Special Presentation Supply Trends ÖGEW / DGMK GROUP JBC, Johannes Benigni 17 October 2014
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Crude Prices Tuesday, 21 October 2014 www.jbcenergy.com Slide 4
Price Structure The price has moved down on the front end and up on the back end of the curve Tuesday, 21 October 2014 www.jbcenergy.com Slide 5
Supply Overview ~93 mbper day of liquids supply of which 73 mbper day is crude oil Tuesday, 21 October 2014 www.jbcenergy.com Slide 6
Supply Balances Europe, Asia and the North America are short Tuesday, 21 October 2014 www.jbcenergy.com Slide 7
Supply Outlook Short Term US and Canada boost non-opec supply, while within the OPEC group Libya and Iraq increase Tuesday, 21 October 2014 www.jbcenergy.com Slide 8
Supply US Shale boom is likely to slow down towards the end of the decade Tuesday, 21 October 2014 www.jbcenergy.com Slide 9
Supply US Lower oil prices means that less additional wells will be drilled Tuesday, 21 October 2014 www.jbcenergy.com Slide 10
Supply US Average costs per well increased this year again Tuesday, 21 October 2014 www.jbcenergy.com Slide 11
Supply - Canada Canadian supply to increase as long as infrastructure keeps pace Tuesday, 21 October 2014 www.jbcenergy.com Slide 12
Supply Russia New frontier projects will not be enough to compensate for the declines Tuesday, 21 October 2014 www.jbcenergy.com Slide 13
Supply Other FSU Other FSU East suppliers fail to deliver Tuesday, 21 October 2014 www.jbcenergy.com Slide 14
Supply Brazil Brazil output is about 1 million b/d below expectations Tuesday, 21 October 2014 www.jbcenergy.com Slide 15
Supply MENA Region Geopolitical risk remains high in MENA region Tuesday, 21 October 2014 www.jbcenergy.com Slide 16
Supply - Deepwater Deep Water hopes in the U.S. Gulf, Brazil and West Africa Tuesday, 21 October 2014 www.jbcenergy.com Slide 17
Supply Costs Easy barrels are gone frontier supplies come at a cost Tuesday, 21 October 2014 www.jbcenergy.com Slide 18
Supply - Costs IOCs have only limited access to cheap resources (about 3/4s are in the hands of NOCs) Tuesday, 21 October 2014 www.jbcenergy.com Slide 19
Price Signals The physical market has already stabilized and turned Tuesday, 21 October 2014 www.jbcenergy.com Slide 20
Market Structure Tuesday, 21 October 2014 www.jbcenergy.com Slide 21
Economy Tuesday, 21 October 2014 www.jbcenergy.com Slide 22
Investors The financial players got excited Tuesday, 21 October 2014 www.jbcenergy.com Slide 23
Demand Weak economic situation weighs on demand Tuesday, 21 October 2014 www.jbcenergy.com Slide 24
Call on OPEC OPEC must see that a cut is inevitable Tuesday, 21 October 2014 www.jbcenergy.com Slide 25
Saudi Arabia Increase domestic crude use and lower production levels lead to a sharp cut in crude exports Tuesday, October 21, 2014 www.jbcenergy.com Slide 26
Competing Grades There is no indication of a price war among OPEC Tuesday, 21 October 2014 www.jbcenergy.com Slide 27
Saudi Arabia No problem for the Saudis to cut Tuesday, 21 October 2014 www.jbcenergy.com Slide 28
Saudi Arabia Tuesday, 21 October 2014 www.jbcenergy.com Slide 29
Supply Outlook Long Term Cheap crude is only available in the Middle East, but will it be available? Tuesday, 21 October 2014 www.jbcenergy.com Slide 30
Supply Outlook Short Term Non-OPEC supply is set to increase mainly on the back of US crude additions While the North America boosts production, others disappoint: Brazil output is increasing, but way below initial expectations FSU East output is expected to decrease next year due to lower output from Russia, Kazakhstan (Kashagandelays) and Azerbaijan Other regions are not seen to have the capability to increase output In the Middle East, OPEC will need to lower output to make room for Iraqi barrels Libya output is also expected to increase over the upcoming months; however not to the same levels as seen before the 2011 crisis. Tuesday, 21 October 2014 www.jbcenergy.com Slide 31
Supply Outlook Long Term Cost of production is set to increase due to frontier developments Cost overruns and project delays are telling the story U.S. Shale boom is likely to slow down, but others will try to follow Main crude supply additions to cover demand will have to come from OPEC Middle East Tuesday, 21 October 2014 www.jbcenergy.com Slide 32
Thank you!