The Changes in the Global Energy Trends
and their Implications on Businesses
International Symposium
27 November 2012
Dr. Tsutomu Toichi
The Institute of Energy Economics, Japan (IEEJ)Major Changes in the Global Energy Trends
1. The End of Cheap Oil under the Circumstancesof Rising Oil Demand in Emerging Economies andHigher Geopolitical Risks in the Middle East
2. Intensification of Gas-to-Gas Competition due
to the “Shale Gas Revolution”
3. China with Larger Impacts on Energy Security
and Climate Change Mitigation
4. Nuclear and Renewable Energy Facing NewChallenges
2Changes in the Global Energy Trends(1)Higher Uncertainties of Oil & Gas Supply from the Middle East
-Spreading of “Arab Spring” from North Africa to the Middle East
-Increasing geopolitical risks due to the Iran’s nuclear crisis-Increasing concerns about energy security for Asian countries
Civil war in Syria
Tunisia

Possibility of militaryattack to Iran by Israel

Libya

Continuing violenceand political instability
in Iraq

Iran’s nuclear programand economic sanctions
by US and EU
Egypt

Qatar
Saudi Arabia

UAE

More oil heads for Asia

Strait of Hormuz
Conflict between Northand South Sudan

3

Historical Trends of Crude Oil Price- High oil price and technological innovation have promoted to develop
unconventional resources of shale gas, tight oil, and oil sand as well as
in the deepwater and Arctic frontier regions.
($/barrel)

Nominal Price($ of the day)120

Real Price($2011)100

Growth of Non-OPEC output
Lower demand in OECD

80

Demand growth inemerging economies
Peak of easy oil

60

40

Rising output ofunconventional oil

20

Note: 1970-83 Arabian Light Posted price, 1984-2012 Brent dated
Source: BP “Statistical Review of World Energy 2012”

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

1970

04

The End of Cheap Oil, but Very Volatile（$/barrel）

Budget breakeven

Commerciallyattractive

Unconventional Oil
Deepwater, Tight Oil,Breakeven cost

Oil Sand, Arctic etc.

Oil Production（mb/d）
Source: IEA, “World Energy Outlook 2011”, Other sources5

Changes in the Global Energy Trends(2)Shale Gas Revolution in the U.S.
-U.S. and Canada are to be major LNG exporters after 2015.
-North America could achieve self-sufficiency of oil in the next decade.
U.S. Natural gas production by source

Potential Shale Plays in the WorldTcf

Note: Estimated reserves of shale gas; 6,626Tcf
Proved reserves of conventional gas; 7,361Tcf
Source: U.S. Energy Information Agency, May 20126

Natural Gas Prices in Japan, EU and US-Japan: LNG imported prices are linked to the Japan crude cocktail-Germany: Border gas price from Russia is linked to prices of heating oil
and heavy fuel-US: Spot prices at the Henry Hub in the Gulf coast（$/MMBtu）
20

Henry Hub18

16

14Japan LNGJapanRussia-Germany (Border)

Germany121086

US Henry Hub4207

North American LNG Exports to Asia
Alaska North Slope(ExxonMobil, ConocoPhillips, BP)Export ranges of70-100 Mt/year
in 2020

Douglas Channel(BC LNG Export, 2MT)LNG Canada(Shell/Mitsubishi/KOGAS/CNPC, 24MT12MT))

Asian market

targeted due toprice difference

Kitimat(Apache/EOG/EnCana, 5-10MT)

Export authorization
Jordan Cove
(Veresen, 9MT)

Freeport(Freeport LNG 11-22MT)
LNG
Corpus Christi(Cheniere, 14MT)

Gulf Coast LNG(Gulf Coast LNG, 22MT)

Cove Point(Dominion, 8MT)
Sabine(Cheniere, 18MT)
Lake Charles(Southern/BG, 15MT)

as an uncertainty
Project participatedby Japanese companies

ECameron(Sempra, 12MT)
TE
8Changes in the Global Energy Trends(3)China as the Largest Energy Consumer and Power Generator-Her coal consumption has increased by 2.5 times in the last decade andaccounts for 50% in the world.
-Second largest oil importer after the U.S. and rapid development of nuclear
energy even after the Fukushima accident.
Trends of Energy Consumption in Major Countries

World Primary Energy Consumption by Fuel(100 Mtoe)
30China
25

ＵＳ

20ＥＵ

15
10Japan

India

50Source: BP “Statistical Review of World Energy 2012”

9China’s Dependency on Imported Oil- China’s oil import from the Middle East continues to increase and energy
security will become major concerns for China.
- Chinese NOCs are making every effort to access to oil and gas resources
oversea with the strong government support.
Mtoe
900

DemandProduction

Net Import

74%

78%

783

700

64%

Dependency on Imported Oil

684
580

573

47%

500

300

367-25%-21%

US437

100

110

138-19-100
1980

367

China
297

195
89 108882172206

203

198

2020

2030

2035

Japan
207-281990

Source: IEEJ, November 2011

2008

2011

10

Recoverable Reserves of Shale Gas by Country

Note: Conventional natural gas reserve of China is 108Tcf in 2011.
Source: USDOE

11Changes in the Global Energy Trends(4)Renewable energies face new challenges-Spain and Germany as top-runners of renewable energy development have toreduce the government support and subsidy due to heavy burdens on users.
-The green industry could not create new jobs as expected in OECD countries.
Cumulative Installed Capacity of Renewable Energy(GW)300234250Wind
20015010069Solar
50

11Geothermal
1120102009
2008
2007
2006
2005
2004
2003
2002
2001
2020000

Source: BP,2012

12Recent Development of the Global PV Industry
 Bankruptcy, crash of stock prices and withdrawal of foreign capital
Top 15 of PV Companies in 2008 and 2011
順位12345678
910111213
1415

上位15社（2008年）
企業・国Q-Cells（ﾄﾞｲﾂ）First Solar（米国･ﾄﾞｲﾂ・ﾏﾚｰｼｱ）
Suntech Power
尚徳電力（中国）
シャープ（日本）
Motech（台湾）京セラ（日本）
Boading Yingli（中国）JA Solar（中国）
Sun Power（ﾌｨﾘﾋﾟﾝ（米国））
Solar World (Shell)（ﾄﾞｲﾂ･米国）
Ｔｒｉｎａ Solar
（中国）
三洋電機
（日本）
Ｇｉｎｔｅｃｈ（台湾）
Solarfun（中国）
Cabadian Solar
（中国）

MW順位

570.4

1504.02497.53473.04384.05290.06281.57277.08236.99221.010210.011210.012180.013172.814167.5

15

Source: PV News Vol.30, No.5

上位15社（2011年）
企業・国Suntech Power（中国）JA Solar（中国）
YingLi Green Energy（中国）

Ｔｒｉｎａ Solar（中国）
Motech（台湾）
Canadian Solar（中国）
Sun Power（フィリピン、米国）
Ｇｉｎｔｅｃｈ（台湾）
Hareon Solar（中国）
Jinko Solar（中国）
Neo Solar（台湾）
Hanwha Solar One（中国）
REC（ノルウェー）
Q-Cells（ドイツ）

Changzhou Eging PV（中国）Production Shareof PV Module

MW
2,070

Japan

1,775

ES

1,684
1,604
1,120

US

34.8GW
In 2011

1,058
922

Asia882China

855
840806

Source: PV News May 2012

788765717

2012年4月
破産申請

700

131

Global Reaction to the Fukushima Accident-Germany and Switzerland decided a gradual shutdown, and Italy abandoned a plan
to build new reactors.
-P5 nations, India and S. Korea announced to continue nuclear development. China ispromoting an ambitious nuclear program and catch-up France by 2020.
-Newcomers such as UAE, Vietnam and Turkey pursue to build new nuclear plants byintroducing foreign investments.
- Prospects of nuclear power are very divided subject to the public acceptance aswell as economic competitiveness.
Comparison of nuclear power projections

14

Implications on Japanese Businesses(1)1. In order to cope with geopolitical risks of oil and gas
supply, diversification of supply sources is most effective,
and Japan has to establish a national flag company that ismore competitive in the global oil and gas market.
2. The shale gas revolution is changing the rule of the game inthe global energy market. In order to correct the “Asianpremium of LNG price”, Japanese buyers should challenge tointroduce new business models of gas imports including
North American LNG and Russian pipeline gas.
3. Dynamic changes in China’s energy situation will increase
opportunities and risks for Japanese businesses in terms ofaccess to resources, nuclear safety, green energy
technologies and climate change mitigation.
15

Implications on Japanese Businesses(2)4. Japan’s energy future is increasingly influenced by thepublic perceptions after the Fukushima accident. Energy
businesses should make larger efforts to gain the public
acceptance by enhancing transparency and accountabilityof their activities.
5. Regulatory reform of Japan's electric power industry is tocreate various business opportunities for newcomers aswell as to promote innovations. Technological innovations
could play a vital role to transform the energy supplydemand systems over the next couple of decades.

16