Mb/d from global market. Meanwhile US output surged nearly matching barrel for barrel.  Without the above disruptions prices would likely have come under pressure without OPEC action.  History has shown us that such disruptions in production take up to a decade to fully recover – which should take pressure off OPEC in the medium term. Energy Outlook Supply disruptions reduce the immediate impact on OPEC

11. Energy Outlook Oil trade continues to shift from West to East

12.  In the US, the increase in tight oil production coupled with declining demand will continue the dramatic shift in import dependence.  Imports are set to decline from a peak of well over 12 Mb/d, or 60% of demand, in 2005 to just 1 Mb/d, or less than 10% of demand in 2035.  China’s import requirement, on the other hand, is projected to more than double from today’s levels to almost 14 Mb/d, or 75% of demand, a level and share of demand higher than the US at its peak. China will likely surpass the US as the world’s largest importer next year and largest consumer by 2029.  On a regional basis, led by China’s growing import requirement, Asia’s imports will account for nearly 80% of inter-regional net imports by 2035, up from 57% today.  Meanwhile, the Middle East’s share of inter-regional net exports will dip from 54% in 2012 to 52%, suggesting that Asia will not only require Middle Eastern oil, but will also pull from other surplus regions such as the Americas, Africa and the FSU. Energy Outlook Asia’s import needs go beyond the Middle East

13. Energy Outlook Extra OPEC supply required to balance stocks

14. Energy Outlook Oil major trade movements 2013  ME remains world’s largest oil producer  ME remains the world’s largest oil exporter

15.  ME maintains its leading role as the world’s top oil exporter  ME energy production expected to expand by 37% while consumption grows by 77%  ME oil production expected to expand by 22% and demand by 55% between today and 2035  ME remains worlds largest oil exporter – share of global supply expanding from 32% today to 34% in 2035  ME remains world’s largest oil exporter 20Mb/d to 22Mb/d  Natural gas is the fastest growing fossil fuel of both production (+74%) and consumption (+95%). Middle East Outlook Global Oil Production 1965-2009 & predicted to 2015

16. Complex Global Supply Chain  Maritime infrastructure – Well to Wheel Common Interests  Energy flow – vital for world consumers  High seas must remain open for free trade Changing Environment  Unstable situations cause tension in a stable market  Regional energy remains in high demand  Changes to business model Industry and Navies in Partnership  Trusted relationship / share information / education  Habitual coordination Be Prepared Summary